Business Model of Ola: India’s Leading Unicorn

Quick Read

 

The Ola business model integrates ride-hailing and electric mobility solutions. This business model of Ola case study examines Ola’s revenue streams, market strategies, and growth, showcasing how Ola’s business model sustains its leadership in the mobility sector.

In our last case study, we went through the entire marketing strategy of Red Bull, but in this one we will focus our attention on the business model of Ola, India’s leading ride-hailing and mobility platform.

Ola Cabs have completely revolutionized the way India travels and have become a crowd favorite due to their convenience and efficiency.

They allow people to avoid daily arguments and haggling with auto drivers who refuse to go by the meter. This ease of use has significantly improved the daily commute for many.

Not only this, but Ola also extends its offerings like micro-insurance and credit-led payments through Ola Financial Services and a range of owned food brands through India’s largest network of kitchens under its Food business.

Also, the company’s core offerings in India is supplemented by its electric vehicle arm, Ola Electric, India’s largest fleet management business, and Ola Skilling, which aims to enable millions of livelihood opportunities for India’s youth.

There are many new marketing strategies used by the company that you can learn from this case study of Ola. Join us to deepen your knowledge of Ola’s business model.

About Ola

Ola was incorporated in 2010, and since then has been steadily making its presence felt in the personal commute markets. The transportation network company founded by Bhavish Aggarwal and Ankit Bhati is among one of the fastest-growing businesses in the country. Ola was valued at a whopping $6.5 billion USD in 2019 when it raised funding from vehicle maker Hyundai last year and is considered one of the fastest up and coming startups in the country, if not the world.

Its most prominent competitor is Uber, which is a dominant international player in the same space. Ola has been funded by many prominent VC firms and investment banks such as the famous Softbank.

In May 2024, Ola laid off 1,400 employees, over 33 percent of its workforce, due to the coronavirus pandemic, which caused a significant slump during the lockdown. However, the company is now beginning to see signs of recovery.

With the Indian economy opening up almost entirely, the company is now seeing a recovery close to the pre-Covid level, with close to 100 per cent recovery in key cities during the festive season.

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Now let us continue with our exploration into the business model of Ola.

 

Ola Business Model: Updated Statistics

1. Number of Rides: Over 1 billion rides annually (Ola Annual Report, 2023).
2. Market Valuation: $7.3 billion as of 2023 (Crunchbase, 2023).
3. Ola Electric Sales: 150,000 electric scooters sold in 2022 (Ola Electric Report, 2023).
4. Active Users: 150 million active users globally (Ola Statistics, 2023).

 

Business Model of Ola – Ola Electric

Ola spun off its electric vehicle business into a separate unit called Ola Electric Mobility with US$56 million of funding capital in February 2019. The funding was provided by Tiger Global and Matrix India. Apart from electric vehicles, Ola Electric also works on charging solutions, EV batteries, and developing viable infrastructure to allow commercial EVs to operate at scale.

Ola Electric has launched its new electric scooter, the S1 in the Indian market. The Ola electric scooter will come in two variants, Ola S1 and Ola S1 Pro.

Both variants of the Ola Electric scooter feature a similar design that comprises a compact twin-pod headlight with an LED DRL ring, apron-mounted sleek LED indicators, a body-coloured front fender, curvy side panels, a sleek LED taillight, an external charging point at the back, and a split-style pillion grabrail. The Ola Electric scooter features 36-liter under-seat storage that can accommodate two open-face helmets. The color palette for the base model includes five options while the Pro variant is available in 10 choices.

Mechanical specifications on both scooters include an electric motor that produces a peak output of 8.5kW and maximum torque of 58Nm. The battery capacity for the base variant and the Pro model stands at 2.98kW and 3.97kW, respectively. In terms of performance, the Ola S1 boasts a top speed of 90kmph and a range of 121km per charge. The Ola S1 Pro, on the other hand, can achieve a top speed of 115kmph and features a range of 181km per charge.

The company announced on 6 May 2019 that Ratan Tata had invested an undisclosed amount in Ola Electric as part of its Series A round of funding.

 

Business Model of Ola

Ola is a logistics and transportation facilitator, acting as a middleman between daily commuters and local transportation providers. The business model of Ola is called a gig economy, i.e., an ecosphere of service providers and user demand which is facilitated by one organisation (in this case Ola), for which the organisation takes a commission on every successful mediation. Since its inception, Ola has expanded its scope as a logistics provider to include multiple new verticals from manufacturing to skills provision.

To further understand the different aspects of the business model of Ola, let us start by learning more about its service offerings.

Ola Business Model: Market Share & Analysis

Ola commands a significant share of the ride-hailing market in India, competing closely with Uber. (By the way, you read all about Uber in this business model of Uber case study). It holds approximately 55% of the market share, driven by its expansive service network and aggressive pricing strategies.

In the electric vehicle sector, Ola Electric is rapidly gaining traction, capitalising on the growing demand for sustainable transportation. Market analysis indicates strong growth potential, especially in urban areas where congestion and pollution are critical concerns.

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Ola Business Model: Product Offerings

Ola offers a wide range of services, including Ola Cabs, Ola Auto, Ola Bike, and Ola Rentals. In addition to ride-hailing, Ola Electric provides electric scooters aimed at reducing carbon emissions. The brand also offers food delivery through Ola Foods and financial services via Ola Money. These diversified offerings cater to various mobility and lifestyle needs, making Ola a comprehensive service provider.

Ola offers different levels of service, ranging from economic to luxury travel. The cabs are reserved through a mobile app and also through their website and the service accepts both cash and cashless payments with Ola money.

