Ola Cabs: Dominating India and Challenging Uber at Global Level

Jeffrey Funk Business Models
Jeffrey Funk Business ModelsAssociate Professor um National University of SIngapore
Ola Cabs: Dominating India and Challenging Uber at Global Level
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
 Higher population - 65% below the age of 35
 Mobile Internet users ~67% mobile penetration
Population:
1.26 billion
 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
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
Ola Cabs: Dominating India and Challenging Uber at Global Level
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
Higher vehicle
utilization
Worry free cab
maintenance
Extra income Flexible work hours
Driver Training
Ola Cabs: Dominating India and Challenging Uber at Global Level
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
Ola Cabs: Dominating India and Challenging Uber at Global Level
 Cabs
› Taxi aggregators: Uber, Easy Taxi
› Fleet Operators: Meru
 2 wheelers Taxis – Baxi and M-Taxi
 Three wheeler aggregator – Jugnoo
In India, private cars can’t be used as taxis
So yes, business model is same
But OLA has a higher market share
Why?
• First mover advantage
• Highest funded start up
• Wider reach
• More taxis
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)
Ola Cabs: Dominating India and Challenging Uber at Global Level
OLA
Ride Later option: Pre-
Booking a cab
UBER
No Pre-booking
available
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
 Ola has more
visibility (OLA logo
on cabs)
 Uber has negligible
visibility
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.
OLA
Started buying its
fleet of cars
UBER
Business model only
as a taxi aggregator
Ola Cabs: Dominating India and Challenging Uber at Global Level
 Ola Share
 Option to share rides with only trusted contacts or friends
 50% cheaper than regular cabs
 Tie up with corporates for employee pick up and
drop services
Ola Auto
• Cheaper
• More convenient for shorter
journeys
 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
Ola Cabs: Dominating India and Challenging Uber at Global Level
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
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
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
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
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
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
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
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
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
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
Ola Cabs: Dominating India and Challenging Uber at Global Level
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
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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
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
• GPS tracker fitted on each cab
• To give visibility about cab location incase
a passenger’s smartphone shuts off
GPS tracker
Low cost ->
more users
More users -
> more taxis
More taxis ->
low pickup
times
Incentivised
drivers ->
more drivers
Reliable
pickups ->
more users
 Taxy App- Compare Cabs Nearby
› Giving options to customers to choose among
various cabs
USD 337 million
Thank You!
1 von 46

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Ola Cabs: Dominating India and Challenging Uber at Global Level

  • 2. 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
  • 3.  Higher population - 65% below the age of 35  Mobile Internet users ~67% mobile penetration Population: 1.26 billion
  • 4.  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
  • 5. 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
  • 7. 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
  • 8. Higher vehicle utilization Worry free cab maintenance Extra income Flexible work hours Driver Training
  • 10. 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
  • 12.  Cabs › Taxi aggregators: Uber, Easy Taxi › Fleet Operators: Meru  2 wheelers Taxis – Baxi and M-Taxi  Three wheeler aggregator – Jugnoo
  • 13. In India, private cars can’t be used as taxis So yes, business model is same But OLA has a higher market share Why?
  • 14. • First mover advantage • Highest funded start up • Wider reach • More taxis
  • 15. 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)
  • 17. OLA Ride Later option: Pre- Booking a cab UBER No Pre-booking available
  • 18. 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
  • 19.  Ola has more visibility (OLA logo on cabs)  Uber has negligible visibility
  • 20. 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.
  • 21. OLA Started buying its fleet of cars UBER Business model only as a taxi aggregator
  • 23.  Ola Share  Option to share rides with only trusted contacts or friends  50% cheaper than regular cabs
  • 24.  Tie up with corporates for employee pick up and drop services
  • 25. Ola Auto • Cheaper • More convenient for shorter journeys
  • 26.  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
  • 28. 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
  • 29. 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
  • 30. 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
  • 31. 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
  • 32. 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
  • 33. 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
  • 34. 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
  • 35. 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
  • 36. 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
  • 37. 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
  • 39. 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 . . . . . . . . . . . . . . . . . . . . .. . .. . . . . . . . . . . . . . . . . . .
  • 40. 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
  • 41. 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
  • 42. • GPS tracker fitted on each cab • To give visibility about cab location incase a passenger’s smartphone shuts off GPS tracker
  • 43. Low cost -> more users More users - > more taxis More taxis -> low pickup times Incentivised drivers -> more drivers Reliable pickups -> more users
  • 44.  Taxy App- Compare Cabs Nearby › Giving options to customers to choose among various cabs