Business Model Of Ola: How Does Ola Make Money?

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Cab services have expanded, particularly in India. Finding a taxi to take us where we're going has gotten a lot easier and more enjoyable.

With their on-demand taxi services, numerous businesses compete in the market. And Ola, a well-known corporation, has received the most preferences and votes in this election.

Being the largest domestic provider of ride-hailing services in India, Ola competes strongly with Uber on the international level.

Ola was established in December 2010 and is a part of ANI Technologies Pvt. Ltd. As an Indian transportation network company, Ola's business strategy focuses on providing taxi service, ride-hailing, and peer-to-peer ride-sharing.

After a disappointing car rental experience, Bhavish Aggarwal and Ankit Bhati, two IIT Bombay graduates, launched the company.

Ola Cabs is an on-demand digital taxi service that aims to offer effective transportation options. The needs of both the drivers and the clients are met by this two-way model.

OLA's success story

Bhavish Aggarwal and Ankit Bhati, two IIT graduates, founded OLA in December 2010

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Bhavish Aggarwal is primarily responsible for the conception of OLA Cabs. Bhavish, who received his degree from IIT Bombay, began working for Microsoft India before quitting after two years.

When he made a taxi reservation to travel from Bangalore to Bandipur, he got the inspiration to find OLA Cabs.

When Bhavish Aggarwal refused to pay him more money, the taxi driver stopped the vehicle in the middle of the road, tried to renegotiate the price with him, and then just left Bhavish there before driving away.

And Bhavish learned that this was the kind of experience most people have with taxi drivers after having his worst taxi experience.

At that point, Bhavish had the idea to create OLA Cabs with the goal of providing the public with a remarkable cab booking service in order to address their difficulties.

Policy used for need generation

Bhavish understood that in order to sustain the cab service industry over the long run, it is necessary to first generate demand among the public.

And you know what always works wonderfully to generate the need? Offering reduced prices, freebies, discounts, etc. Even if people don't truly need anything, they will still buy it because of the freebies or discounts. And Bhavish did exactly that.

Bhavish, therefore, introduced recommend and earn, receive $200 off your first ride, OLA ride at only 6km, OLA share, and other similar programs to that purpose.

He also reduced the price of OLA taxis even lower than Auto. And at that point, passengers began gradually switching to OLA cabs.

Even the drivers have a significant impact on OLA's business model. He then started offering incredible incentives to drivers. Some drivers reportedly made more than a million dollars each month!

Bhavish had everything planned out in advance; he was aware that he would eventually raise the cost of OLA rides while lowering the incentives for drivers.

However, he first needed to establish a following and win the confidence of people and drivers, which went according to his business plan. And that is the success tale of OLA Cabs!

Why is Ola's business model so successful?

Ola's business model gets its goals solely from its name.

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The Spanish word "Hola" is the source of the term "Ola." In English, this word is pronounced "hi."

The business aims to convey that using its services is as simple and welcoming as saying hello. Let's now examine how the business model supports the corporation in achieving this.

Ola originally began as a fleet of taxi rental businesses. In this industry, Ola has its own fleet of taxis. To reserve cabs, customers used to phone their call center.

Customers had access to cabs wherever and whenever they needed them. Cash was used to cover the cost of the ride at the end of the journey. Currently, Ola's business model is an app-based taxi aggregation service.

Now, rather than owning a fleet, it acts as an intermediary between passengers and taxi drivers. Ola uses a mobile app to connect commuters and drivers.

The way that this application operates is as follows:

  1. Customers must launch the Ola application, which uses a portable GPS to determine their location.

  1. The app then displays all of the surrounding taxis that are available, including small, prime, sedan, Ola share, etc.

  1. After that, the consumer must enter a drop-off area. The customer is made aware of the various prices based on the size of the cab through the application. A cab can be chosen based on a person's preferences and requirements.

  1. If the driver is currently logged in to the application, a request is then made to him via Ola's servers. If the driver agrees to the request, the consumer receives a confirmation and the driver's contact information. 

  1. The driver picks up the passenger at the designated pickup location, completes the trip, and collects payment using the preferred payment method

The company's main source of revenue comes from its cab booking service.

How does Ola make money?

Now let's talk about Ola's main revenue streams and how it manages to maximize revenues from each one.

Despite having a far lower valuation than Uber, Ola competes directly with it in India. Each of these businesses controls close to 50% of the ride-sharing market.

So what distinguishes Ola today? This is related to the business relationships and revenue numbers.

Here is how Ola Cabs generates revenue.

1. Commissions on rides

The ride commissions Ola receives are its primary source of cash. In this regard, Uber and other ride-sharing companies are comparable.

Ola charges its drivers a 20 to 30 percent commission per journey. The majority of Ola's profits in 2022 come from this.

The different fees that Ola levies are listed below:

  • Actual Travel Time: The travel time between the pick-up and drop-off locations is factored into the final fare. Within seconds, the full ride is calculated.
  • Waiting time: A waiting fee will be assessed when a customer orders and pays for a service but fails to show up within the scheduled arrival time.
  • Toll and Parking Fees: These depend on the toll crossings passed through and the type of parking service used.
  • Ola levies a cancellation fee if a customer decides to change their travel plans. The total cost of transportation includes service tax as well as other taxes.

