Recently I visited my family in India and happened to use Ola at least a dozen times. For the uninitiated, Ola is India’s leading app-based transportation company. It has raised around $1.5 billion in private funding thus far and is in a fierce battle with Uber India.

As a high-end user, I tried to explore all premium features that it offers. In addition, I made sure to speak with the drivers each time and got their views on Ola and Uber. I will provide some opinions on things I found to be good and ugly sides about Ola.

The Good

Ola’s strategy over the past few months seems to be clear: Increase retention amongst the top 10–20% of the users. This is important because top 20% of the users are likely bringing majority of the revenues. And these loyal high spending users will eventually contribute to Ola’s profitability.

It has rolled out several features and programs around this:

1. Ola Wifi: auto-connects to your phone when you start ride
2. Ola Play: In-cab entertainment which you can control using Ola app
3. Ola Select: Cheaper fares, priority in booking queue, no-surge guarantee, and other “make you feel good” experiences if you enroll at just $10 / month
4. Smooth app experience and booking flow
5. Offline booths — dedicated ground staff at airports to help with pickup

Ola has definitely won my loyalty over Uber owing to it’s valuable (or catchy) features.

The Ugly

One of the common themes in conversations with Ola (and Uber) drivers was mention of reduced incentives. Incentives are offered in order to retain and attract drivers. Owing to reduced incentives, driver incomes have fallen by as much as 3X.

In the good old days when Ola and Uber were “throwing money” to expand driver supply, drivers had the potential to earn as much as $2,000. These inflated incomes misled many drivers to go ahead and take loans to purchase their own car(s) which they’re now having a hard time paying. This has led to several union protests across multiple state geographies in India.

It’s very difficult to imagine a taxi driver earning $2,000 per month, when top-notch engineers in the country struggle to earn half as much per month. Clearly, Ola (and Uber alike) didn’t think deeply about the driver economics when incentives would reduce and stabilise, and the side-effect that the reduced incentives would cause on drivers’ lives.

The dramatic fall in driver incomes is leading to protests country wide. A recent case, Ola and Uber drivers were on strike for 1 week in the city of Mumbai: Ola, Uber drivers on strike in Mumbai. Several state governments in India are trying to curb and strictly regulate services due to protests by taxi unions and the and due to the prevalent dissatisfaction amongst Ola and Uber drivers themselves.

Things look bleak in this area and regulations would be a tough hurdle for Ola, despite the good quality services it provides to consumers.

According to IAMAI report, India will see 460 million Internet users in 2016. The number of local language Internet users in India is growing at around 50% year-on-year and touched 127 million in June 2015, thanks to the increasing use of smartphones in rural areas of the country. Localization becomes of paramount importance in a country where 90% of the population isn’t fluent in English.

Localization as a Strategy, and not just a Tactic

Localization isn’t only about adding that extra language to your product or any such tactic — it’s about continually solving issues that users face in fast changing environments.

“If you want to do more of something, make the friction less. If you want to do less of something, make the friction more.” — Jeff Bezos

Localization is about removing to the best extent possible those frictions that users encounter while engaging with the product you’ve built. This friction is different for different kinds of people, being dependent on factors such as demographics, income levels, tech savviness, etc. It could range from — making available your product in 5 languages or optimizing your product for low internet speeds or facilitating local payment options, among many other things. Thus —

Localization — Adapting your product to meet local needs and preferences so as to reduce frictions users of your product face.

To realize big returns, internet companies should start considering ‘Localization’ an important aspect of their product strategy from a very early stage in their product’s evolution.

Big challenges (frictions) in India and emerging economies

Language Literacy: English is hardly spoken outside metros in India. Only 10% of the Indian population is English-literate. Another 10% is English-aware, that is these people could, with some help, use your product to a reasonable extent. A massive 80% of the population is English-disabled — they hardly understand any to engage meaningfully on your product.

Internet Connections: Internet connections are slow — incredibly slow to download that 40MB app that you’ve engineered and then spent millions of dollars on marketing to get users to download the app — only to realize that most users stop the download due to ridiculous internet speeds and expensive data.

Payments Infrastructure: Although internet banking and online payments are fast catching up, majority of the people still rely on cash. This means that if you don’t have a plan for supporting ‘cash-on-delivery’ or similar options, your business will not see enough conversions, despite having a substantial user base.

Price Sensitivity: Unlike western countries, it’s difficult to win loyalty of Indian consumers. They are highly price sensitive and can switch loyalties overnight for small discounts, offers and promotions. A blessing in disguise as its easy to gain market share through lower price points, however it can prove to be a nightmare to bigger established companies who think they’ve a ‘loyal’ user base.

Bureaucracy: Corrupt governments and never-ending bureaucracy mean it is harder to get around any law and legislations.

From the 5 major issues listed above, top 3 could be solved through localization.

Localization trends in India’s bustling internet economy

Localization in Indian context is a hard problem to solve, given the diversity we have in demographics, languages, culture and literacy. Substantial investment and commitment are needed on company’s part. However, in an increasingly competitive environment, internet companies are going to any extent possible to make sure they continue growing.

For e-commerce giants such as Flipkart and Snapdeal who’ve saturated their user growth in big cities, the next 100M users are bound to come from Tier-2 and Tier-3 cities and rural areas.

Majority of the new generation of internet users will come from small cities and rural areas in India, and will be exposed to the internet for the first time on their low end smartphone with a poor 2G internet connection. Further, it is likely that they don’t understand English, and rely heavily on their native language to get things done in their daily lives.

If you end up building your product ignoring these new internet users , it might prove to be catastrophic for long term growth. For instance, you may have an amazing product that works well on a high end smartphone, but expecting people to buy high speed 3G internet connections is unreasonable, since the prices of high speed internet have yet to come down to affordable levels.

Localization helps in making the process of coming online and performing a transaction on your app as easy as possible. It’s a strategy that internet companies are using to differentiate themselves and drive traffic. A few key trends emerge across all companies —

Mobile First: Since most customers will first experience your product on mobile, it’s very important that you’ve given extra care in designing your mobile app and web for best usability and user experience. Needless to say that it shouldn’t be anything but awesome!

Example: Flipkart has voiced about being ‘Mobile first’ and also about going ‘Mobile only’. It has focused on improving the mobile web and app experience.

Low-end Smartphones: Designing an app with tons of features and heavy resource usage would be suicide when you already know that more than 80% of your current or future customers won’t be able to use it smoothly, owing to the low memory and slow processors on their smartphones.

Example: Amazon India reduced the size of its mobile app by more than 60% to suit low end smartphones.

Poor Internet Connections: Slow 2G and WiFi connections are in abundance in India. It will take some time before the internet connections catch up in speed and affordability. Till then, companies should optimise their app or website to slow networks and lower data consumption.

Example: Flipkart introduced Flipkart Lite — a lightweight version of it’s mobile website. Similarly, Snapdeal introduced SnapLite.

Language Inability: Only 10% of people in India are English literate. The number is even lower in Indonesia.

Example: Recently, Snapdeal launched their mobile website in Hindi and Telegu, and has plans to add more local languages gradually.

Cash-driven Economy: most people don’t have a bank acc, then its impossible to expect that ppl will have a credit card. People aren’t internet savvy — they don’t have access to netbanking or debit/credit cards. Options such as Cash on delivery are quintessential for seeing conversions.

Example: Flipkart, Snapdeal, Ola — have introduced cash payment options.

This is the first part of a 2-part series. In the second part, I’ll be presenting some case studies on Indian internet companies who’ve done a great job in localizing their products to meet local needs and demands. Stay tuned!