Ola: How an Indian startup gave massive competition to world’s largest taxi company

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Ola is not a new term for anyone these days. Ola has easily replaced the word “taxi” from our lives. No one is booking a taxi nowadays, everyone is booking “An Ola”. And all the credit goes to the Ola Founders- Mr. Bhavish Aggarwal and Mr. Ankit Bhati. 

They have correctly proven the words of Winston S Churchill- “Success is not final; failure is not fatal: It is the courage to continue that counts.”

They overcame various obstacles and failures that tried making away when they were trying to make a dream into reality.

 

Introduction: 

Managing and growing a start-up is never an easy challenge. One needs to constantly work hard to improve from the bottom lines and keep the employees along with the investors happy. Getting funds from the investors is never an easy task but when one knows what the investors are looking for; building a powerful team is much more likely to find a start-up success. OlaCabs is an online market place that is into providing online taxi services. They started from Mumbai but soon shifted to India’s Silicon Valley: Bangalore. The man behind the Ola, Bhavish Aggarwal has become the talk of the town. Even as a millionaire, he does not own a car and takes a cab everywhere he goes.

 

Indian Taxi Market: 

The Indian taxi market is hugely fragmented. It is divided into two major segments: organized markets and unorganized markets. The organized markets are valued at $500 million whereas the unorganized markets are valued at $8.5 billion. Organized sector owns only 40% of the market share whereas the unorganized sector owns 60% of the market share. The organized sector is classified into owners, affiliates, and aggregators. The owner’s segment includes pure car rental companies like Meru. The affiliates are the multiple car rental companies that provide tour packages. The aggregators are the latest phenomenon brought up by start-ups like Olacabs.

The Indian taxi market has witnessed tremendous growth with nearly ten large companies operating in the service model. But in this cluster, only three companies could stand out the customer service, driver behavior, timely arrivals, and product uniqueness. These companies include OlaCabs, TaxiForSure, and Uber. 

 

Ola- Company Profile: 

Ola is an Indian Private Company. Ola is used as a trade-name which is registered under the parent company ANI Technologies Private Limited. It uses the latest technology to provide a fast and efficient cab service. Bhavish Agarwal and Ankit Bhati founded OlaCabs in December 2010. 

Bhavish Aggarwal
Bhavish Aggarwal

Bhavish is a B. Tech graduate from IIT Bombay in Computer Science in 2008. He worked in Bangalore for two years for Microsoft Research. But he always aimed of being an entrepreneur. So, he started an online company named Olatrip.com that offered short duration trips. During a business travel to Bandipur from Bangalore, he rented a car which turned out to be a bad experience because the driver wanted a renegotiation in the middle of the journey and abandoned him in the mid-way of the journey. But things happen for a reason and this head to the idea of online cab bookings for extraordinary experience and satisfaction of the customers. So, he started his new start-up venture which today is known as OlaCabs. 

Later the co-founder of OlaCabs Ankit Bhati joined hands with Bhavish. His parents did not support the idea of being a ‘travel agent’ until they got their first angel broking from the founders of Snapdeal founders Kunak Bahl, Rehan Yar Khan, and Anupam Mittal.

To make an idea into success, many helping hands joined together. Usha Loutongbam became the product manager. The first Android version was designed by Ajinkya Potdar and iOS was designed by Khushal Bokadey. Both of them were interns but did an excellent job and rolled out the app release in real quick time.

According to Bhavish the best and the safest model that one can adopt to run a business is, running a business with owing “zero” inventory.

 

Name, Tagline, and Logo: 

The name Ola is inspired by the Spanish word ‘Hola’ which translates to ‘Hello’ in English. It is to indicate that the Ola services are as friendly and as easy as saying a hello. The logo is simply styled and the “O” represents a tyre. 

 

The Product: 

Over the years, Ola is trying to expand its range of services. The various ranges of ride options vary from budget to luxury, subscriptions, entertainment and more to compete with the various competitors in the market especially beyond the pricing strategies.  OlaCabs also launched Ola Money, a mobile wallet that helps in easy pay for the rides.

The recent addition is Ola Corporate. These services not only help the companies to keep a check on the travel expenses of the employees but also helps ensues employee safety.

 

Business and Revenue Model: 

The Ola operates its business on a simple concept. It does not own any of the cabs and only acts as a facilitator in the cab booking services. Drivers with valid permits and verified by the transport authorities only can sign up with Ola. They can be self-employed or can we be working with an operator. They can access to the Ola driver app on their smartphone after getting registered with Ola. A driver is given access only when a positive due diligence report is received. The drivers enjoy the flexibility of their login time. Ola charges a commission of average 15% on the bookings done through the app.

 

Customer Acquisition: 

Ola is currently operating in three international markets. They are Australia, the United Kingdom, and New Zealand. Almost forty thousand drivers are registered on the app in Australia spreading their operations in about seven cities. Over a hundred cities are covered all over India by Ola.

 

Funding: 

Ola is an eight-year-old start-up. Its current valuation is considered to be more than $6 billion. It is the third-highest valued customer internet company in India.

As per the data, Ola has raised a total fund of $3 billion through debt financing and secondary market. Its major shareholders include Softbank group (26.1%), Tiger Global (15.94%), Tencent (10.39%), Matrix Partners (8.75%) and DST Global (6.72%).

 

Competitors: 

The major competitor of Ola stands with Uber. Uber is the world’s most financed start-up. Its current valuation is considered to be $62 billion? It has raised more than $15 billion in debt and equity.

