Decoding Ola’s abrupt foray into quick commerce enablement

Each year on August 15, as India celebrates its independence, Ola makes headlines with its annual event, Ola Sankalp. The event sees the company make ambitious announcements about its path forward, and this year was no different. 

This Independence Day saw Ola tease the impending launch of its cell project—which would power not only its vehicles, but houses and societies—unveil the prices of a slew of motorbikes, and unveiled chipsets and plans for data centres that would power its AI operations. 

Still riding on the high of the successful public listing of Ola Electric, its EV venture, earlier this month, Ola founder Bhavish Aggarwal* made the most radical announcements in its cab-hailing business, declaring that the company was going beyond its traditional core business of ride-hailing.

“Today, we are going beyond mobility,” Aggarwal said. “Our ambition with this company is to make consumption accessible to every Indian. We are also changing the name of the company from Ola Cabs to Ola Consumer.”

Aggarwal announced a new fintech offering for the business, an AI chatbot-based online shopping experience, and perhaps most interestingly, a new, fully-automated, robot-operated quick commerce dark store housed within a shipping container. 

“You have all seen warehouse images—they are volume inefficient. With racks set up for human access, they are not designed for robots, are very inefficient on volumes, and very inefficient on real estate costs,” Aggarwal said. “All of this can change if you design the warehouse with a robot-first, automation-first mindset, and that is what we are doing today.”

The dark store, Aggarwal said, can be mass-manufactured by Ola and set up anywhere, making it highly scalable. All it needs is access to electricity. Unlike the current dark stores used by quick commerce players, Aggarwal claimed the dark store-in-a-box offering requires much less space, operates 24x7, packs items in less than a minute, and costs far less to run. He added that it can process between 7,000 to 10,000 orders a day and can store 120,000 items with automated storage and restocking. 

On paper, the concept is great. While the availability of manpower has always been a challenge, real estate has emerged as a major impediment to the growth of quick commerce, especially for newer entrants to the space such as Flipkart Minutes. Replicating the dark store networks of early movers like Swiggy’s Instamart, Zomato-owned Blinkit, Tata-owned BigBasket or Lightspeed-backed Zepto will not be easy.

The CapTable reported earlier this week about how Flipkart Minutes will likely to find it difficult to find the best real estate in the top eight cities as rivals have already zeroed in on and locked down the best real estate in these geographies. 

The rise of quick commerce has also seen real estate prices for dark stores spike. Property owners, sensing the urgency of quick commerce companies to steal a march on their rivals, are commanding higher rents. 

The dark store unveiled at Ola Sankalp is an early prototype but has already signed on brands such as ITC, Marico, and Bombay Shaving Company. Aggarwal emphasised that he is not competing with any current quick commerce platform, but merely enabling sellers and brands to participate in India’s e-commerce story. 

However, while Aggarwal said that the company plans to deploy these container dark stores this calendar year, that deadline can be taken with a pinch of salt. After all, at the same event two years prior, the company announced that it would launch an electric four-wheeler offering by 2024. There is still no sign of the vehicle.

Indeed, Ola is no stranger to hitching its wagon to the latest trends in the market, seemingly with more focus on riding on hype than actual long-term vision. To its credit, Ola is a company that is clearly great at identifying opportunities, and with quick commerce currently the toast of the town, it has come up with an innovative and potentially disruptive offering that could shake up the space. 

However, while identifying an opportunity is one thing, Ola isn’t exactly known for executing elegantly. In the past, the company made a short-lived attempt at 10-minute deliveries when quick commerce began gaining steam, jumped into the fintech space with Ola Money when lending was all the rage,  and launched (and subsequently shuttered) cloud kitchens and food delivery to piggyback on the growth of the foodtech space.

Even its successful launches, such as Ola Electric, which has grown to become India’s biggest EV seller, and AI Chatbot Krutrim, which raced to a unicorn valuation, have seen their fair share of criticism. The former for its scooters catching fire and the latter for the quality of its responses.

This track record casts doubt on just how serious Ola is about its foray into the quick commerce enablement space. Indeed, the move becomes even more suspect when one considers the stagnation of the company’s ride-hailing business. Younger players are taking away market share from Ola, once the biggest ride-hailing company in India. The CapTable reported in May that not only Uber is a clear market leader in the cab segment, Rapido now claims that it does more rides than Ola when all ride-hailing categories are considered. Ola’s last CEO quit the company barely four months after his appointment, with Aggarwal stepping into the breach as a result.

At Sankalp this year, there was no big plan to reverse this trend. The only two announcements related to ride-hailing were the re-introduction of Ola Share (the company’s shared cab service) and a loyalty programme called Ola Coins. Neither is particularly innovative. These features have existed for at least a decade in the industry and are things that Ola has done in the past as well.

As if to package old wine in a new bottle, Aggarwal said that Ola Share would be an improved offering powered by an “AI algorithm”, but didn’t share further details. 

Ola needs a new story to sell to the world, especially its investors, and it is throwing different things at the wall in its attempts to find one. The company already claims to be the biggest logistics player on the government’s open commerce network ONDC, doing north of 20,000 orders a day. Now, it wants to be a quick commerce enabler as well.

Quite whether it has the technical know-how to execute on this is anyone’s guess. Perhaps, though, it isn’t about shaking up the quick commerce space but building a narrative of being more than just a mobility player as it readies to test the public markets with a $500 million IPO. Will public market punters buy Ola’s grand ambitions the way private market investors have in the past? They will need to if Ola is to replicate the public market success of Ola Electric.

*Ola founder and CEO Bhavish Aggarwal is an investor in The CapTable’s parent company, YourStory Media. Shradha Sharma, founder and CEO of YourStory, is an independent director in Ola Electric.