Ola Cabs Business Strategy – Case Study

Ola Cabs Business Strategy 

Currently both Uber and Ola cabs are following the strategy of expanding their operations and gaining customer base in various cities in India. The motive is to gain market share and achieve economies of scale all the while providing a delightful customer experience to gain trust. They are not looking to be profitable but to be a household name in Taxi service in India.




All the discounts/ referrals/ coupons offered are aimed at exposing the customers to a “new mode” of transport in cities at affordable prices.
(Ola pays driver per km more than it charges the user while commission is a mere ₹100 only if driver makes more than ₹2000 a day, otherwise it pays them the difference so they at least earn ₹2000 daily.)
This kind of strategy is followed by many startups in their initial years, when they are still gaining traction with help from outside investors until they break even and become profitable by gaining a faithful customer base in the market.
Ola has already received $676.8M through six rounds of funding beginning with in the past four years while Google Ventures backed Uber has received over $8.8B for its worldwide operations. The last funding rounds for Uber totaled $2.0B and were aimed for expansions in Indian and Chinese Markets.
So to answer your question, they are not making money presently but are financed heavily by funding from various private players who see a huge potential in this market in future.

ABOUT OLA CABS

OLA CABS, popularly known as OLA, is an online cab services provider company based in India. Founded on 3rd December 2015 by Bhavish Aggarwal (currently CEO) and Ankit Bhati (currently CTO), the company started its operations from Mumbai and is now based in Bangalore. Now it has expanded to a network of more than 2,00,000 cars in more than 85 cities. In 2014, it also started on-demand auto-rickshaw services through its mobile app in Bangalore, Pune and few other cities.

OLA’S BUSINESS OBJECTIVE

OLA plans to focus on and expand in the Indian market only and is customizing its operations to suit the needs of it’s local market and customer base. The company’s focused approach has immensely helped it in driving its growth. Ola operates like a market place similar to the business model of e-commerce players like Amazon, Snapdeal and Flipkart. Any existing licensed cab owner can work for Ola Cabs. It is targeting to have on board a million driver partners. Ola aims to use technology to shake up and dominate the car-for-hire and wider transportation market in the country.

STRATEGY ADOPTED BY OLA 

Ola Cabs is today among the fastest growing businesses in India and all this happened over a short period of time because of the right marketing and operational strategies adopted by the company.

Ola’a initial offline CHALO NIKLO brand campaign did not get the desired results of increasing brand awareness. In October 2014, it chose to shift to online ‘Marketing on Facebook’ campaign to meet it’s specific business goals. Ola being an app-driven company, it made sense for the company to usher into Facebook network to meet it’s objectives such as increasing brand awareness as part of its CHALO NIKLO brand campaign on a wide scale in terms of targeting the right audience, increasing sales, boosting online searches and eventually increasing it’s customer base. Through the ‘Marketing on Facebook’ platform, the company took advantage of Facebook’s wide range of ad formats and customer targeting, both powerful tools of promoting brand and apps.

MOBILE APP AWARENESS

Facebook has designed a customized  mobile-specific methodology by the name of ‘App Analytics’, that enables apps to track and measure performance. It enabled Ola to track its performance and make informed decisions about reaching their customers.

To quote Arjun Kodlay, e-commerce lead at Facebook, ” Building app awareness is a three step-process: app discoverability, app re-engagement and app measurement. And Facebook provides solution for all three steps.”

AD CAMPAIGNS ON FACEBOOK

Ola started it’s campaign by running multiple Facebook ‘reach blocks’, which allow advertisers to reach all of a specified demographic on a given day. This included highly targeted video ads and photo ads also featuring content from its initial campaign CHALO NIKLO. It encouraged people to download Ola’s mobile app. Ola also directed people to its website with link ads in the News Feed and right column, and ran mobile app ads to drive people directly to its mobile app.

TARGETING THE RIGHT AUDIENCE

The company then focused on targeting specific audience. It’s target customers were above 21 years of age and it wanted to segment its audience by gender, and whether they accessed Facebook via mobile or desktop. It also made use of location-based targeting to reach to its potential customers specially in cities that were priority markets.

Sudarshan Gangrade, vice-president, marketing of Ola said “What makes Facebook so useful is its flexibility and targeting compared to other offline and online media. It allowed us to set up and launch our campaign very quickly on a massive scale. With help from Facebook’s excellent account team, we were able to continuously track and optimize our ads and reach people on a large-scale quickly.”

RESULTS ACHIEVED BY OLA

In January-March 2014, the monthly active users (MAU) on Facebook were 100 millions; by January-March 2015, this figure jumped to 125 millions. Out of this, 114 millions were mobile MAUs. Facebook, undoubtedly, offered Ola a captive audience in terms of the number of mobile users who could be used to promote their app. From when they started in 2010, the sales have doubled month on month and the graph is a super upward trend and surprisingly during the year 2014, the revenues grew more than 10 times over past year. They aim to cross the coveted $ 1 billion gross revenue by next quarter by clocking at least 5 lakh trips every day.

LEARNING

The advertising platform offered by Facebook allowed Ola to increase its customer base manifold. The App Analytics further helped Ola to segregate and target the customers based on their demographics and promote their app to the potential customers which in turn proved very beneficial in terms of tapping customers and increasing profits.

Ola’s decision of choosing Facebook as the advertising platform was a smart move to correspond its app awareness campaign as these days usage of mobile exceeds the usage of desktop, Facebook being used by most of the people through mobile app.

OLA Working Model:

1. Ola takes 15% of every ride from driver they provide.
2. Isn’t ola sound good idea. A company to invest in. Biggest source of income is it is attracting BIG INVESTORS. You might have listened ratan tata was investing in ola (Big investor = Huge money)

Oct 25, 2014, it raised $210 million from SoftBank Internet and Media Inc. and its existing investors.

3. Did you know how many employees did whatsapp had when Facebook acquired it. 44, I guess. How many will ola be having guessing that it is just in india.

On an average we pay 100 rs (5km ride +waiting+ride time) so 15 rs from 1 driver. Let us assume their are 1000 driver only ( assuming 11 drivers in 85 cities) which is far less than actual number which I don’t know and they take only 3 rides a day. It’s 45000 a day. ( no airport charges, no peak hour charges included)
Ola only provide coupon on increasing its client database.