Ride hailing app Ola, announced its partnership with Germany based Delivery Hero Group (“Delivery Hero”), the leading global online food ordering and delivery marketplace. This deal includes the transfer of Foodpanda’s India business to Ola in an acquisition deal in exchange for Ola stock. This collaboration between India’s largest online platform and a global leader in online food delivery, unlocks the power of a partnership, that will help Foodpanda India grow as the most preferred online food delivery service in the country.
Foodpanda India will benefit from Ola’s scale and efficiencies as a platform, also having leveraged learnings from Delivery Hero’s global best practices. Ola and Delivery Hero will continue to collaborate on building the online food delivery ecosystem in India. Ola has also committed to invest $200mn into the Foodpanda India business, by far the largest such fund infusion in India’s online food ordering and delivery industry thus far.
Saurabh Kochhar, who was the CEO of Foodpanda India until recently has decided to move on to pursue other opportunities. Pranay Jivrajka, Founding Partner at Ola, has been appointed as interim CEO of this business unit, supported by the existing leadership team at Foodpanda India.
Bhavish Aggarwal, Co-founder and CEO at Ola, said, “I’m excited about our partnership with Delivery Hero as we team up to take Foodpanda India to the next level. As one of India’s pioneers in the food delivery space, Foodpanda has come to be a very efficient and profit focused business over the last couple of years. Our commitment to invest $200mn in Foodpanda India will help the business be focused on growth by creating value for customers and partners. With Delivery Hero’s global leadership and Ola’s platform capabilities with unique local insights, this partnership is born out of strength. I look forward to welcoming the Foodpanda India team to the Ola family.” He added,“I also thank Saurabh Kochhar for building a wonderful team at Foodpanda India over the last couple of years and wish him the very best in his new endeavours.”
Niklas Östberg, Chief Executive Officer and Co-founder of Delivery Hero AG, said, “The partnership with Ola will allow us to further consolidate markets where it strategically makes sense to collaborate with leading local players. At the same time, we consider our stake in Ola as a very valuable asset, while Ola’s investment commitment in Foodpanda India is a clear and confident signal to the Indian market.” He added, “The Foodpanda India team has done a tremendous job building the business and we look forward to supporting them and the Ola team in the future.”
With menus from 15,000+ restaurants across 100+ cities in India available on its cutting edge app and website, Foodpanda is leading people discover and order great food from around them, every day.
Founded in Jan 2011 by IIT Bombay alumni Bhavish Aggarwal and Ankit Bhati, Ola (formerly Olacabs), is India’s most popular mobility platform. Ola integrates city transportation for customers and driver partners onto a mobile technology platform ensuring convenient, transparent and quick service fulfillment. Ola is committed to its mission of building mobility for a billion people. Using the Ola mobile app, users across 110 cities can book from over 800,000 vehicles across cabs, auto-rickshaws and taxis. Ola has also introduced a range of shared mobility services on its platform like Ola Shuttle and Ola Share for commute and ride-sharing respectively. The app is available on Windows, Android and iOS platforms.
About Delivery Hero:
Delivery Hero is the leading global online food ordering and delivery marketplace with number one market positions in terms of restaurants, active users and orders in more countries than any of its competitors and online and mobile platforms across 40+ countries in Europe, the Middle East & North Africa (MENA), Latin America and the Asia-Pacific region. Delivery Hero also operates its own delivery service primarily in 60+ high-density urban areas around the world. The Company is headquartered in Berlin and has over 6,000 employees in addition to thousands of employed delivery drivers.
The acquisition of FoodPanda is the culmination of Ola’s longstanding interest in the food delivery business. The ride hailing app attempted to run its own food delivery business “Ola Cafe” in 2014 for a year. Eventually closing down Ola Cafe.
Foodpanda would retain its existing brand identity as per the terms published in the press release.
The India business represents a small part of Delivery Hero’s overall business, contributing 1.9% of total segment revenues for the first 9 months of 2017. At the same time the equity stake in Ola will allow Delivery Hero to participate in the long-term Indian food delivery opportunity. Delivery Hero acquired foodpanda and its subsidiary foodpanda India in December 2016.
Ola cab drivers are not expected to get into food delivery service. Foodpanda has its own network of delivery partners which will cater to the food delivery space.
Indian Food Delivery Services:
Ola’s interest in food delivery space was evident in 2014 itself when the ride hailing service started testing Ola Cafe. But the acquisition of Foodpanda will give an edge to Ola to compete against another ride hailing service Uber, who has rolled out UberEats few months back in India.
Apart from Ola and Uber, tech giant Google launched Areo in India earlier this year to start their own food delivery service. The other major players in this space include Naspers backed Swiggy, Zomato, Myntra founder’s Cure Fit, Box8, Sequoia backed Faasos to name a few.
The food delivery space in India has already seen a consolidation with startups such as TinyOwl and Runnr shutdown services earlier this year or acquired by bigger players.
Online food-delivery platforms are expanding choice and convenience, allowing customers to order from a wide range of restaurants with a single tap of their mobile phone. As per Statista report for India, the revenue in the Food Delivery segment amounts to US$2,087m in 2017. The market’s largest segment is the segment “Online Takeaway” with a market volume of US$1,983m in 2017.
In the “Online Takeaway” segment, the number of users is expected to amount to 124.8m by 2022.
The average revenue per user (ARPU) in the “Online Takeaway” segment amounts to US$31.22 in 2017. With a market volume of US$37,179m in 2017, most revenue is generated in China.
With online food delivery service expanding choice and convenience, customers has a wide range of options. It’s interesting to see who emerges as the winner.
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