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Ola Cabs: Dominating India and Challenging Uber at Global Level

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These slides use concepts from my (Jeff Funk) course entitled Biz Models for Hi-Tech Products to analyze the business model for Ola Cabs, an Indian ride sharing company that has beaten Uber in India and is now challenging Uber on the global level. It has introduced a wide variety of low end vehicle service (two and three-wheelers), is expanding into last mile e-commerce deliveries, trucking, ambulance services, 2-wheelers for deliveries, and is linking with restaurants, ticket booking and used good marketplaces.
The slides summarize the business model for Ola Cabs including the value proposition, customers, method of value capture, scope of activities, and method of strategic control.

Published in: Business
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Ola Cabs: Dominating India and Challenging Uber at Global Level

  1. 1. Over 25 million Customers Cab aggregation platform provider 350,000+ vehicles (Counting autos, Government registered taxis, yellow Cabs, etc.) Over 1 million booking Requests/day Present in 102 Indian cities
  2. 2.  Higher population - 65% below the age of 35  Mobile Internet users ~67% mobile penetration Population: 1.26 billion
  3. 3.  Cost sensitive public -> prefer no-frills lowest fare cabs  Preference for 3-wheelers for short journeys -> cheaper than cabs  In heavy traffic -> two wheelers preferred (shorter journey time)  Growth of working women -> higher safety concerns
  4. 4. Customer Self Owned Car Cabs Cost of Car 4.85 lacs 0 Loan, Insurance & Taxes (3 yr period) 1.26 lacs 0 Maintenance Cost (3 yr period) 4500 INR 0 Miscellaneous Cost ( 50,000 INR 0 Registration (3 yr period) 72,000 INR 0 Cost of running (3 yr period) 1.21 Lac 4.32 Lac Resale value (after 3 years) 2.35 lac 0 Total Cost incurred 6.18 lac 5.2 lac • With Ola micro and mini, it is cheaper for a customer to take a cab than own a car
  5. 5. Multiple Price and Service Offerings Convenience Payment • One touch • Instant Booking • Pre-Booking Base Fare 80 @Rs10/km Base Fare 100 @Rs13/km Base Fare 80 @Rs10/km Standard meter fare Base Fare 100 @Rs17/km Carpool services Corporate Service Base Fare 40 @Rs6/km Ola Shuttle Micro Mini Sedan Pink 3-wheelerPrime
  6. 6. Higher vehicle utilization Worry free cab maintenance Extra income Flexible work hours Driver Training
  7. 7. Pricing and Payments • Sets pricing structure for rides • Surge pricing • Customers pay with cash, credit/debit cards, Ola digital wallet (Ola money) Revenue Generation • Ola earns between 10% - 15% for each ride depending on the city Expenses • Invest in R&D • Employee salaries • Maintaining infrastructure in 102 cities • Invest in own fleet
  8. 8.  Cabs › Taxi aggregators: Uber, Easy Taxi › Fleet Operators: Meru  2 wheelers Taxis – Baxi and M-Taxi  Three wheeler aggregator – Jugnoo
  9. 9. In India, private cars can’t be used as taxis So yes, business model is same But OLA has a higher market share Why?
  10. 10. • First mover advantage • Highest funded start up • Wider reach • More taxis
  11. 11. Parameter OLA UBER No. of Cars 350,000+ 250,000 No of Rides per day 7,50,000 2,00,000 Funding $900 million (VCs) $1 billion (Uber Technologies) Reach 102 cities 26 cities Cash Payment Yes No Advance Booking Yes No Cancellation Fee No Yes Surge Pricing Yes Yes International Presence Launching soon (Tie-ups with Didi in China and Lyft in US) Yes 3-wheeler (auto rickshaws) Yes No (Stopped in Nov 2015) Payment options Ola money (Can’t be used for other payments) payTM (people use it regularly)
  12. 12. OLA Ride Later option: Pre- Booking a cab UBER No Pre-booking available
  13. 13. OLA  24/7 Call center available for Safety of the Passengers  Helps to book cabs via a phone call  Emergency services such as an accident can be reported UBER  No call center available to reach out to immediately
  14. 14.  Ola has more visibility (OLA logo on cabs)  Uber has negligible visibility
  15. 15. OLA  Smaller hatchbacks for their attractive price to target middle class customer segment UBER No specific business model to use more smaller hatchbacks. Low cost Uber: uberX is still more expensive.
  16. 16. OLA Started buying its fleet of cars UBER Business model only as a taxi aggregator
  17. 17.  Ola Share  Option to share rides with only trusted contacts or friends  50% cheaper than regular cabs
  18. 18.  Tie up with corporates for employee pick up and drop services
  19. 19. Ola Auto • Cheaper • More convenient for shorter journeys
  20. 20.  Buying their fleet of cars -> dedicated drivers  Created network of manufacturers and financial institutions for drivers to buy cars  Set up a fund of USD 15 million to enable drivers to buy their own cars  Car insurance  Extra commission for first 10 rides for new drivers  Incentives for best rated drivers such as supporting child education
