<article>Ride hailing service <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=ola">Ola </a>is piloting a third-party logistics service for businesses using a fleet of two-wheelers and auto-rickshaws in Bengaluru, said three people aware of the development, asking not to be identified.</article>

Ride hailing service <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=ola">Ola </a>is piloting a third-party logistics service for businesses using a fleet of two-wheelers and auto-rickshaws in Bengaluru, said three people aware of the development, asking not to be identified.
Ola’s move appears to take a leaf from rival <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=uber">Uber </a>Inc.’s playbook. Uber runs an express delivery service called UberRUSH in the US.
However, unlike UberRUSH, which delivers anything from groceries and food to house supplies, Ola is currently servicing restaurants. It has deployed part of its delivery fleet from the now defunct grocery and food delivery verticals—Ola Store and Ola Café respectively—as well as auto rickshaws affiliated to Ola to do this, said the people cited above.
The pilot went live in February and the company services 30 to 40 restaurants so far, said one of the three, adding that Ola may extend the services to the grocery segment if food delivery turns out to be a success.
Ola, run by ANI Technologies Pvt. Ltd, started the consumer-facing food and grocery delivery services last year. Ola Café was launched in March last year. Ola Store, a separate app for grocery delivery was launched in June. Ola shut both services in March after the verticals failed to meet expectations, Mint reported on 2 March.
While Ola Store, which competed with the likes of <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=grofers">Grofers </a>and <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=bigbasket">BigBasket </a>among others, was operational in Bengaluru, Hyderabad and Gurgaon, the food delivery service, which was pitched against those of <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=zomato">Zomato</a>, <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=foodpanda">Foodpanda </a>and <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=swiggy">Swiggy</a>, was extended to Mumbai, Bengaluru, Hyderabad and Delhi.
To be sure, the latest initiative is a business-to-business service, much like that offered by third-party logistics service providers such as Roadrunnr, Shadowfax and Opinio.
As a result Ola will not be required to burn cash on customer acquisition.
Ola did not respond to an email seeking comment.
The company is partnering with restaurants to serve orders which are directly placed to them, the first person said.
According to Tracxn, a start-up tracker, at least 27 hyperlocal business-to-business delivery start-ups have been founded in India since January last year, with about $38 million being invested into the sector. The most well-capitalised ones are Roadrunnr (Carthero Technologies Pvt. Ltd), Opinio (Moonshots Internet Pvt. Ltd) and Shadowfax Technologies Pvt. Ltd, who have together raised about $32 million.
Most delivery start-ups have struggled to build sustainable business due to poor unit economics. Revenue from merchants barely covers the costs, which could be as high as Rs.60-70 per delivery.
Some companies also offered concessions to merchants or worked on a commission basis, charging merchants a part of the order value, Mint reported on 30 March.
With investors turning increasingly cautious, such start-ups are exploring additional revenue streams such as advertisements and promotions to try and mitigate the impact of losses incurred by their core offerings.
Industry experts say though well-capitalised businesses have the luxury to experiment with multiple categories, such moves may distract them from strengthening their core offering.
“Companies such as Ola or <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=flipkart">Flipkart</a>, which have grown so sharply and built strong platforms, have the ability to identify several lucrative opportunities along the way. However, in most situations, it has turned out to be a distraction or not resulted in ideal outcomes especially as a collaborative fit with the core business.
Specifically, hyperlocal delivery is a large market but also with razor-thin economics which makes it difficult to create robust businesses without exceptional execution and focus. It may be best for the larger companies to use the vertical specialists and derive better economics as well as quality of output overall,” said Vinod Murali, managing director at InnoVen Capital India.
Uber, the world’s most valuable start-up at $62 billion, and Ola are fighting for dominance of India’s cab business that, according to <a style="color: #000080;" href="http://www.dealstreetasia.com/?s=softbank">SoftBank </a>Group, may be worth $7 billion by 2020.
India is an important market for Uber, especially since it is possibly the last frontier in Asia with lucrative market potential. In China, Uber is still a distant second to Didi Kuaidi, which is also an investor in Ola.
Ola, one of the so-called unicorn start-ups with a valuation of about $5 billion, has so far raised $1.2 billion from investors.
Uber announced in July last year that the company would invest $1 billion in India.
Also read:
<a style="color: #ff0000;" href="http://www.dealstreetasia.com/stories/ola-says-its-micro-has-surpassed-ubers-entire-india-business-39089/">Ola says its Micro has surpassed rival Uber’s entire India business</a>
<a style="color: #ff0000;" href="http://www.dealstreetasia.com/stories/meru-gains-in-confidence-as-delhi-govt-forces-uber-ola-to-withdraw-surge-pricing-38207/">To stay relevant, Meru Cabs is becoming more like Ola and Uber</a>
This article was first published on <a style="color: #000080;" href="http://www.livemint.com">Livemint.com</a>

Ride hailing service Ola is piloting a third-party logistics service for businesses using a fleet of two-wheelers and auto-rickshaws in Bengaluru, 

India: Ola experimenting with third-party logistics service

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