Cab Aggregator OLA Trims Investment in Foodpanda

Key Highlights

Ola plans to make its private-label brands the Cornerstone Business Solutions for development

Foodpanda reduced marketing and customer acquisition by 2/3rds

Foodpanda’s India business in an all-stock deal in 2017

 

OLA is one of India’s most well-funded tech start-up application. It was found on 3rd December 2010 by two IIT Bombay graduates, Bhavish Aggarwal, and Ankit Bhati. Bhavish in partnership with Ankit Bhati started OLA Cabs in Mumbai and is now headquartered in Bangalore. 

Ola is currently available in major cities such as Mumbai, Delhi, Pune, Chennai, Hyderabad, and over 180 cities. In 2018, Ola expanded to the international market and launched it in Australia, New Zealand, and the United Kingdom. The company also introduced auto-rickshaw (tuk-tuk) services in the streets of Liverpool, United Kingdom.

Ola has not only bisected its cash burn at his food trade, Foodpanda, and plans to make its private-label brands the Cornerstone Business Solutions for development. Foodpanda will focus target on running the business more cost-saving by aiming at its private labels and cloud kitchens which consists The Great Khichdi Experiment, FLRT brands, and Love made and carry on with grasping Ola’s customer base. Some of the product team employees have been shifted back to Ola, as last year they were moved to Foodpanda. 

“Early this year, Foodpanda reduced marketing and customer acquisition by 2/3rds, in line with Ola’s de-prioritization strategy for the business in terms of funding. The internal supposition will drop by 60% by the business growth will continue orderly.” said the executive of Ola. 

Ola had acquired food delivery app company Foodpanda’s India business in an all-stock deal in 2017. The taxi aggregator acquired the Berlin-based food ordering and delivery firm 95% stake in Foodpanda for 29 million (INR 200.7 crore). At that time Ola had assured that they will invest $200 million in their food delivery business and scale the business. But by far, there has not been any follow-on investment in the company even after its competitors raised an enormous amount of money. 

Last year, Foodpanda was also running its campaign with pricing deserts from as low as Re. 1 to biryani for Rs. 79 ($1) with no minimum order value. Ola has also acquired cloud kitchen network called Hola Chef. 

“Our target is to build India’s biggest cloud kitchen network that will be a big step in further upgrading the food experience for our users,” said Foodpanda’s CEO Pranay Jivrajka. 

Foodpanda is Ola’s second attempt at food delivery services. In 2015, Ola has launched Ola Cafe, which later got shut down. 

Ola is planning to expand across the United Kingdom by the end of this year. Ola’s approach in the UK is a bit odd. It will not just provide commuters with the chance to book private hire vehicles (PHVs) but also black cabs. They are also planning to provide other types of transport, such as Auto-rickshaw, on the same platform in the future. The company has already obtained a license in South Wales and Manchester.

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