2. Ola Credit Card

Ola and SBI bank have joined to introduce the Ola SBI Credit Card. Every regular Ola customer can benefit from this credit card because it gives a flat 7 percent reward on each journey with no maximums.

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The cashback is then added back to your Ola money wallet, which you can use to pay for other items that accept Ola money wallet purchases or for further journeys.

Through late fines, interest charges, EMI convenience fees, and other costs, the Ola Credit Card assists the business in generating additional money.

3. Cab advertising

The release of the Ola Prime Sedan created a new opportunity for digital advertising within the cabs. 

Ola collaborates with major corporations like Microsoft, Apple Music, and Sony Digital to provide in-cab entertainment via tablets installed in the vehicles.

Additionally, Ola permits banner advertising on its rented cabs, which increases the revenue made by each cab.

4. OLA Prime Play

This is a brand-new service offered by OLA. Customers who wish to use this service must reserve only Prime Play taxis, which feature tablets mounted behind the seats for mobile entertainment.

These taxis have higher rates than the standard ones. So, this is another way OLA generates revenue.

5. OLA Select

OLA offers its users OLA Select, a form of the membership program. OLA will charge its customers a specific sum of money for a specific period of time.

ola select

OLA Select has a number of advantages, such as no peak-hour pricing increases, no booking lines, and free internet for commuting.

6. Ola Corporate 

Ola created Ola Corporate, an enterprise solution, to lower the cost of business travel and simplify the reimbursement process.

7. Ola Food Delivery

In December 2017, Ola purchased Foodpanda India, debuting its concept centered on the food delivery industry. After 18 months since the acquisition, Foodpanda was sold off, and the workforce was reduced.

Ola intends to concentrate primarily on its own brands or cloud kitchens. One of the main revenue streams in that market area is the fixed share of each successful delivery.

8. Leasing CAB

In CAB leasing, OLA personally purchases the vehicle and employs the driver. The driver will be charged a set amount as security before OLA hands over the keys to the vehicle. OLA levies an extra commission from the driver for leasing cab services.

9. Ola cash

Ola has also released a wallet through which payments can be made to merchants or for its cab services, similar to PhonPe, PayTM, Mobikwik, etc.

ola money

With the rise in popularity of digital payments, Ola Money is revolutionizing the company's business strategy.

Ola's future plans

Ola first revealed its all-electric fleet in 2017 under the name Ola Electric Mobility Pvt. Ltd. By 2025, they hope to have completely eliminated gasoline-powered bikes

Through the anticipated markets for batteries and electric fleets, the company also anticipates it to be one of the greatest revenue sources.

In addition, Ola intends to manufacture drones, flying cars, and even kick scooters as part of its future mobility aspirations.

Ola Dash promises "Store to Door in 10 Minutes" delivery for customers who use the Ola app to order groceries. Ola wants to build a sizable customer base by offering quick and courteous deliveries of daily necessities.

Why is Ola so advanced?

OLA is a very user-friendly program. This is without a doubt its benefit. Utilization is simple. The following resources are needed by apps like Ola:

  • Business experts
  • UI/UX specialists
  • Web developers with Node.js skill
  • Android programmers that know Kotlin
  • iOS programmers proficient in Swift
  • Quality Assurance Engineers and Testers
  • A project manager

How to make an Ola-like app

There are millions of apps accessible on the Google Play and Apple App Stores, so you need to have a strong marketing plan to get your app to the top of the search results.

Ola-taxi-booking-app

This can be done for you by a seasoned and knowledgeable taxi app development business. Additionally, they offer the crucial pre-launch technical support needed for a successful launch of your app in app marketplaces

You won't be disappointed after spending a lot of time and money creating a taxi app thanks to this. 

As it is widely known, the importance of mobile application development has increased dramatically as more people access the internet through their smartphones.

Mobile applications have displayed remarkable development and innovation over the past ten years, along with giving businesses a powerful means of reaching a greater number of potential customers throughout the world.

So you can find several companies offering mobile app development services, 5StarDesigners Ltd. is a UK-based mobile app development company.

We serve professionally in all the areas of building a successful app. We are fully aware of how crucial UI/Ux is while creating mobile applications.

We think that having a strong UI/UX structure encourages users to stick around and eventually convert them into devoted clients.

Similar to how UI/UX design and development services for Ola like app development are concentrated on building interfaces that make every digital interaction a pleasant user experience.

Final word

There are numerous segments in both Ola's revenue model and business model.

The company has benefited from operating across numerous revenue streams since these divisions encourage clients to use the primary business division, the cab booking service.

In addition to this, the marketing strategy is also excellent, featuring a number of creative campaigns and activities.

The business goes above and beyond to please the clients, which works in tandem with Ola's business model to increase its success.

The fact that Ola has the greatest market share in the nation is proof that its business model is successful

Over the previous four years, the revenue has climbed by more than ten times. It is currently the biggest online taxi service provider in the nation.

About the author 

Peter Keszegh

Most people write this part in the third person but I won't. You're at the right place if you want to start or grow your online business. When I'm not busy scaling up my own or other people' businesses, you'll find me trying out new things and discovering new places. Connect with me on Facebook, just let me know how I can help.

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