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Do you remember the time when we used to prefer autos over cabs in India? A decade ago, very few Indians used to own a private car, and the rest of us would depend on the public or local transport available. Fast forward, to 2021, with the advent of mobile technology and cab aggregators, we have all the options of transportation at our fingertips.
Today’s generation now enjoys traveling at peace, and is rethinking whether to own a car shortly or not, which you know was(is) considered a luxury by our parents (and by our neighbors too!).
Let us talk about one such cab aggregator – Ola
With the mission – To build mobility for billions, Bhavish Aggarwal and Ankit Bhati, in 2010, started one of India’s largest homegrown cab aggregators – Ola Cabs. Since its inception, Ola has served 1bn+ rides across 250+ cities (both local and global), empowered 1.5 mn driver-partners, and employed 7000 employees.
Great numbers, right? But, how did it all start? What triggered the founders to build one of the world’s leading cab-hailing companies? What business model has Ola adopted to grow?
From OlaTrip.com to Ola!
As founders, Bhavish and Ankit brainstormed a lot of ideas in their early days as entrepreneurs. They first started with Olatrip.com, which was a portal for booking holiday trips and weekend getaways. For novice entrepreneurs, as Bhavish had said once, the ideas would never come from an excel sheet but would click from their own experiences.
Bhavish once had an awful experience during one of his trips from Banglore to Bandipur. Halfway through the ride, the driver demanded a renegotiation later abandoned Bhavish on the roadside. We can say this was the “Eureka” moment for Bhavish and Ola. He empathized with the plight of travellers across the country and made a “pivot” in the business strategy, and within the next six months, rebranded Olatrip to Ola.
The founders envisioned great potential in the cab aggregation space. With the right blend of technology in mobility, it is safe to assume that Ola has reimagined the – way we travel. Ola has expanded its offerings as per the needs of the commuters and that too in every mobility space.
Funding and Acquisition Ride… So far
In October 2019, the valuation of Ola had reached $6.2 billion, but because of the aftermaths of Covid-19, US-based investment firm – Vanguard, which held a 1% stake in Ola, first slashed down its investment by 45% in June 2020 and again by 9.5% in early 2021. This disinvestment brought down the valuation of the company to $3 billion.
According to Crunchbase, Ola has raised $4.3 billion in funding in over 26 rounds. Forty-nine investors are backing the company including, Temasek Holdings and Bhavish Aggarwal. Since its inception, Ola has acquired seven organizations, which we will know about as we move ahead in the article.
Today, Ola is no longer restricted to just cab-hailing services but has transformed the entire mobility sector by aggressive product innovation in its business model.
Deep diving into the Business Model of Ola
Ola, owned by ANI Technologies, started with a relatively straightforward business model. It used to operate as a Taxi Rental fleet business. If you remember, earlier, Ola didn’t have any mobile application; instead, customers used to call its service centre and book a vehicle, and the cab was provided to them as and when required.
In the coming years, Ola envisioned the potential in the digital space and throttled into an app-based cab aggregation business. Through its platform, Ola bridged the gap between the cab drivers/operators and customers. Ola’s platform provides a more convenient way for the customers to book a cab and a large customer base to the driver-partners.
The way you and I as customers have access to the Ola application, in the same way, there is a similar application developed for the driver-partners. Once the customer confirms the ride, the driver-partner receives the ride request. If the request is accepted, the customer gets the details of the driver and ride. Ola charges a commission of around 15- 20% on every ride booked from its platform.
In 2015, Ola acquired TaxiForSure for over $200 million. It was claimed as an attractive buy as, unlike Ola, TaxiForSure worked with taxi operators. The acquisition smartly gave Ola the tap on these operators. As a result of this acquisition, Ola accomplished the success of Ola Micro within a short period. Later, OLA shut down the TaxiForSure business but continued to have different categories at different prices, including Micro, Mini, Prime and Lux, Kaali-Peeli, auto-rickshaws, and even bikes on its platform with a few more vehicle categories.
In the same year, 2015, Ola made its second acquisition by acquiring Geotagg to bolster its bus shuttle services and manage urban traffic problems effectively. In January 2018, Ola had acquired the ticketing app Ridlr to foray into the public transport segment. As per the reports, the deal was a stock transaction of about $25 million.
In FY 2019, Ola Cabs had operating revenue of Rs 2544 Crore. Year-over-year, the operating revenue increased by around 30 percent in FY 2019. However, the company closed its financial books at a loss. A major share of its revenue, in that year, was generated by commission income and convenience fees.
ANI Technologies, the parent company of Ola, has reported its standalone operating profit of Rs 89.82 crore for FY21 and a 62% drop in revenue between FY21 and FY20. Also, Ola Cabs’ operating profit (EBIDTA) grew by 115% in FY 21 compared to FY20, the fiscal year in which Ola Cabs had reported a loss of 610 crores.
