Meru to adopt marketplace model, to offer cheaper service than Ola, Uber

The launch of technology-based startups changed the market completely. In this transformation, many conventional businesses were entirely wiped out by the new age startups.

Amidst the change of winds, there were a few which somehow managed to survive and were biding their time to hit back when the right moment comes.

Car rental firm Meru Cabs is an epitome of such companies which were lost in oblivion in the melee of Ola and Uber in the cab-hailing space. But, it has managed to come back and has been doing everything to stay updated with the change.

Along the lines of Ola and Uber, Meru Cabs is planning to adopt the marketplace model and allow enrolled drivers to set dynamic fares to attract more commuters. It means that drivers on Meru’s platform will be able to decide fares as per demand in the location or the time of the day.

It will first launch the marketplace model in the National Capital Region (NCR) and later expand in other cities. The home-grown firm currently charges customers rates regulated by the government.

The company is planning to adopt the marketplace model as the large discounts offering by Ola and Uber have been heavily slashed. The ride-hailing behemoths now charge riders almost equal to the fares as regulated by the government.

Talking to ET, Nilesh Sangoi, CEO of Meru Cabs said the fares of the ride-hailing cabs have increased now and it is a more level-playing field.

He added that the move will make the fares on the platform more competitive and Meru Cabs may offer even a cheaper service than Uber and Ola.

Though Meru Cabs seems to have overestimated its position against the competitors, the cab company has been managed to establish a third front other than Ola and Uber.

The company has so far raised a total funding of $75 million. In March 2015, it raised $50 million from existing investor India Value Fund. In 2016, it raised $25 million from Brand Capital, an investment arm of Bennett, Coleman and Co (BCCL).

The last round of funding was to utilise for advertising and providing user incentives which would include discounts, loyalty schemes and providing quality service. The cab company has never thrown in the towel and has been making every effort to maintain its relevance in the space.

While Uber and Ola are fighting a fierce battle to emerge as the largest player in India. According to a study by Kalagato, Ola commands 16 per cent more market share than Uber India.

To fight deep-pocketed Uber in India, Ola had raised massive $2 billion from SoftBank and Tencent in September last year. The Bengaluru-based company has been playing proactive moves in electric vehicle segment.

Besides, Uber is planning to provide end-to-end transportation across multiple mediums such as cars, bikes, autos and buses.

For the San Francisco-based ride-hailing company, which raised $7 billion from SoftBank in December last year, India is the most important market.

Last month, before his visit to India, Uber’s CEO Dara Khosrowshahi said that he and his company see India as a huge market as far as the company’s growth is concerned.

In fact, India is the only country outside the US where Uber has a chance to prove its merit at huge scale. It has already lost the battle in China, Russia, and SEA region.

The development was first reported by the ET.