Bowing to the pressure that comes after simultaneously launching into too many verticals, Ola, best known for its cab aggregation service, is shutting down its food-delivery service ‘Ola Cafe’.
The service was started barely a year ago and follows upon the heels of Ola Store, the group’s grocery delivery service. The icon for Ola Cafe has disappeared from the Ola app and users from various cities have confirmed that they are no longer able to use the service. We expect an official announcement on the subject, soon.
Ola’s story is nothing new though. Startups over the whole ecosystem are reeling under pressure as investors tighten their purse strings, leaving them to rely heavily upon the revenues generated by business — which in many cases, is insufficient to cover costs.
Grocery and food delivery have in particular, been some of the worst hit sectors. We had multiple grocery based ventures call it quits in recent times — notably, Flipkart which downed then shutters for its grocery shop a couple of weeks ago and Grofers, which after huge investments, has pulled back operations from most cities.
Coming back to Ola, it was alleged that rather like the company’s primary business model — i.e. cab aggregation — the food delivery service was also something taken out of Ubers book — namely, by copying Ubereats. However, the company has refuted such claims time and again.
Meanwhile, Ola will continue to focus its attention upon it chief forte, the cab and taxi aggregation business, where most reports still put it down as having a lions share of the market. As per Ola’s own claims, the company along with its subsidiary taxiforsure, supplies the needs of 78 percent of the consumers in the niche.
Finally, the shutting down of Ola Cafe is again, a cruel reminder of the fact that favorable market conditions and size, and burgeoning investor interest are not the only factors that need to be considered while launching into a new vertical. While the former is subject to changes and is far from being the deciding factor, the latter is fickle at best.
The food and groceries market in India is estimated to touch $480 Billion by 2020 and investors have pumped in in North of INR 800 crores into the niche, yet you have grocery and food based startups shutting shop left and right.
Low margins, complications with delivery resulting into bad service and most importantly, a decided lack of consumer interest — who except for the very busy, are still cool with buying groceries and picking up food while taking their daily walk — have been some of the most significant factors keeping this niche from taking off in the country.
Ola Cafe was undoubtedly a good try and certain sections of the populace, particularly those living in the metros, stood to benefit much from the service. However, the attempt by one of India’s largest unicorn, seems to have closed down — at least for now — due to a consumer base and market that wasn’t quite ready to receive it.We can only hope that Ola uses whatever it’s learned from its experience to perfect and reintroduce the service, in the future.