Uber goes after Ola by launching web app in India's smaller cities

In a bid to win the Indian market and overtake local rival Ola, ride hailing service Uber is going beyond its well-to-do customer base and is targeting users of low-end smartphones in smaller cities.

The company has introduced a web app that will allow customers to request for rides without installing the Uber app on their devices and allow them to pay by cash. The new feature is up and running in smaller Indian cities of Nagpur, Kochi, Guwahati, and Jodhpur.

“You can now request an Uber straight from your phone – whether you have the Uber app or not,” Uber wrote in a blog post. Uber doesn’t just allow existing customers to make use of the new web-based service, but also allows new users to sign up for its service.

Uber and its rival Ola have been engaged in a price war to win over customers, often making their services a lot more affordable than using autorickshaws. While these low fares might make their service accessible to millions, there was a bottleneck around getting potential customers install the Uber app on their devices.

In India majority of the smartphones sold cost less than Rs 10,000 and a sizeable chunk of those devices are ultra-low-end phones which inadequate storage and also lack other essential features such as GPS and access to maps.

A January 2016 study by 9Apps, an android app distributor says Indian smartphone users have around 32 apps on their smartphone lower than the world average of 42 apps. Also, because most users tend not to download apps on their smartphones due to lower internet speeds on 2G networks in smaller towns.

Interestingly, Ola, which copied Uber’s business model, in India to tap first time users for its on demand service had a website and a call centre that allowed users to book cabs before it scrapped it in favour of a smartphone app.

Uber, which came into India in 2013, has taken a top down approach of first tapping higher income users with access to credit cards before expanding its service with options such as cash payment.

By building a web app, Uber can potentially break into this market of low-end smartphone users in towns with patchy mobile internet access  who have so far been restricted from using its services.

Users of low-end smartphones make up a significant enough chunk of online shoppers for India’s largest e-commerce marketplace Flipkart to rethink its web strategy. The company’s fashion commerce subsidiary Myntra said it saw sales jump nearly 15 per cent after reintroducing its mobile and desktop websites, with mobile web still being a popular choice for users.

In many ways, Uber realises it cannot compete with the top apps, or essential utilities, which majority of Indian smartphone users have installed on their smartphones. These include social networking service Facebook, caller ID service Truecaller, messaging service WhatsApp and e-commerce marketplace Flipkart.

After losing out to Alibaba-backed Didi Chuxing in China, Uber is on a mission to avoid the same outcome in India. While local rival Ola currently leads the market, Uber has put together a substantially larger war chest and is committed to winning customers by subsidising rides for customers and incentivising drivers to stay on its platform.

Moreover, as Ola struggles to raise money due to loss of investor confidence given Uber’s aggressive stance, the company is scrambling to conserve its cash reserves. Ola shut its subsidiary TaxiForSure 18 months after acquiring the company and laid of close to 700 employees as it looked to cut operational costs in order to fund its discounting game for longer.