However we know, over the years, Ola has cemented its positioning in different sectors and is not just restricted to the trip commission. To analyze Ola’s business model in detail, let’s have a quick view of multiple revenue streams and business segments of Ola:
1. Commission from ride-hailing services:
Ola offers several types of hailing services, from cabs to autos; from economic to luxury vehicles; from intercity rides to intracity rides. In a way, Ola has developed a gigantic ecosystem that is highly favored by both the customers and the driver-partners.
Even though Ola has forrayed into different verticals of services, cab booking services remain the most significant revenue generator. It charges a commission of 15-20% on the total fare of the trip.
The fair can be paid by both cash and other online methods available on Ola’s platform. Ola started its operations in London just when Uber’s license got revoked. It seems the rivalry is just not restricted to Indian soil.
2. Ola Select –
Ola Select is a subscription-based membership model of Ola. By opting in for the membership, members can avail themselves of numerous advantages, such as – no peak pricing, priority bookings, and free wifi.
3. Ola Corporate –
Ola launched the enterprise solution – Ola Corporate to make business travels costs affordable and the reimbursement process hassle-free.
4. In-Cab advertisement:
You must have noticed several brochures, pamphlets, or sometimes live ads are displayed or distributed during your ride. Ola charges a fixed commission from the companies for promoting their brands leveraging Ola’s services.
5. Ola Prime Play –
Ola launched an in-cab – infotainment platform – Ola Play to provide an enhanced ride experience than its rival, Uber. Ola charges a slightly higher fee to the commuters if they opt for Prime Play.
6. Cab Leasing –
To broaden its territory in the fleet mobility services, Ola, in 2015, bought Delhi based radio cab service and renamed it Fleet Technology Pvt Ltd. Here, Ola buys the cars and leases them to the partner drivers under its leasing program. The driver-partner takes the travel-fair home, while Ola takes a fixed fee and trip-based commission.
Ola’s business model is now much more than cabs
By now, if you thought that’s all Ola is about, let me tell you a few more exciting ventures launched by Ola.
Ola Financial Services(OFS):
In 2015, Ola had launched the wallet app Ola Money for short-term credits, mobile wallets, insurance, and payment of utility bills. Ola cut a deal with 20+ partners including, BookMyShow, Pizza hut, and a few others, whose offers can be purchased using Ola money.
To have a strong foot forward in the financial services space, in 2019, Ola had hived off the operations of the financial services arm from its parent ANI Technologies and started Ola Financial Services Pvt Ltd. In its maiden funding round, OFS had raised fresh funds of Rs.200 crores from Matrix Partners and Falcon Edge. The move had made Ola give a tough competition to the larger competitors in the market, including Amazon Pay, Google Pay, Phone Pe, etc.
Ola has claimed that its Ola Money Postpaid has been a profitable business and is a leading product in the fintech market. On the other hand, Ola has shaken hands with SBI to launch Ola Money Credit Card, Religare to roll out Ola Money Hospicash, and Zipcash to enhance wallet business.
OFS is now planning to expand the insurance business overseas by developing innovative insurance products and rolling out lending offers for a two-wheeler, four-wheeler, and personal loans for UK and ANZ markets.
In 2016, Ola had acquired payment startup Qarth to continue providing best in class payment experience to its customers. The cab-hailing company did not disclose the acquisition sum.
Ola embarked upon its journey into the food and delivery industry in December 2015 with Ola Cafes. Things took a downhill, and Ola had to shut it down within a year. Ola tried its luck the second time when it acquired Foodpanda India for $200 million.
After some initial hiccups, in 2019, Ola had shut down FoodPanda’s food delivery business, but it continued to operate Foodpanda’s cloud kitchen business. They say the third time is a charm, and thus Ola again pivoted the business strategy and focused on being a food-first company instead of a food delivery company.
The homegrown cab-hailing firm moved to build its private brands and curated food offerings such as The Great Khichdi Experiment, Bowlsome, That Pizza Place, and a few more.
Ola affirmed that its leading brand, “The Khichdi Experiment”, crossed 1mn orders within a year, despite Covid-19 restrictions.
Ola has shifted the focus to building private food brands, cloud kitchens, and contactless delivery. Ola’s multi-brand kitchen model is designed to cater to 8-10 brands, and can be scaled up if the demand rises. Ola Foods operates 40+ cloud kitchens across six major cities in the country and has aimed to spread over 150-200 kitchens to fulfil 70-80 % of the urban food delivery demand. Ola Foods is vying with Curefoods and Rebel Foods in the cloud kitchen sector.
