OLA Business model
Today we’ll disucss about ola and uber business model.
I know you already know about them
What do they do? they have a taxi business
Ola is our indian based startup
and uber is international
So i’ll talk about ola more
and less in uber because we are indians
And our audience is india centeric
See if i want to start my taxi business
Most important thing i need is taxi and a driver
and from where do i get the money?
If i invest money in buying taxi in the inital stage
Ola says that they have around 5 lakh registered driver
Now it means
5 lakh taxis , how did they do this investment?
They came with a model that
You need to have a driver and a car
and we’ll give you commission
and you need to give us some percentage of the revenue
This seems interesting
We get to know that on some rides
If we drive 12 hours then this much money
this much incentive.
and can earn around 1 lakh.
Drivers got fascinated by this
and some who were wise
CA people
What did they do? they put their own cars and hired an employee
On EMI
EMi of around 10,000
and hired an employee in 20,000
and he’ll get 5000 incentive.
and used to track their employees , this lead to a network of 10-15 cars
and they earned thousands and lakhs from this
Everything was going fine till now
For drivers, this thing is good
But ola uber give us discount coupons
and first ride freea
and 6rs/km
Cheaper than auto
How were they paying for this?
Basically they were in loss.
In the last financial year 2015, they beared the loss of 2300 crore.
I’ll tell you in more details.
About their profit and loss.
Salaries amount was around 381 crore.
and advertising cost 437crore
and cost on tech was 120 crore.
What about the other expenses?
SO they tried to analyse this
In this financial year, they increased the percentage of incentives.
Now 5 lakh people are linked with them
That EMI trap
What happened here
People who used to earn 1 lakh, now they earn 35000
32000
If they want to earn 1 lakh then they have to work for 24 hours.
Which is not possible.
What happened here, they hired their own drivers
their own cabs.
And they just need to give them commision
and they’ll earn profit.
In this financial year, we’ll get all the details of their profit and loss
According to me
Their loss margin has decreased
In the initial stages
People used to prefer auto than cabs
And before auto ,people prefer auto
Then metro came
If you are getting a cab in 6rs
and 3 people can easily seat in a cab
Why wouldn’t people use cabs?
Now when people are tilted towards cabs
One thing Economies of scale
THere was a person who used to take 10 rounds of driving
10 hours
and now he has work of 16 hours, so here he can earn more
So ola and uber
Brought a revolution where they tried to let people switch from auto to cab
So according to me
This is a very profitable business model
In starting they did bear the loss of 2300 crore.
it’s a big loss and their valuation
Decreased after they asked for funding.
Why did it happen? because of the loss
Now you’ll see it’s valuation will increase.
Because it’s loss is less.
Now let’s talk about some strategic decision
Means they acquired some startup
First they did in 2015
Taxiforsure
Taxiforsure had a good marketing image
They acquired them
and people get to know about ola and uber.
That was the time when ola and uber was highlighted in the eyes of people
Because they bought taxiforsure
and in the same year
They bought the jio tag also
Basically it’s computer system
No. of km and total amount
All the software system was designed by jio tag
GPS tracking and everything
So they are getting ROI from the money they invested in 2015
JIO spent 2 lakh crore
On the spectrum but
They’ll get the ROI from now
__________________ Gauhar ALI
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