Ola Acquires Foodpanda For Under $50 mn; 3 Reasons Why This Is A Smart Business Move!
Foodpanda India had reported revenues of Rs 62 crore during 2016-17 financial year, which was an increase of 64% a year earlier.
Online food delivery is the industry which is continuing to attract major businesses into their charm, and everyone want a piece of that pie! Pun intended. Now, joining the league is India-born, app-based cab provider Ola, which has just bought Foodpanda for under $50 million (not confirmed) amidst some stock exchange (details of which are not currently available).
Foodpanda’s ex-CEO and co-founder Saurabh Kochhar has decided to move on to other ventures, while Ola Founding Partner Pranay Jivrajka has taken over as interim CEO of Foodpanda.
Foodpanda was acquired by Germany based Delivery Hero last year from Rocket Internet, which founded the brand Foodpanda in 2012. Including India, Foodpanda operates in 193 cities globally, and has partnered with over 27,000 restaurants.
Ola co-founder and CEO Bhavish Aggarwal said:
“I’m excited about our partnership with Delivery Hero as we team up to take Foodpanda India to the next level.” Bhavish also declared that they will spend $200 million into Foodpanda to make them even more powerful, and more flexible.
Foodpanda India had reported revenues of Rs 62 crore during 2016-17 financial year, which was an increase of 64% a year earlier. At the same time, they registered losses of Rs 44 crore, which was down from Rs 142 crore a year earlier.
Here are 3 reasons why this acquisition can be described as a smart business move, which will ultimately benefit Ola in the long run:
1. UberEats Will Now Get Some Heat
Earlier this year, Uber launched their food delivery service UberEats in India, after it was launched globally in 2014. Using the existing fleet of Uber cabs, this makes perfect sense to deliver food as well.
Now, Ola being their main competitor in India, it makes perfect sense for them to join the bandwagon, and give UberEats some serious competition.
With Ola acquiring a big brand like Foodpanda, Uber will face some heat, and it will eventually help develop the whole industry of food deliveries, across India.
Now, passengers travelling in Ola or Uber can directly order food while travelling, and this will open up a new paradigm of app-based services in India.
2. Foodpanda Was The Obvious Option
This is not the first time Ola ventured into online food delivery niche. In 2015, they launched Ola Cafe, which was shut down a year later due to poor response.
Now, the fact is Ola had to enter the segment, and Foodpanda seemed the obvious option. Zomato and Swiggy are the other two major players in this niche, and both would have been way too expensive for Ola.
Besides, owning an established brand is a lot easier than building a new one, as witnessed in the case of Ola Cafe. By acquiring Foodpanda for under $50 million, and some stock exchange, this is indeed a smart business move by Ola.
3. Food Delivery Industry Is The Next Big Thing
By all counts, food delivery industry is on fire in India, and analysts and business observers are quite bullish on its growth.
As per a study, “online takeaway” niche alone is worth $1.9 billion in 2017, and food delivery is worth $2.1 billion in India right now.
In 2016, the industry grew by massive 150%, as GMV of $300 million was generated pan-India.
By 2022, the industry is expected to reach $5 billion threshold, and this is an exciting time to be in the niche.
Zomato and Swiggy are the only major players now, and their proposed merger failed last month, signifying that there are tremendous opportunities here.
Now, with the competition of Uber and Ola in the space, we can expect some more fireworks and more intense battle.
Do you think Ola has made a smart move by acquiring Foodpanda? Do let us know by commenting right here!
