Ola’s Second Attempt at Quick Commerce: Will New Strategies Disrupt Blinkit and Zepto’s Dominance?

Ola has made several attempts in the past to establish a foothold in the online food and grocery delivery market, but surprisingly, all of them have failed. Now, in 2024, the ride-hailing giant is gearing up to re-enter the quick commerce game to take on established players like Zomato Blinkit, Swiggy Instamart, and Zepto. However, the road to success won't be easy.

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Quick commerce is rapidly emerging as one of the most competitive sectors in India. Leading companies like Zomato, Swiggy, and Zepto are leaving no stone unturned to capture the largest market share. After Reliance, Tata, and Flipkart, now ANI Technologies, the parent of Ola Cabs, is reportedly gearing up to enter the sector with its own network of dark stores.

It is worth noting that this will be Ola’s second attempt to establish a presence in India’s online food and grocery market.

People familiar with the matter revealed to ET that Ola’s dark stores are expected to be highly automated, leveraging robotics to minimize human intervention. This technological edge could be a game-changer in the quick commerce sector, which relies heavily on human labour for rapid fulfilment and streamlined operations.

In addition, Ola will also utilize its electric two-wheeler fleet for deliveries. This integrated approach will not only enhance the company’s commitment to fast delivery but also align with cost-cutting measures and sustainability goals. While rivals rely on conventional two-wheelers for quick deliveries, Ola’s electric fleet would offer a significant competitive edge in the quick commerce sector.

India’s Quick Commerce Market

India’s quick commerce sector has witnessed an influx of major players in the last three years, driven by the rising online grocery demand and substantial investor backing.

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It is important to note that the key competitive factor in the quick commerce sector is the ability to deliver orders within 10-20 minutes. Companies that master this speed are poised to attract a larger customer base, leading to higher sales and revenue. To meet this demand, companies are racing to expand their dark store networks.

For instance, Zomato-owned Blinkit has announced plans to increase the number of dark stores from just 639 in June 2024 to 2,000 by the end of 2026. Similarly, Zepto aims to double its dark store count to 700 by March 2025, while Swiggy Instamart is actively seeking new dark store locations across the country to enhance its reach. Currently, it has more than 500 dark stores.

Ola’s Past and Future Plans to Stay Competitive

Ola Cabs has made several attempts in the past to establish a foothold in the online food and grocery delivery market, but surprisingly, all of them have failed.

Ola Cafe, launched in March 2015, was shut down in March 2016. The company then acquired Foodpanda in December 2017; however, it discontinued its operations in mid-2019. Ola Foods, launched in 2019, was phased out by late 2020. Ola Dash was Ola’s entry into the quick commerce sector in early 2021; however, it was shut down in June 2022 due to operational inefficiencies and intense competition from other quick commerce platforms like Blinkit and Zepto.

Ola is now making its second attempt to enter India’s quick commerce market, armed with lessons learned from its failed previous ventures and new technological advancements. However, the road to success won’t be easy.

Ola is also reportedly planning to launch its own Unified Payments Interface (UPI) system in collaboration with banks. Integrating UPI into Ola’s services will enable customers to make seamless payments, enhancing convenience and efficiency across transactions.

“Ola is spending a lot of money on ONDC food delivery services. This will remain a focus area for the new commerce business under ANI Technologies,” a source told ET.

If we look into financial performance, Ola’s parent ANI Technologies recorded a 17.7% YoY growth in its operating revenue, amounting to ₹23.18 billion in FY23, ending March 31, 2023. What’s noteworthy is that the company cut down its losses by nearly 50% YoY to ₹7.72 billion during the period. The FY24 financial results are yet to come.

All said and done, India’s quick commerce sector is highly competitive and capital-intensive. Ola will indeed face stiff competition from established players such as Zomato’s Blinkit, Zepto, Swiggy Instamart, and Flipkart, all of which have deep pockets.

However, Ola’s existing infrastructure, including its delivery fleet and extensive customer base, could provide a significant competitive edge. The ultimate success will hinge on how efficiently Ola can execute its strategies and present a compelling value proposition. It will be interesting to see who emerges as the leader in the fast-evolving quick commerce market in India!

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