The acquisition of FoodPanda in India by Ola from the German company Delivery Hero AG in an all-stock deal is an indication that the company wants to counter Uber neck to neck. UberEATS, the food delivery unit of Uber, was launched by Uber in selected cities a few months back in India and Ola seems to be countering the move by acquiring FoodPanda. Ola will also be investing $200 million in FoodPanda's India operations. It also seems that the food delivery business through this acquisition will intensify further in India and some experts suggest that Zomato may eventually buy Swiggy in the near future.
“Through this acquisition, Ola wants to leverage FoodPanda's network in India. I have experienced UberEATS in Chennai and found it good. Now Ola through FoodPanda will be able to penetrate further in the Indian market, as Ola has a good network and is present even in small cities unlike Uber, which is present only in limited cities. Plus Ola has a strong backing from the Japanese investor SoftBank and is expected to do well in this sector. Broadly, it will mean more choices for customers. The food delivery market is doing well because it has become difficult for many customers in big cities in the country to travel to different restaurants due to heavy traffic and road blocks,” remarked Kris Lakshmikanth, the CEO of Head Hunters India Limited.
Experts like Alok Shende of Ascentius Consulting feel that the acquisition of Food Panda means more choice for the Indian consumers as Ola has a good network and in between when its drivers are sitting idle they can very well deliver food. “The food delivery market is dominated by only a few players in India and with the entry of Ola into the market it will further hot things up in the market. Uber on the other hand is having a tough time in the Indian market and may not be able to do that well in the food delivery business as Ola also has a strong financial backing by SoftBank,” remarked Shende.
Another expert Vivek Srinivasan, co-founder, Startups Club feels that with Uber bringing UberEats to India, Ola needs to get a similar weapon in its arsenal to strengthen its position in the market. “The idea seems to be to get to a point where they want to take care of any kind of ‘Logistics.' Rather than building it ground up, they have chosen to acquire it in the form of FoodPanda. Also, with Softbank as an investor in both Ola and working on consolidating their position in Uber, it remains to be seen if the new move by Ola is to project itself as a much stronger bet in India than Uber, given there will most certainly be consolidation if Softbank is a considerable stakeholder in both businesses. Having said that food delivery has not been a profitable business anywhere in the world and hence this move seems strange. This move seems to be very reactive and hence the wisdom of this move may be questioned in the future" said Srinivasan.