As the food-tech industry is growing both in customer adoption and investor’s interest, Ola has also ensured to take notes from its past learnings. As consumers’ preferences are changing, more DIY cooking kits are trending. Ola is embracing this change and is betting big on technology to grab this opportunity. It has developed research, development, and food innovation centre, and not just that, Ola has also teamed up with the best culinary chefs, food technologists, automation specialists, and nutritionists to innovate and create differentiated products.
Keeping the technology at the forefront at Ola Foods, Ola is aggressively working on “precision cooking” methods that ensure the right time, temperature, and amount of cooked food. The firm is also reportedly innovating AI-driven solutions to monitor kitchen quality.
Well, it seems that this time, Ola can have the cake and eat it too!
Adding New Mobility to Ola’s Comprehensive business model
Ola has paved the way to building a consumer-centric New Mobility ecosystem. Sharing his vision of New Mobility, Bhavish Agrawal said that the New Mobility would stand tall on three pillars – mobility services, energy vehicles, and auto -retail.
Ola aims to fulfill diverse consumer needs through its diversified portfolios such as kick scooters, e-bikes, drones, and flying cars. Bhavish asserts that the new sustainable mobility will cost 80% less to run than internal combustion engines.
Ola Electric Mobility
The early efforts to start Ola Electric started way back in 2017 when Ola partnered with the Government of India and Mahindra to launch India’s first-ever multi-modal electric vehicle project in Nagpur, Maharashtra. Ola claimed that it had spent INR 50 crores to procure the vehicles and set up 50 charging stations across the strategic locations in the city.
In 2019, Ola Electric Mobility secured funding of $250 million from Softbank and joined the unicorn club along with its parent company Ola.
To advance strides in electric mobility space, Ola had acquired Etergo BV, an Amsterdam-based electric scooter original equipment manufacturer, for an undisclosed amount. Following the acquisition, Ola has positioned itself in the premium electric two-wheeler market, both globally and locally.
Advent of OlaFutureFactory
Ola is ensuring the end-to-end operation is integrated into its in-house technologies and capabilities, including building battery packs, motors, vehicle computers, and software. To accomplish the same, Ola has been reaching out to the best-in-class partners globally.
Ola’s commitment to invest 2400 cr to the Tamil Nadu government for setting up its first electric scooter factory in the state was in tandem with its partnership with German firm Siemens to build one of a kind and advanced manufacturing facility in the Krishnagiri district of Tamil Nadu. The 500 acres facility is also regarded as the world’s largest two-wheeler mega-factory, which is entirely run by women. Ola has anchored on Siemens’ digital twin design and manufacturing solutions. The integrated solution will help Ola to validate products and production beforehand.
Ola has also collaborated with Swedish automation giant ABB to build and supply robotic and automation solutions. These solutions will get deployed at its mega factory for the key processes and assembly lines. ABB-developed solutions will be deeply integrated with Ola’s in-house AI engine platform and tech stack. By leveraging ABB’s automation package with digital connectivity, Ola will ensure remote digital connectivity and monitoring of robots, which will remain instrumental in optimizing robot performance, productivity, and product quality.
The partnership is conducive to the rollout of the best-in-class e-scooters for India and the world.
Qualcomm also has a tie-up with Ola Electric to provide a 4G-connected octa-core android platform that provides connectivity and computing capabilities.
Ola FutureFactory is expected to be the world’s most automated facility that will work on Industry 4.0 principles. With over 3,000 robots powered by Ola’s proprietary AI, 10 million annual vehicle-making capacity, 2 million vehicles at initial annual capacity, run by 10,000 women employees, the facility will be the greenest with 100 acres of forest on-site, running fully carbon-negative operations. The company aims to handle 15% of the global two-wheeler capacity.
The mega-factory will serve as the global manufacturing hub for its electric-powered scooters across India and international markets, including Europe, the UK, Latin America, Asia Pacific, Australia, and New Zealand.
It is #VocalforLocal at Ola!
Ola Electric wants to make its business model self-reliant. One of the most prominent features of Ola’s e-scooter is its replaceable battery. The Li-ion battery is about 40% of the cost of a scooter, and the battery cells account for 70% of the battery cost. In today’s world, cell manufacturing space is dominated by South Korea, Japan, and China.
But, Ola has laid down big plans to set up its cell manufacturing plant in India. Once this plan gets accomplished, Ola will join the club of a few Indian manufacturers to do so, as all the cells are imported as of now.
Creating an Ecosystem for EV
I had owned an e-scooter back in 2013. We used to live in a small city in India, where we could get it charged in our courtyard. But when we moved to the financial capital of India, we could not find any means to charge the e-scooter in our sky-scraper. Therefore, we sold the e-scooter for a token sum of Rs. 500 to the local kabadi (ragman).
