Ola may put international expansion plans in neutral gear

cmriidul · 发表于 2019-06-14 15:08:17

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[p]Ola may be preparing to hit pause on its international market expansion, said two people with knowledge of the company’s operations.

[p]The two said the company is also slowing down investment in its current overseas markets of the UK and Australia.

[p]Ola was supposed to expand to the Netherlands, Kenya, Dubai, Israel, and Brazil.

[p]It was closest to launching its Dubai operations with its executives visiting the city multiple times to set up meetings with government officials.

[p]“It may still happen but things are very slow there now,” said one of the two persons.

[p]Ola dismissed this as speculation.

[p]“We are encouraged with the progress we are seeing in our global markets and continue to invest in these regions.

[p]"In addition, we are constantly evaluating new opportunities and offerings across geographies as we build a sustainable business,” it said in an emailed reply.

[p]This is the second time in two years that Ola has made plans to launch in an international market and then gone back on it.

[p]The last time was when it was on the brink of launching Bangladesh and Sri Lanka as markets but issues over internal remittance forced it to shift focus to Australia.

[p]This time the company is waiting until it can complete its $2-billion round.

[p]“It is looking difficult for Ola to do that,” said the person familiar with the company.

[p]"This is the second phase of Ola’s struggle to raise its mega round.

[p]"The first phase took place when it had to change tack after Foodpanda pivoted from being a food delivery company to a cloud kitchen firm.

[p]"Ola had tried to use Foodpanda as a medium to raise the next round of funding but it has not been able to present a sustained alternative to Zomato or Swiggy.

[p]"It only got some traction in the market when it offered discounts.

[p]“Uber’s IPO has not helped Ola either,” said a former Ola executive.

[p]He explained that fewer investors may now see value in putting cash into another ride-hailing company.

[p]Uber, in the first day of trading, closed at 7.6 per cent below its IPO price.

[p]Uber also posted a $1 billion loss in the first quarter post the IPO. Even though it has enough capital to last a good few years, the road to breaking even looks challenging.

[p]Ola has to raise the money if it wants to pursue its expansion plans.

[p]In India, it has been seeing its ride numbers drop and average ticket value climb.

[p]In response, it has tried to rationalise its costs.

[p]“What Ola has also done is increase its commission to 30 per cent in some cities,” said a former Ola executive.

[p]This has prompted some drivers to drop off the platform.

[p]Another difficulty has been the steady stream of talent leaving the company over the past year. Ola lost some employees when it shifted its focus to Foodpanda in late 2018.

[p]It lost some more when it moved its focus back to Ola.

[p]The only major countervailing force to this outflow is that it has managed to add Flipkart founder Sachin Bansal as an investor and to the board.

[table border="0" cellspacing="1" cellpadding="2" align="center"][tbody][tr bgcolor="#0063a6"][td align="center"][strong]Recent journey[/strong][/td][/tr][tr bgcolor="#99ccef"][td][p][strong]Jan 2018:[/strong] Ola launches operations in Australia

[p][strong]Aug:[/strong] Ride-hailing firm expands its service footprint to UK

[p][strong]Nov:[/strong] Enters New Zealand market

[p][strong]Jan 2019:[/strong] Sachin Bansal invests

[p]Rs 650 crore in Ola, joins the board

[p][strong]Mar:[/strong] Ratan Tata, Tiger Global and Matrix Partners invest Rs 400 crore in Ola electric

[/td][/tr][/tbody][/table]