Over the past couple of years, the cab services have really grown, especially in a country like India. Remember the days, when we used to rely on public or local transport for going to places?
Cut to 2022, we are living in this mobile-first generation where from just the click of a button on your smartphone, a cab would be ready to pick you up from your location and drop you off at your desired destination- just a few clicks, that’s all you need to do.
As you must be aware, there are several companies competing in the market, offering on-demand ride-sharing taxi services. Today, we are going to talk about one of the most popular competitors in this market- Ola.
Ola Cabs, popularly known as Ola is India’s most profitable cab-sharing company. The company is headquartered in Bangalore and works in more than one business vertical like the used-car marketplace, and cloud kitchen services which have picked up pace during the COVID-19 induced lockdowns in India, and it even has its branches in the financial sector.
All in all, it is not just about cabs. Well, how can it be? Ola is the biggest competitor of Uber in the global marketplace and we are glad to tell you that the competition is pretty tough! Ola is known for its reasonable prices for offering on-demand ride-sharing services, that too through a simple mobile application, just like Uber.
The company was established back in 2011 with a pretty mainstream idea of providing the most convenient and easy ride to its customers from wherever they are to wherever they wish to be. As we spoke about its popularity in India, Ola is also a prominent market player in countries like the United Kingdom, New Zealand, and Australia. Ola is literally going places by simply providing convenient rides to millions of customers across the globe.
I’m sure you must have traveled in an Ola cab at some point in your life, or you could even be a regular traveler, but have you ever wondered how ride-sharing companies like Ola actually make money? It is quite interesting to understand how Ola makes money and if you are from a business background, this article will intrigue you to understand the working business model of Ola and the strategies they implement to stay relevant in the market where global competitors like Uber are giving them a cut-throat competition.
The India-based company, Ola was founded by IIT graduates Bhavish Aggarwal and Ankit Bhati. In the beginning, Ola did not employ the tech-savvy method of having a mobile application for the simple reason that India at that time was not a mobile-first company and there were no prominent internet services that everyone would have access to. Thus, they employed the next best option available to them and that was “Call Centers”. Yes, call centers were in, at that point in history. It must sound like old-age but it was what it was back then.
Customers would call up the Ola call center and employees would actually book a cab for the customer confirming the pick-up and drop locations. However, this is just a brief history of how the story of Ola began in India. Now in 2022, Ola has over 125 million active customers that are conveniently booking cabs every day through Ola’s user-friendly mobile application.
Let’s push the Skip button to how Ola actually makes money?
Ola’s business model: Everything you need to know
To understand the working business model of Ola, you need to understand its target audience first. Who is Ola targeting after all? Well, they are focusing on people who are anywhere in their teens up to old age, say 45-50 years. People who are financially independent, office-going, college students, or senior citizens who do not wish to drive on their own are the main target audience for Ola.
As I mentioned before, Ola was previously a Taxi-rental business but since 2015, it has completely changed its business model to a more user-friendly and acceptable digital way. Ola took great advantage of the ongoing wave of digitization in India and took a 180-degree approach to implement digital marketing. The company basically shifted from the call center business to online service, bridging the gap between customers and cab drivers. All of this is done through the Ola mobile application.
Ola mobile application works flawlessly and is hundred percent user-friendly when it comes to using the app. The application connect the customers with the available Ola Cab drivers. When you download the Ola app on your mobile device, the customers can simply register and the app will detect the customer’s location via GPS. The customer puts in their destination and then various cab options with different price tiers are shown to the customer. The user can select their desired cab from several taxi categories with their respective price tiers that would appear on the app.
The customer will choose the most suitable cab from the list, the Ola cab driver will verify the customer through a simple OTP sent to the registered number. And, you are good to go!
The USP of Ola that makes it a more popular choice in India is the cheaper price tag it offers as compared to other market competitors. However, there are a few streams through which Ola generates revenue and some of them are mentioned below:
1. Trip commission charges:
Ola generates revenue by taking a percentage as commission in the total tax fare earned from the cab ride. You must have noticed, if your waiting time exceeds 5-10 minutes, your fare automatically increases. That is because Ola is charging a commission on you getting late after the driver has arrived at the location. This is one way that Ola earns commission and generates revenue.
2. Credit Cards:
Credit Cards are a medium of income for almost every brand as they offer some really attractive offers. Ola is no different! Every time a customer pays Ola cab fare through a credit card, he/she receives some great offers from Ola and the credit card company on that expenditure. Is commission the new oil for Ola? Well, it looks like it. Yes, customers get great benefits and rewards on paying via credit card.
Moreover, since the pandemic began, more and more customers and even companies are encouraging digital payments, wither via Credit cards or UPI. Cash is an obsolete mode of payment in today’s day and age.
3. Corporate Deals:
Ola is known to join hands with various companies, endorsing brand associations and corporate deals to facilitate its business travels. Another great mode of generating revenue is through corporate and brand deals. Ola thrives in this business set-up as they keep the prices a little lower than usual, and in turn enjoy higher sales volume. Thus, generating higher revenue!
Mind you, Uber and other competitors do almost the same thing to generate revenue but it is the brand value that Ola has maintained over the years that bring recurring business to the company. Something to consider closely!
4. Food Delivery:
I couldn’t have imagined mentioning this point if it was 2019 or earlier, but here we are in 2022, post-pandemic. Times have changed and all this while since the first wave till now, Ola and other ride-sharing businesses have really taken a strong financial hit. If nobody is going anywhere, who will book a cab from Ola and how will they earn? This issue got Ola thinking in other directions and the ride-sharing company entered the food delivery business.
This business has proven to save Ola from drowning. It has kept Ola relevant the entire time during the pandemic and introduced a new revenue stream for the company that once started as a call center for cab services, something like this.
Food delivery is a relevant business as it generates employment opportunities in times when people are being fired due to the COVID-19 crisis and it surely enhances the gross profit of the business.
To be honest, Ola has faced some criticism concerning safety and driver concerns. There have been talks that Ola is not transparent enough when it comes to charging for its services. Nevertheless, the ride-sharing company is tackling those criticisms with utmost honesty and trying to improve its services through several means and modes. I mean, what else can you actually ask for?
Ola’s prices are reasonable and they are making sure that every ride is safe, convenient, and enjoyable. In the post-pandemic era, you can see on the Ola app the COVID-19 vaccination status of the driver. It gives credibility to the customers that they are safe and most cabs in today’s time are fully covered and separated from the driver with transparent sheets as a precautionary measure against the spread of Coronavirus.
Keeping these steps in mind, it is easy to say that, Ola has gained an enormous amount of success in the past few years and its easy application makes it much more convenient for users to book a can to their desired destination.
As mentioned by Ola, its ultimate goal is to provide extraordinary care, convenience, and safety to its customers. Ola has really refined its strategies over the years, especially in terms of technology and marketing.
Today, you can see Ola everywhere as it is the first choice for millions of people. in addition to this, the company has even signed some incredible business deals over the years and is backed by the most credible financers in the world.
What do you think about Ola? What do you think will be the future of Ola? Will it only pertain to food delivery and ride-hailing services or it can go places like Ola Boat and Ola Plane in the coming future? Do let us know in the comments down below.