Swiggy-backed Rapido recently forayed into the four-wheeler cab-hailing segment, taking the triad of Uber, Ola, and BluSmart head on. In this interview to Akanksha Nagar, Pavan Guntupalli, co-founder, Rapido, talks about the challenges faced by the ride-sharing services at the moment and the firm’s growth plans. Edited excerpts:
While ride-hailing services have disrupted India’s public transportation system, they also face a number of challenges to growth. Please comment.Over the past five years, the cab-hailing industry in India has been stagnant, the CAGR is under 5% and the reason is not that there are not enough users, it’s because of some fundamental problems. This is something we aim to disrupt with the zero-commission model—the same will lead to fewer cancellations of bookings and will help increase the market size since there would be more participation from the supply side. Since the firm will keep its commissions low and revenues from the co-stakeholders low, it will also try to explore alternative revenue opportunities, including advertisements on the app.
Fundamentally, Rapido has always been a low-cost player. When we started with bikes, which is 50- 60 per ride on average, we knew the profits per ride would be not more than 2-3 and hence we would need to manage our cost within that bracket. We have built all cost structures in line with that. We let the product take the lead and as of today, the company has less than 10 people managing Indian payments and it does 15 lakh rides every day.
Because of our positioning as a low-cost player, we knew we had to operate on super-low margins when foraying into cabs. With this, we can pass the benefit to the drivers, which will lead to higher satisfaction levels among drivers and eventually a better experience for users. We offer a zero-commission subscription model and we have witnessed drivers coming back into the online cab-hailing system.
How do you plan to scale up?Rapido currently operates in over 100 cities in the country, and over 35% of the revenue comes from tier-II and III cities. As of today, 1.5 lakh drivers are on board across three cities — Hyderabad, Bangalore, and New Delhi. In terms of expansion, we are taking one city at a time. Over the next one year we will cover key cities across the country and the immediate targets are Mumbai, Pune, Chennai and Kolkata. A lot of our investments are going to be in electrifying the existing fleet, which should reduce operational costs to a great extent. We would be looking to foray into the next mode of transportation used in smaller cities — like the e-rickshaws.
What are some of the measures the company has taken to ensure user safety and quality manpower?Apart from the basic checks, there’s a single-tap 24/7 emergency button that is connected to our internal teams and also to the local police station. Additionally, for every ride that a user takes post 10 pm, the company will call and check on the user about safety and if the driver takes a deviation from the suggested route or there’s an unscheduled stop, users are prompted and intimated to approve it. Also, the drivers are monitored for the first 10 rides and we also take subjective feedback from the users. If anything goes wrong, we put their profiles on hold.
What are your early targets in terms of revenue, growth …Bike taxis are our core product and we do close to a million rides daily, and there is healthy revenue growth. Close to 50% of the revenue is still bikes and the rest 50% is divided among autos, Local parcel delivery services, and cabs. In the next year and a half, we expect cabs to contribute around 15% to the total revenue. In terms of on-demand delivery, Rapido does close to a lakh plus rides — this includes both deliveries and parcels.
The company has grown 50% year-on-year. One of the other important things we are aiming for is profitability. We are already operationally profitable and are looking at touching an overall 40% growth next fiscal. While our cab service operates on a zero-commission model, for bikes, we charge around 15% commission and for autos, there is a subscription model.
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