The other major competitors include Zoom cars, Carzonrent and Meru cabs. Rapido is a bike taxi which is slowly acquiring Ola’s market share.

 

Acquisitions and Mergers: 

Ola has acquired various small venture start-ups. To name a few, the list includes TaxiForSure (taxi service based in Bangalore) which was acquired in March 2015 for an amount of $200 million. It also acquired Geotagg (a trip planning company that provided bus shuttle service) in November 2015 and Qarth (a mobile payments app) in March 2016. Later in April 2018, it acquired Ridlr (a real-time traffic updates app).

 

Marketing Mix of OlaCabs: 

1. Product: 

Ola has revolutionized the concept of traveling for the Indians. Booking a taxi has now become hassle-free as one can easily do so without stepping out. The diversified range from luxury to economic that Ola provides can be listed as under:

a. Ola Mini

b. Ola Sedan

c. Ola Prime

d. Ola Rental

e. Ola Outstation

Ola also started operations to include autos on a trial basis and it turned out to success. As a result, its operations were too expanded to various cities.

2. Place: 

Ola deals through an online network. The cabs can be easily booked through Ola website or through the app that can be downloaded through the Google Play Store. Ola started its operations from the metro city Mumbai in Maharashtra. It later shifted its base to Bangalore in Karnataka. By the year 2014, approximately two lakh cars were connected to the Ola network in a hundred cities across India.

3. Price: 

Ola is currently valued at $6 million. The consolidated revenue shows a rise to 60.9% in the fiscal year ending on March 31st, 2018. Ola on its onset accepted payments through PayTm only but later included options for cash. Ola offers a comfortable ride through its air-conditioned cabs. The prices are flexible varying from its different range of vehicles which includes economic range, mid-range, and high range. It has placed its pricing policy in a way to gain a competitive advantage over its rival companies. Various promotional activities are conducted and incentives are provided to increase the customer base.

4. Promotion: 

Ola is the fastest growing rental companies in India because it has the first-mover advantage. It has an extensive marketing policy that has created high and positive brand awareness among its customers. Digital and print media are used to create awareness among customers. Some of them are mobiles, magazines, newspapers, and billboards. Social media platforms such as Twitter, Facebook, Instagram, and Blogs are also used. It has also created a partnership with TVF (The Viral Fever), an online web series platform in India to acquire customers from the existing fan base of TVF.

Incentives like free rides, 50% discount coupons, rupees fifty off, free rides for new members and other promotional codes are some of the incentives used to increase the customer base.

During the Chennai floods, Ola had launched its ferry services. Each ferry could accommodate 5 to 9 people per trip. It developed this service to help people reach home. It also helped to deliver essentials like food and water.

 

STP for OlaCabs: 

1. Segment: 

People who move from one place to another for any purpose.

2. Target Group: 

Customers who are in instant need of cabs.

3. Positioning: 

Using technology that provides high efficiency and maximum customer satisfaction.

 

SWOT Analysis for OlaCabs: 

1. Strengths:

a. First mover advantage

b. Acquisition of TaxiForSure

c. High promotion through online and print media

d. Effective network and huge customer base

e. Online application with rapid expansion

f. High investors g. High-quality service

2. Weaknesses: 

a. Any misbehavior by the drivers affects the image of the company as they are the ones who represent the face of the company b. With the increase in demand during the peak hours, cash-burning is high

3. Opportunities:

a. Acquisition of small players in the market

b. Shifting the customers towards convenience and creating its huge demand

c. Rise in the disposable income of people

d. Increase in the number of smartphone users

e. A huge share of the unorganized sector which increases the potential

4. Threats:

a. Lack of customer loyalty in the industry

b. Presence of various other players in the industry

c. A rise in competition

d. Lack of clear government regulations in developing countries like India

e. Uber, the major competitor has deep pockets that can burn cash heavily

 

Economic Strategy: 

Ola focuses on the target market by segregating its customers into different models which are suitable as per the customer budget and demand. These include Ola Mini, Ola Sedan, Ola Sedan, Ola Micro, Ola Prime, Ola Pink, carpooling for corporates, etc. Ola micro charges Rupees 6 per km with a base fare of rupees 40. Ola mini and Ola Sedan vary the base price prices from rupees 80 to 100. Ola pink was specially introduced for women to ensure women safety. The revenue is generated by supplying a large volume of services. Ola is the most preferred service as it offers the lowest price compared to the other aggregators in the system.

 

Conclusion: 

Ola is the largest cab service provider in the country today. It has successfully created a buzz about its brand in the market through public support. There is surely no looking back for Ola now as it has witnessed tremendous growth in the taxi market sector. Its revenue has increased by almost ten folds in the last four years. Ola now aims to provide the desired service to the people in the target market. Ola promotes its brand through both traditional and modern techniques. At the same time, it always keeps its name highlighted in social safety, social awareness events and promotion of acts of humanity. The key elements in the success of Ola are quick accessibility and efficiency.

So it can be said that Ola is and will always be a great platform for transportation as it offers easy booking and payment options for the customers along with flexible timings. Soon our groceries will be delivered at our doorsteps with ease. Kudos to the two genius Indians who made our lives simpler by providing such services at our doorsteps.

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Arun is a writer by day and a reader by night. He is on a mission to stamp out gobbledygook and to highlight the insider stories about startups and entrepreneurs around the country.

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