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Ola Scales Down Food Delivery Ambition For The Third Time; To Focus On Quick Commerce

Ola Scales Down Food Delivery Ambition For The Third Time; To Focus On Quick Commerce

In 2015, Ola started Ola Cafes and shut down a year later. In 2017, it acquired Foodpanda, but shut down the business and laid off the company employees

It restarted the food delivery business with cloud kitchen partnerships but is now looking to sell the kitchen equipment and prioritise Ola Dash

Already late to the party, Ola Dash only started business in January 2022 alongside Zomato

The quick commerce wave has replaced the hyperlocal commerce module within the tech ecosystem. It has also affected IPO-bound mobility giant Ola, which is now reportedly looking to scale down its food delivery business to focus on quick commerce.

This is the third time that Ola has deprioritised its food delivery business to focus on something else. In 2015, it started Ola Cafes, to take on Uber Eats and provide food delivery services. The business, alongside Ola Stores – its grocery delivery business, was shut down a year later. 

Later the mobility giant acquired foodtech startup Foodpanda to strengthen its food delivery. But, the business failed to return the expected numbers and Ola’s foodtech business was running in hindsight, operating only around 50 cloud kitchens across the country. Thus, Ola shut down Foodpanda India too, and laid off its employees, 

It then pivoted to certain flagship food brands such as Khichdi Experiment, The Biryani Experiment, Paratha Experiment, The Daily Diner, Nashtha Express and The Pizza Place, among others. 

The company then had set up 50 cloud kitchens, opted for a multichannel approach across the country including via pop stores, acquired public transportation startup Ridlr and was looking to acquire Freshmenu to scale the foodtech business to more than 500 cloud kitchens. Eventually, its deal with Freshmenu did not fall through. 

This time, as it plans to descale the foodtech business, reports suggest that the mobility company will sell most of its cloud kitchen equipment at up to 30-50% discount. 

An Ola spokesperson was unavailable to comment.

The startup reportedly intends to focus on its quick commerce venture Ola Dash as the quick commerce segment is the centre of attention. 

The Quick Commerce Bubble & Its Busting Danger

Valued at $700 Mn currently, the quick commerce industry has newer models from Zomato and Ola besides Blinkit, Zepto, Swiggy Instamart and Dunzo. Zomato founder Deepinder Goyal recently introduced the company’s 10-minute food delivery programme, Zomato Instant.

The fulfilment of the quick delivery promise would rely on a dense finishing stations’ network, which will be located close to high-demand customer neighbourhoods. Interestingly, the model could not prove successful on its first pilot in Gurugram, and the company had to halt its expansion plans.

Grofers (now BlinkIt) introduced the ‘magic-like’ model and invited flak over the model and clarified that the company only delivers to areas within a 2 km radius of a grocery store. 

The quick commerce model has been repeatedly questioned over driver safety including being under stress, facing minor accidents over speedy and rash driving, possible penalisation over delivery lags and over-the-top targets.

The likes of Zomato and Swiggy are also facing the threat of poaching of their delivery personnel by Zepto and Dunzo and others. The outrage against the lack of income stability and job security has also forced the government to form new policies. 

Ola’s foodtech failure story can be attributed to a delay in the company entering the segment. So, as Ola intends to lay focus on quick commerce – a segment marred with inefficiency, questionable tactics and no regulatory policies in place, it will be interesting to see how quickly things turn around (for good) with Ola Dash.