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Ola cancels food delivery to focus on ridesharing

Shifting focus to fend off Uber's advances, Indian ridesharing company closes Ola Café, Ola Store

Technology trends and news by Ronny Kerr
March 10, 2016
Short URL: http://vator.tv/n/43e4

On-demand food delivery is hard. We know this because of increasing, widening market consolidation.

Ola Cabs, the India-based on-demand ride-sharing service, announced this week that it is shutting down Ola Café and Ola Store, its two food delivery apps that launched as experiments a year ago.

The shuttering of the food delivery services demonstrates a renewal of focus for Ola, which just closed a $500 million Series F round of funding this past November. The company has secured over $1.3 billion in venture capital to date. The last round, which valued Ola at $5 billion, also saw contribution from Didi Kuaidi, Uber's main competitor in China.

The news is telling for the broader food delivery market considering that here in the states and abroad there are droves of startups and late-stage growth companies whose entire missions rest on doing solely what Ola Café or Ola Store sought to do.

Ola Café—which served Mumbai, Bangalore, Hyderabad, and Delhi—was a restaurant food delivery service akin to DoorDash, EAT24 (from Yelp), GrubHub-Seamless, Munchery, and Just Eat. The last of these, London-based Just Eat has performed relatively well, and has demonstrated an appetite for further growth by recently snapping up food delivery platforms in Spain, Italy, Brazil, and Mexico from Rocket Internet. DoorDash, on the other hand, has struggled to close new funding at a $1 billion valuation, with investors now more conservatively pegging the valuation at $700 million.

Ola Store served as Ola’s grocery delivery app, more in line with Instacart, Google Express, Amazon Fresh, Good Eggs, and offerings from supermarket chains (Mollie Stone's, Safeway, etc.). Instacart was last valued at $2 billion, though it’s still unclear how well it can compete with services provided by tech titans like Google and Amazon.

Beyond the above named, there's an army of startups seeking to get their slice of the food delivery pie, including Big Basket, Blue Apron, Din, Gobble, HelloFresh, Kitchit, Maple, PepperTap, Plated, SpoonRocket, Sprig, Sun Basket, and Zesty. Even Uber, which competes with Ola for the ridesharing market in India, has pursued food delivery through its UberEATS service, currently available in a dozen major U.S. cities.

In the blog post announcing the shutdown of Ola Café and Ola Store, the company tones down the news as the end of an experiment and sign that the company is shifting its focus to the ridesharing market in India:

"Ola Café and Ola Store were two such experiments that brought you food and groceries from restaurants and stores around you. Your response has been overwhelming and we’d like to believe that you have had a wonderful experience with Ola Café and Ola Store! As we strengthen our focus on building mobility for a billion people, we are drawing these two experiments to a close and taking learnings from these to serve you better in the time to come."

Given the news, I can’t help but wonder whether Uber will try to fill the void by bringing UberEATS to the Indian market. When I reached out to the company to ask about this, a spokesperson told me there are "no immediate plans" for UberEATS in India.


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