The deal was announced swiftly and without much fanfare. Ola acquired Foodpanda India on a notional valuation. DeliveryHero, the food tech company’s parent, and one of the largest foodtech companies in the world, got a small equity in the Bengaluru-based unicorn in return.
Surprise. It was a word used very often when Ola employees discussed the acquisition at water coolers, coffee breaks and on various internal instant messaging channels. They didn’t know what to do or what to make of this. There were jokes: you think we’ll get free food? There was concern: is this Ola Cafe again? Ola Cafe was the ride-hailing company’s failed attempt at food delivery. When the project flopped, the company fired most of the staff working on it. As it often happens, it all went back to making jokes. In the face of uncertainty, it is easier to find refuge in humour.
But the question remains: Why did Ola buy Foodpanda?
The easy answer is UberEats. Seven months ago, Uber started its food delivery platform. It was piloted in Mumbai, then it grew to Delhi-NCR, followed by Bengaluru. Now it is in seven cities. There is one explanation; whatever Uber does, Ola takes a shot at it. And hopes to do it better. Hopes to.
Then there’s another explanation. Ola is not mirroring Uber anymore. The company is gravitating towards an on-demand logistics model, much like fellow SoftBank-funded company Grab or Indonesia’s Go-Jek. It will be fair to say that Ola has been dropping a trail of breadcrumbs over the last two years. And it is important to follow them. In 2015, Ola launched two products: Cafe and Store. Ola Cafe was its food delivery platform and store was a hyperlocal grocery player. Neither of them worked and Ola shut them down in 2016. But now, it has returned to those ideas. Well, at least one of them. It will not be surprising if Ola takes the acqui-hire route for a grocery company too.
“When Ola started Cafe about two years ago, it was too early. Now, it has come back to it at the right time and this time with a warchest,” says a senior executive at a rival company. He asked not to be named as he is not allowed to talk to the press. This executive says that Ola gets something significant from this acquisition: that is, access to restaurants. If it had started by itself, it would struggle to onboard just like UberEats. Despite being in three of India’s biggest cities, UberEats has been struggling to chalk up the number of orders that it so covets. Primarily because restaurant owners have already made deals with either Swiggy or Zomato, the two largest food tech players in the country. And in very few cases, with Foodpanda. Breaking into that duopoly has been difficult.