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How OLA Makes Money? Research Team | Posted On Tuesday, July 23,2019, 03:00 PM

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How OLA Makes Money?



Ola cabs, an Indian transportation network company, offers peer-to-peer ridesharing, ride service hailing and also taxi and food delivery. OLA aims to gain considerable market share and increase revenue generation, by offering better customer experience and acquiring/ purchasing small car rental services. This article tries to explore how this Indian start-up operates and generates revenue.

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How OLA Makes Money?

How Does OLA Work?

Customer bookings are done through the OLA app. The app auto-detects your location through the mobile GPS. Once you enter the pickup and drop points, the app displays the cab options and pick-up time. You can select the cab of your choice and click on the RIDE NOW or RIDE LATER option, after checking the fares. The driver receives the ride request and once the ride is accepted by the driver, the customer gets confirmation along with all the details of the ride. As soon as you book the cab, an OTP is generated which must be shared with the driver for the trip to commence.

Ola Business Model:

OLA partners with drivers who sign up on their platform and shares a percentage of the ride fare with them. The percentage ranges from 15-20 depending on the city and the type of vehicle. OLA operates rentals as well as outstation services in all major cities in India, and the estimated rides are 3 million a day.

A staggering amount of revenue is generated by OLA under this business model. Few other factors affect the revenue generation. These factors are important while calculating the percentage of fare shared between OLA and the driver.

  • Trip Based Incentives: The drivers operating with OLA enjoy incentives each day, based on the number of trips they complete. The drivers can choose to login and logout as per choice. Generally, the drivers receive a commission for 12 rides or more.
  • OLA cabs charge an extra amount from passengers during peak hours.
  • Travel Time: OLA charges for each minute of travel after free X minutes.
  • Waiting Time: In case the driver holds up for refueling, extra charges are levied on the passenger as the system doesn’t detect the cause of waiting.
  • Service Tax: OLA deducts service tax, commission percentage, income tax applicable from the total fare and then remits the remaining amount to the driver’s bank account.

Services Offered by OLA:

OLA has a user-friendly app which allows customers choose from a variety of rides as displayed on their interface namely, auto, micro, mini, prime and share. The interface also allows customers to book cabs under rentals and outstation services and also luxury car rentals.

The app also displays a food delivery option. Generally, OLA operates 2 apps simultaneously while the trips are being coordinated. One is used by the customer to raise a request for booking the cab and the other is utilized by the taxi driver to receive the ride request. For each confirmed ride an OTP is generated. The customer must share the OTP with the driver and the driver would feed it into his app to start the ride.

Revenue Lines of OLA:

  • The fleet management through telesales
  • Payments made through OLA money
  • Revenue generated by OLA food delivery
  • Corporate and event tie-ups
  • Income outstation services
  • Car leasing to drivers
  • Peak time extra charges
  • Advertisements
  • Percentage commission from trips served through OLA app.

How Does OLA Share Work?

OLA Share helps you save money by sharing a cab with other passengers. To book OLA share, you must login to their app and enter your origin and destination, and the number of seats you wish to book. Based on your destination, OLA connects you to a ‘share cab’ travelling to a nearby location that has the available number of seats as requested.

The share option is a very profitable venture for OLA, where the driver earns almost twice the amount for the same ride as opposed to single rides. The share option helps passengers save a considerable amount. The driver can pick-up a maximum of 3 passengers for share rides and earn handsomely for the same distance covered. So it’s a win-win situation for the customer, the driver as well as OLA.

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