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Rapido Cabs To Contribute 20 Per Cent To Overall Revenue Within Two Years, Says Co-Founder Pavan Guntupalli

Driving into the lane of Uber and Ola, with its ride hailing cab service, Rapido will start with 0 per cent commission, transitioning to subscriptions, which it hopes will help it garner higher customer loyalty

Rapido Cabs To Contribute 20 Per Cent To Overall Revenue Within Two Years, Says Co-Founder Pavan Guntupalli
POSTED ON December 16, 2023 3:58 PM

Better known for its bike taxi and auto aggregation platform, Rapido is shifting gears to enter into the cab ride-hailing business—dominated by the likes of Uber and Ola nationally and the likes of Blusmart and Zoomcar in certain pockets of the country. Starting small, the Bengaluru-based start-up will launch the services in Delhi, Hyderabad and Bengaluru with a fleet of 1,00,000 cabs.

The company, which claims to have a 60 per cent market share in the bike taxi sector, hopes to replicate this success in its new foray and gain 15 per cent soon. But could it be a case of wishful thinking, given the duopoly that exists in the industry?  

In an exclusive conversation with Outlook Start-Up, Pavan Guntupalli, co-founder of Rapido, explains his optimism on why the company can entrench itself in the burgeoning cab-hailing sector, plans of entering the unicorn club and more.

Edited excerpts:

Why did Rapido venture into the cab-hailing service? Was it to corner more ground from your competitors, Ola and Uber?

Our motive behind all our verticals has been to provide affordable options to our customers. At present, we are offering more than 1,00,000 rides daily.

2014-15 was the peak of the cab ride-hailing revolution. That is the time we began with bike taxis, and it has been successful enough. We started collaborating with the governments and many discussions are still ongoing. Our most significant growth was in the Delhi and Bangalore markets.

We analysed and experimented with the current situation and realised that we should venture into the cabs market to provide better solutions. We were piloting cabs in Hyderabad for quite some time.

Will this new venture deflag some losses from the frequent bans the company faced in several cities?

Talking of bans at places, we've got the court's favour in Bangalore and many places. The Tamil Nadu government is proactively working on a lot of things. Even in Maharashtra and Orissa, where we faced issues, the state governments have asked us to work with them on policies. The narrative that we're doing new things due to minor problems is a false narrative that has developed in the past couple of years.

Rapido cabs

 

You are starting the cab business by charging 0 per cent commission and offering free subscriptions to drivers, aka captains. Aren't you burning cash to gain market share, and will this not impact the venture's profitability?

The 0 per cent commission is our commitment to empowering our partners to play a significant role in making our services efficient. We are not burning cash as our revenue and expense models are planned accordingly.

This is a SaaS-based model where drivers will be paid to get onboarded according to subscription charges. So, it will not be free forever; it will be free for the first few months to show our captains the value of our platform and give them a chance to test it. After that, we will charge a nominal subscription fee to onboard the drivers.

How will you earn profit if you get Rs 500 on every Rs 10,000 made by the captain?

While the Rs 500 vs Rs 10,000 ratio is being quoted at various places, I want to emphasise that we are only trying this in Hyderabad and nowhere else. This experiment is to check how it works before implementing a subscription plan for the captains based on their feedback. So, the 0 per cent commission value proposition is forever, but the subscription charges will be announced when applied.

Many of your competitors offer luxury commuting options like SUV vehicles, while you only offer sedan cars. Will this put Rapido cabs at a disadvantage?

We are more into providing economical solutions for millions of people. That category is what we would majorly want to grow.  

We have solved a commute problem by introducing a sedan card. If you see a few existing platforms, there are four to five categories with different prices. All these have various commissions, incentives and payouts, which is why they exist.

Since our inception, we have been creating categories and don't have a problem venturing into a different category; however, we want to avoid going into artificial value categories. We cater to every ordinary person, and hence, Sedan is the most needed and economical solution.

Considering that electric vehicles (EV) are the need of the hour to control pollution, most of your competitors are adding EV vehicles to their fleets. What about Rapido? 

We are constantly electrifying our fleet. We have partnered with Zypp and Zemo E-Bikes to electrify our two-wheelers and would like to follow the same approach in our cabs.

However, our primary objective is to leverage the existing infrastructure to improve mobility in India. Currently, around 20 million cabs are running on the roads, with an equal number of two-wheelers. We should electrify them first.

Rapido's pan-India average EV fleet is 2 per cent, but we're improving by increasing this in cities like Hyderabad and Vijayawada. One of the solutions that we want to work on is going with the zero-commission scheme. By giving a more driver-centric value proposition, we want to increase their incomes and then start educating them about going electric. This could even be a partnership between Rapido and the captains.

Over the coming year, you'll see different forms of partnerships and investments where we work on creating awareness amongst our captains.

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