India’s Ola, which has expanded to select international markets and set ambitious goals for its electric vehicles business, is struggling with selling food. So it is making major changes to its food business.
The ride-hailing giant is pivoting Foodpanda, the Indian business of the food delivery startup it acquired in late 2017, to focus on in-house food brands, sources familiar with the matter told TechCrunch. Unlike market leaders Zomato and Naspers-backed Swiggy that work with tens of thousands of restaurants to deliver food, Foodpanda will now focus on expanding its own portfolio of private labels, sources said.
Ola currently has over 50 kitchens and four private labels — Flrt, The Khichdi Experiment, Lovemade and Grandma’s Kitchen — that cover items such as shakes, biryani, and khichri, a dish from the Indian subcontinent made from rice and lentils. They operate in Bengaluru, Delhi, Mumbai, Pune, and Chennai. The pivot comes as Foodpanda finds competition from Zomato and Swiggy unsustainable, one of the sources said. Local newspaper Mint reported earlier today that Ola was suspending Foodpanda’s business in India.
“As part of our ongoing business repurposing initiatives, we are focused on building a portfolio of own food brands and curated food offerings through our fast expanding network of kitchens. Many of these offerings are already available in all major cities through the Ola and Foodpanda apps. We continue to invest in expanding our facilities and kitchens, as well as our portfolio of food offerings for customers. We remain committed to our mission of building a superior food experience for millions of our customers,” a company spokesperson said in a statement.
Foodpanda, which operates in more than 10 other markets under a different owner — DeliveryHero — remains fully operational outside of India.
After acquiring the India business of Foodpanda, Ola’s second foray into food business, the company aggressively tried to court customers by offering heavy discounts in early 2018. The company said then that it would invest $200 million in Foodpanda business. But later in 2018, the discounts began to run thin as Ola revised its strategy for the food business, one of the sources added.
The move comes as Zomato and Swiggy remain locked in a fierce battle in India, leaving little room for anyone without deep pockets and strong commitment. Uber has attempted to sell off its UberEats business in India to either of the two giants, but failed to get a deal, people familiar with the matter said. The San Francisco-headquartered firm, which went public earlier this month, has since cut its spendings budget for UberEats in India, a source familiar with the matter said.
Ola, which leads the ride-hailing market in India, has struggled with food business in the past, too. In 2015, it launched OlaCafe, a food delivery service that did not take off and was shut down a year later.
As of September last year, Foodpanda was processing about 3 million orders a month, compared to Swiggy and Zomato, both of which claim to handle over 30 million orders in the same period.
According to Mint, Ola has terminated contracts of most of its 1,500 food delivery partners, and laid off about 40 people. As of Wednesday morning (local time), the vast majority of restaurants listed on Foodpanda and Ola apps were not servicing in major cities.
India has emerged as one of the largest food-technology markets globally in recent years. It could be worth up to $2.5 billion by 2021, according to consulting firm RedSeer.
Source: TechCrunch
