Ola is Not Using the New $2Bn to Enter Sri Lanka
Tuesday morning came with clunky sounds of Ola’s coffers clamping down on 2 billion dollars from SoftBank and Tencent (is there anyone else who puts in billions of dollars into Indian startups as often as these two?). The report hasn’t been confirmed by any of the involved parties but the song goes (it’s more like a chorus given how often we hear it) that Ola will be ‘shored up’ in its fight with Uber for what seems the largest, fastest growing market for ride hailing after North America and China. (We are talking about India, of course).
Approximately three and a half hours from Delhi NCR and 35 km away from a point in Tamil Nadu lies Sri Lanka, pearl of the Indian Ocean. Mid-August 2017 startup sentinels caught a whiff of Ola trying to expand in Sri Lanka and Bangladesh, deduced by an Ola exec’s LinkedIn post looking for talent in the smaller nations.
Could it be that some of the newly promised ka-ching will go the way of Sri Lanka, India’s near, dear neighbour?
Zone into the pleasantly humming city of Colombo, Sri Lanka’s financial capital, a city with under a million people. In this west coast capital, everything is smaller compared to Mumbai and the NCR. But the constant is that race to become the leading ride aggregator. Uber got to Sri Lanka in October 2015 and are doing comfortably well according to a spokesperson: “Uber has received an overwhelming response from riders. Having completed millions of trips in less than two years, we continue to provide affordable, reliable and convenient rides at the push of a button to hundreds of thousands of riders every day.”
Despite all the news and fanfare, it’s a land that has heard little of Ola Cabs. According to reliable sources, Ola may not have any immediate plans to come to Sri Lanka.
Sure, there might have been having an internal discussion about international expansion. Sure, the anti-Uber alliance ended among the ride hailing biggies, Lyft, Didi, Grab and Ola, and everyone is free to expand and compete against each other. But it looks like the story broke a little too prematurely. So, Ola did what was appropriate – they surfed the media wave. When contacted to verify their international expansion plans, Ola said they will not be commenting. (Smart). It’s come to a point where Ola need not seek any publicity nor even play an active role in gaining attention.
Sources from the Sri Lankan mobility sector theorize, “It may have followed the LinkedIn post which the Indian media took up,’’ [then followed by the Bangladeshi and Sri Lankan media outlets].
The source continued, “I met the Ola team, and the general outlook seemed to be ‘Yeah, we are taking advantage of all the exposure’.”
Ever heard of PickMe?
Why is it always the ride hailing companies that are among the most valuable? Uber is the most valuable private company/ startup in the world. Didi Chuxing is the most valuable startup in China. Ola is a leader of the unicorn pack in India. And a company called PickMe is one of the most valuable and successful startups in Sri Lanka.
The company is supposed to be worth 3 billion [Sri Lankan] rupees (around Rs 130 crores) and is only around 2 years old.
According to sources, PickMe is the market leader enjoying about 80 to 90 percent of the taxi aggregator market; not Uber which launched in Sri Lanka a few months after the local ride hailing app.
While it doesn’t make sense to compare the market of Sri Lanka with India’s ride hailing market said to be worth $10 billion, it’s still an attractive market. PickMe’s founder and CEO, Jiffry Zulfer says PickMe is growing 10% month on month. The company is said to notch up over 35,000 rides a day compared to just over 10,000 daily rides a year back. Gross billings are now said to stand at 2.3 billion [Sri Lankan] rupees (tad over Rs 97.7 crores).
At a peak close to 200,000 [Sri Lankan] rupees a month, the money a driver with one of these ride hailing platforms can earn isn’t bad either.
If Ola goes to Sri Lanka…
According to Sri Lankan media, back in 2015, Uber execs had announced in Colombo, “that early growth rates have surpassed those of Bangalore – Uber’s pilot city in India.”
“…Sri Lanka is a key market for Uber. The business is growing fast and in a sustainable manner…The opportunity is huge and we are just getting started. We are very excited at the growth we are experiencing today in Sri Lanka and optimistic about the future,” said an Uber spokesperson.
However, if history is anything to go by, if and when Ola does decide to come to Sri Lanka, their journey will not be an easy one. Nor does history point to too many Indian businesses that do incredibly well in Sri Lanka, according to the business fraternity of the island.
It’s like the telco business. There’ll be two big players, and everyone else won’t be making any money at all, compounded by the fact that Sri Lanka is a small market.
Of course, a new international entrant can come in with ample money to burn in promotion and customer acquisition. But they may have to spend 5 times the money a local and established player may spend given the lack of local knowledge and understanding. As the saying goes, ‘We are developing nations and we sit by each other, but Sri Lanka is not India.”
A spiel worth a thousand words and what have we learned? That Ola has been promised another 2 billion dollars but is highly unlikely to venture out of India any time soon, leaving Uber to surround and dominate in neighbouring countries.
