India’s taxi giant Ola on December 19, 2017, acquired Foodpanda’s India business in an all-stock deal for $200 million (Rs.1,282 crore). This move clearly indicates Ola’s intention to expand its business far beyond online transportation network.
In an e-mail to his employees Ola co-founder and CEO, Bhavish Aggarwal announced the acquisition.
“Foodpanda India, with all its 800-plus employees, will be a part of Ola going forward”
However, it must be noted that this is not the company’s first attempt to enter the food delivery industry. In 2015, Ola launched Ola Cafe in four metro cities but it was a sour experience for the company. The business was shut down within the first year facing losses and lack of customer. The same fate was met by the company’s attempt at grocery delivery network with was closed and shut down without much fuss.
Analysts say that Ola’s obsession with food delivery is result of it’s obsession to overtake Uber. Uber’s online food delivery network UberEATS, has been doing quite well and has expanded its operation to six metro cities. With the acquisition of Foodpanda India, Ola looks forward to giving Uber a run for it’s money with Foodpanda’s delivery network which is spread across 100 cities with 15,000 restaurants.
Ola this year raised $1.8 billion and this acquisition seems to result from the money raised. Theoretically it all seems good. However, there are problems that Ola needs to find solution too. With the growth slowing in their existing business this year and the tough landscape of food delivery networks, Ola has some thinking to do. Many food delivery network in India have been shut down over the time and even established firms like Swiggy had to downsize their employees in order to stay open. With these statics in mind, many experts believe that Ola should have checked its obsession with Uber and use the raised money in accelerating their existing business by providing discount coupons to users rather than venture in to the food delivery network.
But with the latest trend of Indian startup tech companies acquiring business’ outside their core field, only time will tell if Ola made the right choice with its Foodpanda acquisition.