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Ola, TaxiForSure merge, but real challenge is customer satisfaction

Experts and customers say constant improvement and innovation in service quality will be key to success

Digbijay Mishra & Itika Sharma Punit  |  New Delhi/Bengaluru 

The first major consolidation in the online taxi aggregation industry in India is likely to have varied implications for customers, investors and competitors. While it's good news for investors, as this is a classic exit route for them in an industry that may be years away from an initial public offer (IPO), it may not be as positive for the other two.

According to experts, the joint entity of Ola and TaxiForSure will be the largest internet-based taxi aggregation service provider in the country. While Ola alone was racing ahead of competitors, some experts believe that this deal may propel the company into a different league altogether.

Much of the heat will be on Siddhartha Pahwa-led Meru Cabs and US-based global giant Uber. Meru has already started pulling up its socks and is close to raising funds to acquire regional brands.

Pahwa has been vocal that in the near future, only two or three players will survive. With the Ola-TaxiForSure deal, it seems like his prediction may be reality sooner than expected.

ALSO READ: Ola Cabs acquires TaxiForSure in $200 mn deal

Uber, which was seen as the main competitor to Ola and TaxiForSure, has been plagued with regulatory issues for the past few months after a Uber driver was accused of raping a passenger.

Another home-grown player, Easy Cabs, which is a part of car rental company Carzonrent, is currently too small to taken on someone the size of Ola.

For customers, this may well be the beginning of controlled discounts for every ride in future as TaxiForSure merging with Ola will give the company breathing space to keep costs under control without losing market share. This process seems to have already begun – shortly after the merger was announced, Ola said it would start charging more for peaks hours.

Several observers compare Ola's move to acquire TaxiForSure to e-commerce major Flipkart's decision to acquire online apparel retailer Myntra. While the two never merged, and according to sources don't plan to do so in the near future, Flipkart and Myntra together hold close to 50% market share of the fast-growing online apparel retail segment. While several vertical players such as Jabong and Limeroad have been trying to establish themselves, experts believe that the combined muscle of Flipkart and Myntra is far from being overtaken.

While Ola has reached a comfortable position for now, experts say that the company can’t afford to rest on its laurels. “Internet-based businesses are such that if you are not evolving yourself for a week, another player may come and overtake you,” said a senior official with a leading taxi aggregator, on condition of anonymity. “I am sure that Ola and TaxiForSure know that it may not be right for them to bask in the glory of becoming the largest. Retaining that tag is going to be the real challenge.”

For a sector that has been struggling to maintain service quality, customers may play the most crucial role, experts say. Despite the consolidation, both Ola and TaxiForSure will need to keep up quality to maintain their leadership position.

“How long does it take for me to delete an app and download another one?” said technology professional Punit Rastogi, who uses app-based taxi aggregation services at least thrice a week. “If they think being big is good enough and they don't keep the quality at its best, I am going to take those 2 minutes to switch to a player that may not be the largest but has clean taxis and well-behaved drivers.”

And that is going to be the real challenge for taxi aggregators services, market share be damned.

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First Published: Mon, March 02 2015. 16:16 IST