OLA Business model - More time required before its branded success

If you’re staying in Pune or Bengaluru, hiring an auto is the last thing you would want to do. The endless discussions, bargains and over-above the meter charges has led to customers adopt to a new service – radio cabs. Charged at a nominal rate of Rs.20 for the first 5 kms and Rs.12 thereon, these cabs are a boon for anyone travelling over 10Kms. The cab service is an asset free model (where no cars belong to the company) and the current count of fleet is 40000.

Main attraction for drivers – Each driver gets Rs.1800 for a day. He needs to log in to the system for 14 hours and the company agrees to pay him a total of Rs.1800 ie if he drives around and gets Rs.1400, the rest 400 would be credited to his bank account. If he manages to earn more than 1800(say 2500), out of the 700 that he earned, 10% has to be paid to the company.

If the driver cancels a request of going to a particular place, he has pay up Rs.250 to the company. Instead the company has the risk of losing the customer and buys more time by appointing a new driver.

So what’s the flaw here: There is no minimum amount that one needs to make on a particular day – Hence when the cab driver gets a very remote location, he continues to stay there for the next 6-7 hours knowing that there is very less probability of being called.  The cab driver has his profit maximum when he doesn’t drive the entire day and still makes 1800 in the process.

Marketing Campaigns: Currently there are 3 marketing campaigns

NOW20 – 20% off on the ride if you book it now. Customer’s advantage – All the cabs that I need would take 30 minutes to reach my destination, hence I would always book it half an hour prior and still use the 20% off even if I am not traveling technically now.

50/50  - 50% off if you book it through OLA money. Company’s advantage – The Company is sincerely trying to increase the number of users who would park their money in the OLA wallet hence a capital which the company uses to earn interest on through a sweep mechanism. Given the numerous customer complaints on this end, a solution is required for those drivers who start and stop the ride even before they meet the customer and hence the money being debited from OLA money.

100% cashback – This was a jackpot. Travel for x kms for free and get a cashback. Technically the company would charge you for the transaction and then credit the money back to your OLA wallet hence increasing the use of their in-house OLA wallet.  I personally used this service on a Friday morning when the offer had been introduced – charged Rs.240( actual cost Rs.300, discount 60 distance travelled 21Km) and 300 is credited back to my ola wallet. I use this money against the 50% offer and hence the actual discount I get is Rs.600(I initially pay Rs.300 and use the service 2 more times for equivalent ride) and end up making a profit of Rs.300 on the entire transaction. VOLA!

The reason the company is doing so well is because of the volume of transactions that happen on a daily basis – Close to 1,40,000 transactions on a daily basis. A simple math will tell you that with a minimum of Rs.400 Lacs is their inflow per day and their outflow to these cab drivers is Rs.720Lacs (There are large number of expenses not taken into account). Its only when these cabs become really efficient( read as: more volumes) , the company starts to make more money. This is reason for such marketing campaigns by the company.

***This analysis was done purely by interviewing cab drivers ,company staff  and secondary internet sources in the Pune region .

Flipkart showcase of US Thanksgiving sale

Every year, thanksgiving sale in the United States is driven by long sleepless queues, bulk shopping and a literal loot of stores offering great discounts. Many immigrants decide to shop for the annual wishlist during such sales and literally the entire racks are emptied to the shopping carts. It’s a different issue that these goods make their way to ebay and best deals websites. To give Indians a flavor of this historic day, Flipkart introduced the big billion day on 6^th October. The date signifies the flat number when the Bansal brother started Flipkart(610) . To what would would have been the biggest marketing event of the decade became a PR nightmare for the duo. Deals were available for Rs.1 and most of the discounts were at 50-80% category.  Deals were updated frequently and everywhere hour and were bought by people in 2-3 minutes of starting the sale. The rivals were not silent.Snapdeal came up with similar prices to tackle the sales and attracted the audience. Things started to go wrong when the servers crashed, people kept trying for better deals and technology was the biggest barrier for flipkart. Apart from this, there were complaints about incorrect pricing and fake checkouts by people – this was because with the best internet connection also, deals were over by the time they reached the cart. An interesting way how Amazon demonstrated its sale was to show the number of units that have been blocked hence the users wouldn’t spend time if they know that the product has very low probability to be obtained.

Are you paying more for your pizza?

Dominos Pizza Old menu. Compare it with the new one to see price difference

So how much do you pay for that cheese burst pizza at Dominos Pizza? It cost me 455 for a non veg medium and cheese crust pizza, the last time I ordered. The tax, another Rs.1oo. The pizza that cost Rs.380 a year back has increased a good 20%, but doesn’t anyone complain? Nope. Its Khushiyon ki home delivery.

A simple math calculation would tell you that an increase in 20% is equivalent to a decrease by 16.66%. Hence every day you should be getting a minimum discount of 15% on all pizzas, considering inflation last year and this year doesn’t affect the raw materials so much.   And it’s sad, you don’t. Instead the price rise is equalized by a increase in promotional offers for one day in the week like 25% off on Wednesday and you start getting a feeling that it’s a customer centric company. Boo. 

How silly can the online ordering get?

Dominos Pizza is really trying to push people to start ordering online by a large number of offers which are applicable only if you order online/mobile. The rationale behind this is I believe the company’s motive to reduce the number of people who would want to come to the stores and eat hence saving rent space and infrastructure costs. A clever customer would always pre-order his pizza online, pick it up from the counter and sit and eat there.

 The online model has not been 100% successful considering the angry consumer forum complaints regarding cancellation, wrong orders and transferred orders of the pizzas. A lot of work needs to be done here : Read this: http://www.complaintboard.in/complaints-reviews/dominos-india-l128365.html

Twitter & Facebook Contests:

Last week, Dominos ran a contest where in the last reply to a tweet would receive a prize. Followers aimlessly tweeted wanting to be the last person. The catch here, they didn’t specify the timeframe. Tweets & messages were received even after 2 days. The winner has not yet been declared, another set of angry customers.  The last comment was a few seconds before this blog was being uploaded.

Twitter & Facebook as a consumer forum:

Yes, more than social networking, these sites are used by consumers to voice their opinion. But apart from their posts, there have been no attempts to listen to complaints, grievances.Bad one again.

The brand is really good, and I really love their service, and i seriously hope the management takes some steps towards not losing its existing customer base through these intelligent marketing moves. After all, yeh public hain,sab jaanti hai