Business Model of Ola (2020), How does Ola make money?

 Nowadays taxi business is emerging at a very fast pace and many are excited to know about the most popular taxi business model like ola business model.

Yes! Ola has changed the traditional way of hiring a taxi for commuting to the office, parties, shopping or anywhere in the local area.

We all know that one of the most popular ride-hailing and widely used taxi services are Ola taxi service and many entrepreneurs started digging the Ola business model to recreate such a popular taxi service to retain their taxi business in this transportation business industry.

Ola grabbed its massive customer base for its taxi business and became a very successful and one of the leading taxi services around many major cities in India with its rigid business model.

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In this article, we will discuss the Ola business model to know more about its successful taxi app ola and its service.

 

Facts about Ola

Ola is an online taxi booking app which is owned by the organization named ANI technologies. It is an Indian based company with head office in Bengaluru. Customers book this online taxi-hailing or ride-hailing service via Ola taxi app installed on smartphones and the respective drivers reach their destination.

At the beginning of its taxi service, they worked as taxi providers to their customers without any taxi booking app. The customers used to make calls to their support or call center team to book the taxi by providing the date, time, pick up address and the support team used to arrange the taxi with a driver to their customer’s address. After the trip is completed the customers used to pay the ride fare in cash to the drivers.

Once they came to know about the broad use of Android and iOS applications among their customers, they switched over to the app-based model and launched their Ola taxi booking app and driver’s app to communicate with each other with more comfort.

 

Founders and Funding of Ola

Valuation: According to the last fundraised, the value of the company is around USD 6.2 Billion.
Funding of Ola: Approximately around $3.3 billion as per the latest data.
Founders of Ola: Ola was founded in the year 2010 and it was founded by Ankit Bhati and Bhavish Aggarwal.

 

Ola Business and Revenue Model

To know about the Ola business and revenue model, firstly you should understand how Ola works and it looks very similar to the Uber app.

Source: Business Strategy Hub

 

How does Ola Work?

As already discussed Ola is an online taxi booking app and customers can book the taxi via this app by enabling the GPS. Ola app will be able to auto-detect the customer location via GPS service. The various categories of the cabs are shown in the app.

The available categories like (Mini, Sedan, Prime, Ola Share, State Transport Taxi, etc) will be listed as per the customer location. Customers will be allowed to choose from the category and should click on Ride Now to confirm the booking.

The request placed by the customers is shared with the driver app if the driver is available online and it is shared via the Ola server. If the driver accepts the request, you will get to know the confirmation message and can also track the driver via the map with all the details about the driver.

Once the ride is completed the money will be debited from the wallet. Incase if the ride is canceled, the money wallet amount is not debited.

 

The Business Model of Ola

There are various revenue lines for Ola. The most important thing is a certain percentage of the trip commission earned. Usually, the commission percentage ranges from 15-20% which depends upon the vehicle category and city.
The revenue lines for the Ola company are as follows and these revenue lines show how Ola Business makes money.

• Trip Commission

The trip commission is charged by Ola from the trips accomplished via its on-demand app. The percentage of the commission depends upon various factors like the city and the vehicle category.
The other factors which decide the total trip commission as follows:

Total time of travel: Ride time is calculated and charged for the minutes by Ola and they also provide certain free minutes for its customers.

Cost per KM: It charges according to the distance traveled (Kms) apart from the fixed initial distance fare. It also depends upon the type of vehicle chosen.

Demand for Cabs: The demand of the cab has a significant impact on the rate. Ola usually raises the cost per km travelled. Ola generates high business revenue when there is more demand for cabs.

Fare for waiting time: It is charged if the driver had to wait for the customers.

Peak time fare: During peak hours the charges differ and it also depends upon the vehicle category that you have chosen. This also includes the above-discussed fare.

Scheduled ride fare: Advance is charged for all the rides that are scheduled for later use.

Ola Service tax: It is imposed on the final trip fare.

Ola Access fees: For auto rides, this fee is charged.

How Ola Fee for convenience: It is fare charged for providing entertainment like games in the cab.

Fare for Airport ride: Ola Charges a Fee for an airport ride.

Cancellation fare: Ola Charged under certain conditions of the canceled ride.

Once the ride is completed, the amount is deducted from ola wallet money and the same will be credited to the driver. In case if the payment is via cash, then the amount will be deducted from the driver’s wallet and the same and it will be included in the driver’s payout section.

• Ola Wallet Money

Ola also introduced its wallet just like other online wallets introduced by the payment gateways like PayTM, PhonePe, etc. The wallet is incor[porated with the payment services of Ola and it contributes to the Ola revenue line.

• Cab Advertisement Commissions

It offers the advertisement pamphlets, brochures to promote other company products and they charge a commission for promoting their business via the Ola platform. This commission also contributes to the revenue of Ola.

• Cab Leasing

Ola initiated this program to lease the cabs for its drivers. The drivers need to pay an initial amount and security deposit which is refundable by Ola. A fixed daily rental is charged to drivers of Ola where the travel fare is provided to the driver.

• Credit Card of Ola

On combining with Visa and SBI, Ola has initiated a credit card which is named as Ola Money SBI card. It offers benefits to its customers and also contributes to the ola revenue.

• Corporate tie-Up

Ola collaborates with various corporates to promote their services and also makes the corporate employees to be engaged and make use of the services of Ola by offering discounts for the travel fare. With these Corporate tie-ups, it helps to enhance the sales volume.

• Ola Food delivery

Ola incorporated with online food delivery services like Food Panda and soon it is expected to join with other online food delivery services like UberEats, Swiggy to enhance its business revenue.

• Prime Play

To enhance the services of Ola, it joined with Sony, Microsoft to introduce the prime play or entertainments in the cab and the extra fare is charged for the convenience offered during the ride.

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Conclusion

Hope in this article, you will be able to find the Ola business model and how does it work by looking into the above revenue lines. This business model provides a complete solution to reach the destination and making use of the GPS enabled Ola booking app by its massive customers.

This has finally taken the Ola services to restructure mobility for its huge customer base worldwide. 

Like Ola, Uber is one of the Top Taxi Booking Service App in the world. Here is a detailed Write-Up on Uber Business Model for you to understand the working structure of a Taxi Booking App.