Fortunately, Ola has taken note of the infrastructural gap for EVs in India and is going to establish the world’s largest and densest electric two-wheeler charging network. The Ola Hypercharger Network will be one of its kind, with more than 100,000 charging points available across 400 cities. Ola has estimated the cost of $2 billion over the next five years.
Ola will ensure to set up the Hypercharger in city centers and popular locations so that an Ola Electric customer can always find a Hypercharger nearby. Along with this, customers will also have access to a home charger bundled with the Ola Scooter.
Ola Hypercharger network, together with the home-charger and Ola Scooter’s industry-leading range, will ensure that customers have complete confidence when opting for its electric vehicles. Ola is ensuring to provide a seamless customer experience, for which it has also developed – Ola Electric App. Through the app, a customer can monitor the charging progress, pay for the charging, and get insightful navigation features indicating whether the customer has enough charging to go from one place to another. (Man, I am impressed! ).
To accelerate electric vehicle development or to strengthen the “Mission Electric,” Ola Electric first raised $100 million by taking a long term debt from Bank of Broda and later raised $200 million in funding from Falcon Edge, SoftBank, and other investors, valuing the company at $3 billion.
It is fair to conclude that Ola is playing all the right cards to instill confidence in customers to opt for its electric vehicles.
Ola has launched a new EV category on its ride-hailing platform that allows riders to book electric vehicle rides. The category – Ola EV is first available across London and then rolled out to other cities where Ola is operational.
In India, Ola Electric competes with Ather Energy, Hero Electric, Bajaj, and TVS Motor Company. As the company has reported that it sold e-scooters worth Rs 1100 crores, it will be intriguing to wait and watch how the rivals play out their cards in the EV game!
This year, Ola has launched its new vehicle commerce platform from which customers will be able to buy and manage new and pre-owned vehicles. Ola Cars will first start with the pre-owned cars and will later move to Ola electric and vehicles from other brands. By challenging the archaic retail model, Ola Cars will bring transparency and a digital experience for its customers.
It has plans to start with 30 cities for the first phase and eventually scale up to 100 cities by next year. Ola Cars have a long list of services to offer, such as – purchase, vehicle finance and insurance, maintenance, including vehicle health diagnostics and service, accessories, and finally, resale of the vehicle back to Ola Cars, as claimed by the company.
Ola Cars will be competing with other market players such as Cars24 and Droom.
The new business segment is in line with Ola’s vision of The New Mobility, and to reinforce it further, Ola has acquired next-gen location tech GeoSpoc. “Enhanced geospatial services will also go a long way in improving urban planning, including road networks, better public transportation, and pre-empt congestion spots,” as said by Bhavish in a blogpost. The sum of the acquisition transaction remains undisclosed.
The following business segment in the bucket list of Ola is – Ola Store. With Ola Store, Ola will join the quick-commerce industry as well. It has launched a pilot delivery for items such as personal care, grocery, and pet care, in Bengaluru.
The company is aiming for a 15 minutes delivery timeline. As traditional e-commerce deliveries take one to two days, quick-commerce can deliver small amounts quickly. Swiggy Instamart and Dunzo are already playing in the segment. By 2024. the quick commerce sector in India will grow to $5 billion from $0.3 billion.
Ola’s Marketing Strategy
For the marketing strategy of Ola, let us focus on its social media strategy, as I want to draw your attention to how Ola engages its customers on the web.
Ola had started building its online presence from Facebook (Oops! I mean Meta). Its campaign #ChaloNiklo was such a success that sales surged up to 60%.
From then on, Ola started several trendy hashtags, including #FarakPadtahai – to spread awareness about carbon footprint and to encourage carpooling. Another one that you might have noticed was – #HeroesofOla, which showcased the acts of courage and humanity of Ola driver-partners. The recent one I observed is – #jointherevolution an obvious one to engage customers in Ola Electric.
Not just this, Ola has also partnered with TVF in its famous web series – Permanent Roommates. Now you are thinking of Purshottamji riding the Ola cab!
Ola also joined other brands to pull the best pranks on April Fools’ Day. Ola launched a fake campaign stating that it was coming up with a flying car – Ola Air Pro! The company mentioned that the flying car would be so light that it could be lifted with one hand, and one need not worry about finding the perfect parking spot and poor urban planning! ( Honestly, I also thought it was a genuine product campaign when I was researching to write this article. Facepalm! )
Not just that, Ola had also launched a website of Ola Air Pro to keep a tap on the interest of consumers.
You must have noticed that we come to know about most of the details on Ola by Bhavish himself. Every article that I have read so far had the same sentence – The co-founder and Group Chairman, Bhavish Agrawal, took on his Twitter handle to share.
So, If you ever wonder what is happening with Ola or any of its subsidiaries, Bhavish’s Twitter account must be your go-to place!