Today we will Talk about OLA business model.
I know you already know about what is OLA and what so they do? right?
Basically, They have a taxi business. and it is one of the fastest growing taxi service providers in India.
Ola is our INDIAN startup. okay, And there is a same company name UBER but it is international brand.
See if i want to start my taxi business,
So, the most important thing i required is a taxi and a driver right?
And from where do i get the money?
If i invest a lots of money in buying a taxi in the initial stage.
OLA says that they have around 5 lakh registered driver.
Now it means 5 lakh taxis, how did they do this investment?
Okay, so basically in this blog i will tell you, the case study of OLA,
How they made a brand viral all over India. OLA cabs branding strategy was targeted at expanding their operations.
And gaining costume 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.
Okay, now i am tell you about that Dark secrets of OLA that made them such a Massive Brand.
And is specially for all the aspiring entrepreneur and business owners, who want to know how to build a massive brand.
And in these blog we are going to discuss following points.
- About OLA History
- How to build a viral brand?
- Researching about Their competitors
- Objectives of Ola
- About Ola
- How does Ola work?
- Their profit and loss.
1. About OLA History
And How to combat competition., before i explain everything about OLA and the dark secrets ,
We need to revisit their history……
OLA started as a very normal tour operator company,
But.. in the Journey, they released that there was a massive opportunity
That was emerging in technology led CAB aggregation business and they Immediately jumped onto it.
Now, after raising the first round from it’s first set investors.
OLA had two options, first was, “do i become yet another brand among all other existing players like MERU,Easycab.”
And the second one is “do i become the only brand in the country”
And They decided the second one, they decided to kill everyone in the competition.
How did they do that?
Now, to achieve this, they again had two options, option one is,
” buy a huge fleet of cabs, train as many as drivers and then launch in the market”
And option two was,” build a viral brand, “And Ola did the second one.
Now it is very easily said than done. how to build a viral brand?
2. How to build a viral brand?
Let me explain it to you today. how they built their viral brand.
Now, you need to understand, you can not build a viral brand
on the basis of TV advertisements or newspaper advertisement or probably the hoardings that you see on the road.
A viral brand has a different way to build it and OLA understood it very their business life.
OLA knew that if they have to become a viral brand.
Customers have to become their Brand Ambassadors, the vendors,
vendors means the Driver partners have to become their Brand Ambassadors
And they Immediately started focusing only on that.
To build a viral brand at the customer side, they understood that.
The customer when he books a cab has multiple problems.
Understood what are the need of the customer,
The problem can be availability of the cab or the hygiene of the cab or the reliability of the cab.
Now, these were the normal problems that to customer used to speak about,
But there was one unspoken problem that Customers were bot speaking about and that is
The Burning problem of the customer was Price.
And they decided to give not discounts to the customers,
Not the discounts to the customers, they decided to give
Shocking price to the customer
like for example , if a customer staying in a city like a Bangalore,
Travelling from a MG road to a sarjapur on a normal day Would have to paid 200-250rs
But in 2012 when Ola was trying to become Big. they were offering this at 80-50 rs only.
Now, imagine, when you suddenly take a ride and get such a shocking price in front of you.
What is the first reaction?
First reaction that you will give is, you will go and discuss it with all of your friends.
Now, Ola knew that this was one of the best ways to become Viral.
Ola did not stop there, Ola did not make the customers their only brand ambassadors,
Ola said, i will also make you my salesperson.
Do you guys remember, a lot of you had gone and told your friends, why don’t you
Install the Ola app using my promo-code, you can use my promo code
And I will get a 25 rs discount and your friends were installing the app,
every body in the country installing the app using their family and promo code ,
In fact, a lot of people were using fake accounts to make Ola promo code
This becomes a big massive viral.
Now Ola was actually losing a lot of money at that point of time,
A lot people thought that Ola was probably foolish by doing that
But, what do you think? Ola did not know that the customers were exploiting them.
They knew it, but they said, let them exploit,
This is called Strategic loss of brands.
They knew that we are here to build a brand.
and all these problem can be take care in the later stages.
That one problem that could not be taken care is how to combat competition?
And these customers are helping them to do that.
How will the competition survive?
3. Researching about Their competitors.
Now, problem number one they solved, that they had customers installing and using their app, right?
But there was problem number 2 that on the Driver side,
Now, what was that problem.
Problem on the driver side was that, if you want a driver to come and join my platform or join my company,
I have to incentivise him, i have to give him more rides, longer km of run.
Now, Ola knew that they might not be able to do that initially.
So what did they do,
They again gave shocking treatment to these guys as well.
And the shocking things was shocking incentive treatment.
Foe customers they gave shocking price thing. and for vendors they gave shocking incentives.
Even if the driver partners who were fulfilling the rides,
They were not even getting 50-100-500 from the customer in return to a ride,
They were 5000-10,000-2000 incentive for doing 10-15-5 rides in a day.
Now, this become a viral at the operator side as well.
