OLA CASE STUDY

BY AJIT SINGH
ABOUT OLA

OLA was founded in January, 2011, by Two IIT Bombay Alumni Bhavish Aggarwal (CEO) &
Ankit Bhati (CTO – Chief Technical Officer) and presently based in Bangalore. • Name has
been derived from a spanish word – Hola means Hello. • OLA ensures convenient,
transparent and quick service • Customers can access OLA on the web, through the mobile
app or through the customer service centre. • OLA does not own or operate its own fleet,
but aggregates small operators and single vehicle owners. • OLA’s GPS enabled mobile app
for the driver helps receive booking requests from customers in the vicinity and navigate to
the customer’s pickup point with utermost ease.
FUNDING

• OLA is present in 110 cities with over 6 lakh vehicles, includes: – Cabs – Two-wheeler
(on rent & with Driver - Bangalore) – Auto Rickshaw. • Over 70% of the bookings come
through the mobile app! • Ola's revenue is growing at an average of 30% month on
month. • 2000 cars get added on the platform every month pan-India. • Ola has raised
~$70mn through venture capital funds and has prestigious investors like Tiger Global,
Matrix Partners, Steadview Capital, Sequoia Capital and ‘Ratan Tata’.
BUSINESS MODEL

• If you think Ola is taxi business then you are wrong. It is just a taxi aggregator which
means Ola act as an entity between end user and cab drivers. They partner with private
taxi owners, provide them technical equipments and process for booking through Ola
app. This is very beneficial for both customer and driver as customer can book a cab for
few Kilometers without paying half day or full day cab fare and drivers gets more
customers.
MICRO-ENTREPRENEURS

• OLA has transformed lives of Drivers and motivated them to become Owner well
known as DCO – Driver cum Operator. • OLA also works with leading car
manufacturers and financial institutions to help drivers buy their own cars at huge
discounts - nurturing micro-entrepreneurship. • Payment may be received through cash,
Paytm, OlaMoney, etc. from customers. • DCO : OLA ratio – 80% : 20% – OLA has
recently increased its commission from 15% to 20%. – OLA also provides ‘Minimum
Business Guarantee’ (MBG)* to drivers to secure their earnings.
REVENUE MODEL

• OLA ensures that every driver earns Rs. 1300 per day in 10 bookings which is MBG -
Minimum Business Guarantee. • OLA compensates by adding money to Driver’s account
linked with OLA after deducting 20% commission If driver fails to meet MBG. • OLA also
charges 1x, 1.5x, 2x of normal fare during peak hours which are usually between 7 am to
11 am and 4 pm to 8 pm. • Different fares for different categories of vehicle: – Ola Share
– Micro – Mini – Prime & – Auto .
• Example – Micro Category • Base Fare: Rs. 28 /- • Per Km: Rs. 6 /- • Ride Time: Re. 1 per
minute (time consumed in travelling) • Taxes: 7.8% (Service Tax + Swach Bharat)
MBG CONCEPT

• MBG Means Minimum Business Guarantee by OLA

(A) Rs. 1300 Cash received from customers by driver in a day
(B) Rs. 900 Difference
(C) (A – B) Rs. 400 20 % Commission on MBG (i.e. 20 % of Rs. 1300) Rs. 260 Compensation to
Drive Cum Operator (400 - 260) Rs. 140 *** In case, Driver receives Rs. 1300 as cash
amount from customers; Rs. 260 as 20 % commission amount shall be charged by company
on daily basis and OLA shall deduct the amount from DCO’s account when customer pays
through OlaMoney and Paytm, etc. else it reflects in minus.
OLA VS UBER VS

• Uber started its operation in 2013 which is 3 year after Ola has been launched. So Ola
already have head start of 3 years. But with the Uber’s global experience Uber have
made their way into Indian market, result of which Uber has slowly captured 35-40% of
market share in India while Ola is claiming 60% of market share.
PRICE WAR

• Uber and Ola has unleashed a price war which has resulted in a increase in consumer
and upped the stakes of Investors. In attempt to counter Uber’s prices Ola raise around
500 million dollars and launched a new category called Ola micro for low fare rides.
Priced at 6 Rs per km Micro is cheaper than Ola go.
• Ola claims to have 4,50,000 vehicles on the ola platform where Ubers claims the number
to be 3,50,000.
• According to industry experts Ola’s focus has wavered from last year since the company
has launched new food and grocery delivery(Ola Store) and dabbled in shuttle service
where Uber is singularly focusing on the core business to catch up Ola.
JOURNEY SO FAR

• After its inception in 2010 Ola has claims to have 6 lakhs vehicle on ola platforms across
the country. Ola serves in 110 cities in India by Ola fleet. Ola has 6000 plus employees
and more than 6 lakhs driver partners building mobility for a billion Indians across the
country