  21. 21. Collaborate with Restaurant Discovery Mobile Apps • Provide a cab booking option to a Zomato app user to go to his favorite restaurant BOOK A CAB Delhi B1-11, Connaught Place, Delhi - 1 Market Potential • 15 million Zomato app users • Approx. 5 million journeys to restaurants on Zomato platform • Average journey cost to a restaurant costs USD 1.5 Potential new revenue for Ola • USD 2.56 million
  22. 22. Collaborate with Event and Movie Ticket booking Mobile Apps • Provide a cab booking option to a BookMyShow app user to attend his favorite movie Delhi B1-11, Connaught Place, Delhi - 1 Reach your show in time! Book a cab Market Potential • BookMyShow sells 100 million tickets annually • Approx. 50 million journeys • Average journey cost to a multiplex/sports arena/theatre costs USD 1.5 Potential new revenue for Ola • USD 38.4 million annually
  23. 23. Collaborate with online marketplace Mobile Apps - Quikr • Provide a cab booking option to a Quikr app user to meet a potential seller Market Potential • USD 477 million – size of India’s classifieds market • 1.5 million – monthly transactions on Quikr • USD 1.5 – average journey cost to a potential seller Potential new revenue for Ola • USD 2.76 million annually Delhi B1-11, Connaught Place, Delhi - 1 Meet your seller ! Book a cab
  24. 24. Collaborate with Advertising Agencies to display in-vehicle Ads and Ad stickers  Provide in depth analytics based on – • location where ad displayed • approximate eyeballs attracted • duration of travel in peak hours In vehicle digital ads Sticker ads Analytics In depth analytics for advertisers Distance travelled during Ad display 90,000 eyeballs attracted today 7am 8am 9am
  25. 25. Analytics In depth analytics for advertisers Distance travelled during Ad display 90,000 eyeballs attracted today 7am 8am 9am Market Potential • Outdoor advertising in USD 15 billion industry in India Potential new revenue for Ola • USD 13.85 million annually
  26. 26. Introduce 2 wheeler taxis • Convenient mode of transport on crowded roads • Shorter journey times Market Potential • 70% vehicles on India roads are 2 wheelers • Average daily journey 15km per 2 wheeler Potential new revenue for Ola • USD 90.5 million annually
  27. 27. Introduce Cargo delivery services • Higher vehicle utilization • Incentive for drivers Market Potential • USD 6 billion – e retail market size in India • USD 0.3 billion – e retail logistics market size in India (increasing at 48% YOY) • Last mile logistics constitutes 53% of e retail logistics cost • 50% of last mile logistics deliveries provided by 3rd Party Logistics companies Potential new revenue for Ola • USD 82 million
  28. 28. Introduce truck aggregation platform for inter- city logistics • Higher visibility in supply chain • Higher utilization rate for long haul freight carriers and trucks . . . Market Potential • USD 90 billion – size of truck logistics market in India Potential new revenue for Ola • USD 74 million
  29. 29. Specialized vehicles enabling travel for the physically challenged • Inaccessible public transport systems • No dedicated pathways Market Potential • 11 million – number of physically challenged residing in markets in which OLA operates • USD 1.5 – average journey cost • 21 million – journeys made by physically challenged daily Potential new revenue for Ola • USD 33 million
  30. 30. Introduce emergency Ambulance services • Ambulances with advanced life-support facilities such as defibrillators, ventilators and drugs for use in critical or trauma-related cases Market Potential • Indian cities have 1 ambulance per 1,50,000 citizens • WHO suggests it to be at 1 ambulance per 1,00,000 citizens • USD 18 - Average revenue per trip
  31. 31. Lightweight App for tier 2 cities which can work on low internet connectivity • 90 Tier 2 cities and semi urban areas face internet connectivity issue - Tier 2 city -Metropolitan city . . . . . . . . . . . . . . . . . . . . .. . .. . . . . . . . . . . . . . . . . . .
  32. 32. Restaurant delivery using 2 wheeler taxis • Tie-ups with restaurants to deliver food • For higher profitability, 2 wheelers are best suited mode • Average food orders were USD 4.6 • OLA charged a commission of 10% from restaurants • OLA incurred cost of USD 0.76 per delivery • Unprofitable Previously was done using 4 wheeler taxis OLA Cafe Market Potential • Food delivery is a $2 billion industry in India (growing at 30% YOY) • $0.8 billion potential in cities where OLA operates in • Average order size is USD 6.15
  33. 33. OLA Store Grocery delivery using 2 wheeler taxis • To give higher profitability for each delivery, 2 wheelers are best suited mode • Competitors like Grofers, Peppertap use 2 wheelers for delivery which gives higher profitability as operating cost are low Previously was done using 4 wheeler taxis
  34. 34. • GPS tracker fitted on each cab • To give visibility about cab location incase a passenger’s smartphone shuts off GPS tracker
  35. 35. Low cost -> more users More users - > more taxis More taxis -> low pickup times Incentivised drivers -> more drivers Reliable pickups -> more users
  36. 36.  Taxy App- Compare Cabs Nearby › Giving options to customers to choose among various cabs
  37. 37. USD 337 million
  38. 38. Thank You!

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