This is the value of a true brand, customers saying we want to use this brand,
Drivers telling other drivers, use this brand. see a lot of people will keep saying, that by giving discounts Ola become this big.
You have to understand that it is not the discount that made Ola this big, there were strategic marketing expenses
That Ola was ready to make in acquiring customers, in acquiring drivers. and in killing the competition,
Look, what they have achieved. is MERU existing anymore,
Easy-cab existing anymore, is tab-cab of Bombay existing anymore.
Most of them have either shut down or are on the verge of shutting down.
Ola has kind of created a monopoly from the Indian side,
4. Objectives of Ola
See, entire objective of this activity number one was app was app should get installed in every customer’s phone.
They got that objective fulfilled, and the second objective was kill the competition, they kind the competition. by doing what?
When the customers are not where will the competition be serving.
Not only that the hired part was, they were incentivising drivers.
So that they could choke the supply, choke the demand.Choke the supply.
If you choke the demand. competition dies, if you choke the supply customer has no option left,
There were days before when Ola and uber were there, that we used to
Find an auto driver and we used to will not go by meter, i want 50 rs more 30 rs more.
And we used to feel bad, and we all thought that Ola has solved that problem.
But Ola was really very smart, Ola took this problem to the next level.
Now, if don’t have the app and if you are not ordering from your phone.
You will see the autos going in front of you but they.
will not stop for you because they are stopping for those people who have installed their apps.
This led to a massive choke in the supply and demand. okay?
5. About Ola.
|Founded||3 December 2010|
|Products||A mobile app, website|
|Services||Vehicle for hire|
|Revenue||₹2,222 crore (US$310 million) (FY 2018)|
|Number of employees||4500 (2019)|
Ola Electric Mobility
6. How does Ola work?
They came with a model that, you need to have a driver and a car
And we will give you commission,and you need to give us some percentage of the revenue.
This seems interesting right?
so we get to know that on some rides, like if we drive 12 hours then a particular amount and incentive we earn.
and the interesting thing is we can earn up-to 1 lakh.
And on the other side there are some smart people, what they did?
They buy their own cars on EMI around 10,000.
And they hired an driver on rs.20,000 + 5000 incentive.
what they do is, they used to track their drivers, this lead to a network of 10-15 cars.
And they earned thousands and lakhs from this.
Okay, and you already know that OLA and UBER offer us discount coupons, first ride free and 6 rs per km.
And its actually cheaper than auto right?
Now, the question is How were OLA paying for this?
7. Their profit and loss.
You know Basically they were in loss.
In the financial year of 2015, they beard the loss of 2300 crore.
I will tell you in more details. about their profit and loss.
Now, first of all see, overall they provide salaries around 381 crore.
And in advertisement they spent around 437 crore and their cost on technology was 120 crore.
Now the questions is what about the other expenses? you now, in incentives.
So, they tried to analyse this and in financial year of 2016 they increased the percentage of incentives.
Now 5 lakh people are linked with them in that EMI trap.
So, now generally Who used to earn 1 lakh, now they earn around 35000 or 32000.
If they want to earn 1 lakh then they have to work for 24 hours. Normally which is not possible.
Now they started hired their own drivers and their own cabs.
And they just started to give them commission. and they started earning profit.
Some Strategic Decision
Now let’s talk about some strategic decision, means they acquired some startup.
First they did in 2015, and that is Taxiforsure.
Taxiforsure had already had a good marketing image, they Acquired them.
And people get to know about OLA and UBER. and that was the time when OLA and UBER was
Highlighted in the eyes of people, because they bought Taxiforsure.
And in the same year, in November 2015 they brought the JIO tag as well.
Basically it is a computer system, which shows number of Km and total amount.
And the software system , GPS tracking and everything was provided by jio tag.
So, they are getting ROI from the money the invested in 2015.
In the initial stages of India, people used to prefer auto than cabs and before auto, people prefer Buses.
Now, the point is, if you are getting a cab in 6 rs Then why wouldn’t people use cabs?
Now when people are tilted towards cabs. see, their is one thing called economies of scale.
Lets take an example, There was a person who used to take 10 rounds of driving like 10 hours per day.
And after some time he has work of 15 hours, so obviously here he can earn more money.
So, Ola and UBER brought a revolution where they tried to let people switch from auto to cab.
Now, according to me, this is a very profitable business model.
In starting they did bear the loss of 2300 crore. it is a big loss and their valuation decreased after they asked for funding.
Marketing Strategies Of OLA .
Their marketing strategy is not targeting at being profitable immediately
But to be a household name in a taxi service in India.
OLA operates like a marketplace similar to the business model of e-commerce players like Amazon, snap-deal and flipkart.
It is targeting to have on board a million driver partner.
Marketing strategy is the business overall game plan for reaching prospective consumers
And turning them into customers of the products or services the business provides.
A marketing strategy contains the company’s value proposition, key brand messaging among others.
Marketing strategy involves-
- Knowing your target customer
- Researching about your competitors
- Choosing the right channels
- Creating marketing goals
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