How To Make Money With Ola Cabs

Last updated: Feb 9, 2020

Company: Ola Cabs
CEO: Bhavish Aggarwal
Year founded: 2010
Headquarter: Bengaluru, India
Number of Employees (Dec 2018): 8,134
Type: Private
Valuation (May 2019): $6.2 Billion
Annual Revenue (FY2018): Rs 2,222.6 crores
Profit | Net income (FY2018): Rs 2,842.2 crore

Ola Cabs

When it comes to reaching your destinations on time, several on-demand taxi services would probably come into your mind. Undoubtedly, one of them would be Ola. India's largest domestic ride-hailing service company and Uber's greatest rival in India, Ola was founded in 2011, offering efficient transportation services to people.

Based on the two-sided network model, Ola connects customers seeking on-demand transportation with driver partners through a mobile app.

Ola serves millions of customers every day in over 169 cities. There are over 125 million users registered at Ola currently. The services of Ola are also effective in Australia, New Zealand, and the United Kingdom.

Let's dig into Ola's business model canvas to explore the company in depth and find out how Ola makes money.

Business Model Canvas of Ola

1. Customer Segments of Ola

There are two customer segments of Ola:

Users of taxi service:

City Taxi – Everyday commuters who want to book a cab to reach from one place to other, people who don't like to drive instead enjoy working while on the go.
Outstation or intercity Taxi – Friends and Families who want to travel to some place together for outstation travel.
Rentals – People who enjoy driving has an option to rent a car for as little as 1 hour or up to 12 hours.
Ola Corporate – Corporate customers who want to manage employee travels (pick/drop services), insurance, expenses, and invoices through a centralized portal or dashboard.

Drivers (taxi service providers):

Driver partners owning eligible cars, who provides taxi services and earn through the Ola platform.

2. Value Propositions of Ola

The value propositions of Ola are as follows:

For Passengers

its affordable and lean fares
high-quality service and convenient rides
Certified drivers
Criminal background check
active customer support system
advance booking
multiple stops facility
hourly packages for rental cabs, share and express rides,
zero wait time with Ola Select membership program
cashless rides and
in-cab entertainment with Ola Play

For Drivers partners:

Choose your own working hours
Access to more customers
Instant booking
Daily Payments
24/7 helpline support
Lease cars get free car maintenance and
Run and manage the fleet of cars

3. Customer Relationships of Ola

The customer relationships of Ola can be gauged by the pleasant experiences and satisfaction of the customers and driver partners.

Self-Serve App – Ola app is mostly a self-serve portal with 24/7 customer support.

Promotions offer – it maintains relationships with customers by offering them referrals credit points, various offers for their first ride, credits points if a trip is delayed or canceled by any reason, and many other promotions and discount offers.

In-App and Live Services – Ola provides 24/7 call and emergency (SOS) alert button in the app for exceptional customer service and support.

4. Channels of Ola

The channels of Ola include:

Self-Serve – its hi-tech mobile application available on iOS, Android, and Windows. It also utilizes SMS and emails notifications to work with customers and driver partners.
Partner Channel – Other delivery channels are its extensive range of vehicles that include autos, bikes, micro, mini, Prime Sedan, Prime SUV, Prime Play, LUX, E-Rick, and Kaali Peeli.
Social Media – It also efficiently manages its social media pages and thrive in communications with customers. It keeps asking for feedback from customers to improve their services

5. Key Resources of Ola

The key resources of Ola are:

Technology – its mobile technology platform
Brand Reputation – Ola has created significant brand equity for itself.
Employees – its employees and staff working in the domains of IT, sales, marketing, customer support, and finance and business management
Engaged Community – its vibrant community of passengers and drivers that uses Ola services every day.
Driver partners – Experienced, trained, and qualified drivers are also its key resources.

6. Key Activities of Ola

Major key activities of Ola are given as below:

Platform growth – Managing and updating mobile app on a constant basis
Manage daily operations, which includes –
1. Ensuring safe, secure, prompt and convenient rides
2. Hiring, verifying and training of drivers
3. Providing time-to-time incentives and commissions to drivers
4. Performing car audits to ensure the quality, value, and maintenance of vehicles
Manage relationship – Managing relationships with customers, partners, and investors
Government Compliance – Understanding and complying government regulations and RTO rules in the areas where it's operating
Sales & Marketing – Planning and executing promotion and marketing techniques – both online and offline
Manage Finance, which includes
1. Raising funds & develop an effective pricing strategy
2. Administrating financial, operational, and functional tasks
3. Performing surprise audits occasionally to ensure that the services are being delivered up to par, meeting the company's expectations.

7. Key Partners of Ola

The key partners of Ola include

Ola Cabs Driver

Driver partners:

Car drivers
Car fleet owners
private taxi owners

Operational partners:

Technology enablement partners such as GPS service provider, Internet service provider, electronic or mobile wallet, platform hosting company, etc.

