Monday, 23 April, 2018

Ola acquires Foodpanda India for $200 mn, Pranay Jivrajka to head

Ola buys Foodpanda's India biz Ola acquires Foodpanda India for $200 mn, Pranay Jivrajka to head
Scott Davis | 20 December, 2017, 01:38

Ola and Delivery Hero are committed to continue the collaboration and build the online food delivery ecosystem in India.

Ola, the homegrown cab hailing and mobility platform, is taking rival Uber head-on in the food ordering and delivery service space with the acquisition of Foodpanda that has been struggling with its operations in India.

Germany-based Delivery Hero Group on Tuesday announced the sale of its Foodpanda India business to Ola in return for shares in the Indian ride-hailing app. In 2015, it introduced a food ordering and delivery service - Ola Cafe.

He added, "With Delivery Hero's global leadership and Ola's platform capabilities with unique local insights, this partnership is born out of strength". However, this created strong opposition from users and made a significant dip in the revenue that came from the regular cab rides.

In 2014, Ola had forayed into the food delivery business with Ola Cafe and had expanded the offering to cities like Delhi, Mumbai and Bengaluru.

Foodpanda isn't Ola's first move into food.

The food delivery business India is of mixed results. It registered an operational profit in transaction revenue previous year.




Earlier in September this year, according to media reports, South African media firm Naspers hiked its holding in Delivery Hero and bought half the stake of Rocket Internet for €660 million ($775 million).

I'm excited about our partnership with Delivery Hero as we team up to take Foodpanda India to the next level. The list of startups that had to shut down is even larger and includes Dazo, Eatlo, Zupermeal, iTiffin, Eazy Meal, and Biteclub.

Swiggy is backed by Naspers and raised near-to $100 million this past year, Zomato scaled to reach profitability and expanded into logistics while worldwide giants Uber (UberEats) and Google (Aero) entered the space with initially limited services. And with the entry of Uber, Google and now Ola is going to further intensify the food delivery war.

To be sure, Ola and Uber are likely to face stiff competition from established players such as Swiggy and Zomato that have fought the downturn to emerge leaders in the nascent market. As of August 2017 there are 325,000 daily average order, with each order valued an average of Rs 350 with a per delivery cost of Rs 60, which Ola could take advantage of.

With Foodpanda now facing intense local competition, Delivery Hero, the world's largest takeaway app, said the deal with a local-based rival made strategic sense.

SoftBank-backed Ola is planning to invest $200 million (approximately Rs 1,300 crore) in Foodpanda India as it is looking to engage millions of users more often on its platform.

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