It claims to clock an average of more than 200,000 bookings per day and commands 70% of the market share in India as of 2014. As of 2019, the company has expanded to a network of more than 1.5 million drivers across 250 cities.

Ola Business Model: Target Audience

Ola’s target audience spans diverse demographics, including urban commuters, college students, and working professionals. Its ride-hailing services and attract users falling in the age range of 18-45, while Ola’s electric scooter marketing strategy appeals to environmentally conscious consumers and early adopters of electric vehicles. Ola’s competitive pricing and convenience make it popular among middle-class and affluent segments in metropolitan areas.

Ola Business Model: Funding & Investors

The Ola cab business model managed to raise significant amounts of funding from various investors, including SoftBank, Tiger Global, and Tencent. As of 2023, through this business model of Ola, the company was able to secure over $4 billion in funding. These investments have supported its expansion into new markets, technology development, and the launch of Ola Electric. The backing from high-profile investors underscores confidence in Ola’s business model and growth prospects.

Ola Case Study: Revenue Model

The revenue model of Ola revolves around commission from rides, rental services, and subscription fees for Ola Play and Ola Select. Ola Electric generates revenue through the sale of electric scooters and battery subscription plans. Additionally, Ola earns from financial services offered via Ola Money and food delivery charges from Ola Foods. These diverse revenue streams ensure a steady income flow.

Ola Case Study: Marketing Strategy

Ola’s marketing strategy focuses on digital advertising, social media engagement, and influencer partnerships. It leverages data analytics to personalise marketing campaigns and improve customer retention. Ola also runs promotional offers, discounts, and referral programs to attract new users. The marketing of Ola Electric highlights sustainability and innovation, appealing to eco-conscious consumers.

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Ola Case Study: Value Proposition

Ola’s value proposition includes convenience, affordability, and a wide range of services. For ride-hailing, it offers multiple vehicle options and flexible pricing. One big aspect of Ola’s business model is that it not only promises sustainable solutions but also cost-effective transportation. The brand’s commitment to safety, with features like SOS alerts and in-app customer support, enhances user trust and loyalty.

Ola Case Study: Operational Model

The business model of Ola operates through a vast network of driver-partners and regional hubs, ensuring efficient service delivery. Its operational model includes robust technology infrastructure, real-time data analytics, and a strong focus on customer service. Ola Electric’s operational model involves manufacturing electric scooters, setting up charging infrastructure, and providing after-sales support. This integrated approach ensures high service standards and customer satisfaction.

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Business Model of Ola: Strategic Alliances & Partnerships

Ola has formed strategic alliances with various companies to enhance its offerings and expand its market reach. Key partnerships that the business model of Ola managed to include various collaborations with automotive manufacturers, financial institutions, and technology firms. These alliances help Ola improve its service quality, introduce new features, and expand into new markets. Ola Electric’s partnerships focus on battery technology and charging infrastructure, crucial for its growth.

Business Model of Ola: Technological Innovations

Ola invests heavily in technological innovations to enhance its services. This includes AI-driven ride matching, real-time traffic analysis, and advanced safety features. Ola Electric focuses on innovative battery technology and smart vehicle features. These technological advancements improve user experience, operational efficiency, and safety standards, positioning Ola as a leader in mobility innovation.

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Business Model of Ola in India

India is the domestic market of Ola and its biggest source of revenue as well when compared to other regions. Since Ola took off in popularity, they have been on an acquisition spree to expand its scope of business offerings and fleet of logistics providers.

In March 2015, Ola Cabs acquired Bengaluru-based taxi service ‘TaxiForSure’ for approximately ₹12.37 billion. Later in the year in November, Ola further acquired Geotag, a trip-planning applications company, for an undisclosed sum.

In a move to expand large cab aggregation, Ola acquired struggling food tech company Foodpanda India with an eye on leveraging the growing food delivery segment business in December. In April 2018, Ola made its second acquisition with Ridlr, a public transport ticketing app. Later in August 2018, Ola financed Series A funding of the scooter rent startup Vogo, and again in December, invested another $100 million.

Corporate Social Responsibility (CSR)

Ola’s CSR initiatives focus on sustainable mobility, community development, and driver welfare. The brand runs various programs to support driver-partners, including financial aid and skill development. Ola Electric promotes environmental sustainability through its zero-emission vehicles. Additionally, Ola engages in community outreach programs to improve urban mobility infrastructure and support local communities.

 

Top Competitors

1. Uber: A global ride-hailing giant, Uber competes directly with Ola in various markets, offering similar services and advanced technology.
2. Lyft: Predominantly in the US, Lyft offers ride-hailing services and competes with Ola’s international expansion efforts.
3. Rapido: A bike-taxi service in India, Rapido competes with Ola Bike by providing affordable and quick transportation options.
4. Bounce: Specialising in scooter rentals, Bounce competes with Ola Electric in the urban mobility space, focusing on short-distance travel.
5. BluSmart: An electric ride-hailing service in India, BluSmart competes with Ola Electric by promoting sustainable transportation solutions.

 

Conclusion

Ola’s journey from a taxi-hailing app to a diversified mobility platform is a testament to its strategic vision. By expanding its services through acquisitions and strategic partnerships, Ola’s business model has been able to solidified its position as a dominant player in India’s transportation sector.

The company’s ability to adapt to changing market dynamics and invest in emerging technologies has been instrumental to its success. As India’s digital economy continues to evolve, Ola is well-positioned to capitalize on new opportunities and further expand its reach.

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Extra Details

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