Extended Partners:

Event organizers
Corporate association
Auto – Insurance companies
Automotive maintenance companies
Drug and background check companies
Driving school or training institutes

8. Cost Structure of Ola

Ola's primary sources of costs include:

Platform cost:
- New feature development
Sales & Marketing:
- promotion and branding costs
- discount offers and deals
- partners and community events
Operational cost:
- Employee salaries
- legal and accounting expenses
- Commission to drivers
- infrastructure cost,
- web/app hosting cost
- Insurance cost
- Maintenance of lease vehicle
- Credit card/ mobile wallet processing cost
- day-to-day office maintenance expenses
Assets cost:
- Computer equipment – phones, tablets, etc.

9. Revenue Streams of Ola

Let's look at Ola's revenue sources in more detail.

How does Ola make money?

The question ' how does Ola make money ' would be answered once we take a dive into its revenue streams. Ola earns through various ways which are described as below:

Trip commission

Ola charges percentage commission from the trips being carried out through its platform. It charges trip fares from customers through several factors (below), some of these factors are applicable based on location, car type, etc.

Base fare – it's an initial flat fare
Distance per km Fare – is charged based on distance traveled per km, after initial fixed fare distance (differs from car to car and geographical location)
Ride time fare – A fare charged based on the total time of the trip from pick up to drop off. Customers will be charged based on travel time in minutes.
Wait time fare – is imposed if the driver had to wait
Peak Pricing – During high demands for cabs, Ola increases the rates per km. It may also increase the rate of slabs depending on the type of car to generate more revenue. Your charges will vary according to the car you have selected at the time of booking. These charges include a fixed rate per km, per km travel charges and driver's waiting time.
Advance booking fees – there is an advance booking fee that is charged on all rides that are booked for later use.
Access fees – it's a fee for auto rides
Convenience fee – its applicable to ride that provides in-cab entertainment
Airport fees – surcharge fees are charged in case of airport pickup/ drop off
Tool and parking fees – it's based on the usage, when applicable
A cancelation fee may be charged for canceled rides in certain conditions (fees vary as per rides and regions).
Service Tax – is also charged on the entire trip fare

Once the travel fare is charged to your Ola Money Wallet, it will be credited to the driver's account. If it is paid in cash, the same amount will be deducted and included in driver's payment for the trips he has conducted.

Moreover, Ola deducts the service tax from customers' payment firstly. Then, it charges commissions percentage. Finally, it pays the remaining amount to the driver's bank account within 2 working days.

An estimated commission that Ola charges per trip:

Introductory promotion: 7.5 % commission for new drivers for a limited period
In India: Ola charges about 20% commission
In the UK: Ola charges 10% for metered taxi and 15% for Private Hire Vehicle(PHV)
In New Zealand: Ola charges about 18% commission
In Australia: Ola charges about 15 – 22.5% commission

Also read: what Uber charges for commission?

2. Ola Money

Ola has also introduced its money wallet just like PayTM wallet and FreeCharge wallet. Through Ola's virtual wallet service, payments can be made at various vendor touch points. The wallet also incorporates its own services of cab-hailing payments. This contributes to the revenue of Ola.

3. In-cab promotions and advertisement commissions

Brochures, pamphlets, or other advertising tools are given to commuters. Live streaming ads from different advertisers are played to promote different company's products and services. Ola charges commissions for these promotions.

4. Cab leasing program

Ola has started a cab leasing program for its driver partners. It buys cars and leases them out to drivers to enhance the loyalty of drivers towards Ola.

There is an initial fee of Rs 4000 non-refundable fees and Rs 21,000 – 31,000 refundable security deposit. Also, a fixed daily fee amount of Rs 700 -1150 is charged to the drivers for running the vehicle while the travel fare revenue goes to the driver. So, it can be an aggregate of both fixed fee and trip-based commission.

5. Ola Credit Card

Ola has introduced a credit card "Ola Money SBI Card" in association with SBI and Visa. The card offers many benefits and rewards to its consumers.

6. Corporate accounts

Ola performs several business meetings with the heads of various organizations where they promote Ola and convince corporate managers and employees to use Ola cabs for their business travels. Reduced rates are charged from these corporates as demand increases. With these B2B tie-ups, Ola earns a higher sales volume.

7. Delivery service – FoodPanda

With FoodPanda acquisition, Ola successfully entered into online food delivery segment. Ola is expected to take on UberEats and Swiggy, increase its profits, and thus develop a strong position in the food delivery market soon.

8. Ola Prime Play

Ola has made a partnership with Microsoft, Sony Liv, Apple Music, Audio Compass, etc. to provide commuters in-cab personalized entertainment. Ola makes money on some of those rides providing entertainment services. Ola is charging passengers Rs 20 as a convenience fee for in-cab entertainment.

Final Word

The taxi based model of Ola has served it quite well as their services are earnestly welcomed by almost everyone. An ultimate solution to reach destination promptly, conveniently and safely, Ola has truly redefined mobility for billions of people worldwide.

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