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Expansion to Tier II, Tier III cities & Leveraging On-Demand Logistic Delivery Segment has enabled Rapido to grow across the country: Ken Research

02-Feb-2021   Aravind Sanka, Designation: Co-Founder, Rapido   Author: Shefali Jain

“A wave of change is gradually coming forth and states like Telangana, Rajasthan and Uttarakhand are working towards building a robust framework for bike taxis. In Uttarakhand, it is believed that bike taxis can create over 20,000 jobs and at the same time, reduce traffic while in Haryana, they are introduced as public service vehicles”- Aravind Sanka

In conversation with Aravind Sanka, Co-Founder at Rapido, we attempt to identify the key trends in the India Bike Taxi Space & how Rapido differentiates itself from other service providers.

Q. What led to ideation for Rapido? How has been the journey for the company since inception? 

Before the idea for Rapido came into existence, the initial team was running on a completely different idea which was into trucking space, which involved movement of goods from one place to another. After working on that idea for over a year, we realized that the growth and market potential for this particular segment is smaller than what we had anticipated and we wanted to enter into a space that had more potential in terms of growth. 

When we were looking for alternatives, we observed that there was a lot of potential in the mobility space as the price point at which four wheeler ride sharing service was being offered five years back, is not a long term solution for Indian Mobility Space and two wheelers being the dominant vehicle among households we ventured in this field. 

Q. What have been the focus areas for Rapido? How has it changed over the years?

We have always wanted to do something that has deeper and larger penetration. For that, we have focused on expanding across Tier II and Tier III cities in India. Within two years, we expanded our presence to more than 100 cities. If we compare four wheeler ride sharing services, 90% of the revenue is concentrated in the top 10 cities. Two wheeler being India’s most used common man vehicle, we are focusing on leveraging this category and expanding presence in over 500 cities.

One advantage that two wheelers have is that the vehicle which is used for commuting can also be used for delivery. This is a huge advantage that we thought of capitalizing upon. We entered the logistics segment a few years back and we are proud to say that we are the second largest on demand Logistics Company in the country. This has helped us improve the unit economics for the driver. Currently we are the largest in number of Captains, number of cities and number of rides in India.

Q. What are the incentives offered to the Captains? 

The more you work for Rapido, the more income you’ll get. We have partnered with multiple aggregators and we aggregate demand for our Captains. We always give an option to our Captains to multi-perform transportation as well as logistics delivery.  We give them options of logistics, grocery or food delivery service to earn extra income. We follow an instant payout system, wherein 80-85% of commission is earned by them.

Q. What are the current challenges to the Bike Taxi Industry in the country? What are the regulatory challenges in this category? Are there any states where this service is not allowed? 

Like a lot of startups, we have gone through a lot of challenges in terms of creating a market. Two Wheeler is India’s common man vehicle, but sitting behind a stranger is something customers have not experienced before. Before Rapido, customers were not used to doing that. So we took time to build market understanding in terms of understanding the pain points and launching this category. 

Safety is another prominent concern for the customers in this segment. We are the first player in the country to provide insurance, from day one for both the customer and the Captain, in each and every ride before it became a norm for other players in the industry. 

Another major challenge that every bike taxi company has to go through is the regulatory challenges. Different states have different regulations for the bike taxi segment as it's a completely different market. We work very closely with the government to make sure that government recognizes this category slowly and steadily in all the states. In a few states the regulatory framework is not defined for this category. There is a central government recommendation that has gone to each and every state to accept this category but there are certain states that are taking time for making clear regulations around this service. Four wheeler ride sharing service took about 10 years to be accepted in the states. So we are not expecting 10 years but it should be cleared in all the states soon.

Q. How has the demand been impacted due to the COVID situation? What steps have been taken by the company to mitigate the losses during this period?

Lockdown had impacted the business both positively and negatively. Our mobility segment definitely witnessed decline as no commute was happening during the initial months of lockdown. But at the same time, our logistics segment witnessed a boom. We observed that a certain section of population preferred using bike taxi service over public transport for commuting where any kind of social distancing is not possible. This has helped us to recover 100% of our losses. 

With strong tech capabilities, we have innovated our way out of the pandemic. We were able to implement the following innovations for our customers and Captains within a stipulated time frame and maintained business continuity:

  • Essential at home: Rapido has been operating delivery services for e-commerce companies for close to 2 years now namely Zomato, Swiggy, Delhivery.com, Myntra, Eat.Fit. SuprDaily, Mapprr, 24*7 Stores, Kalerya, Bharatpe. During lockdown due to COVID 19 pandemic, we accelerated the existing Rapido-Delivery services to provide for the delivery of essential goods and partnered with major online companies like Big Bazaar, Big Basket and Spencer’s for delivery of essential goods.

  • New Services Launched: The lockdown brought mobility to a standstill with restraints in everyday commuting for Indians all across. To ensure a quick, safe and cost-effective exchange of essentials amongst users in these challenging times, we extended our logistics offers and launched Rapido Local, a person-to-person delivery service. Initially piloted in Hyderabad, Bangalore and Kolkata, the service is now available in 45 cities including additional Tier I cities like Delhi, and Chennai. Customers can request pick up and drop of food, groceries and medicine on the App, from or to another customer.We also launched Rapido Store, a one-stop solution for all business deliveries. Rapido Store, as a service, is a convenient tool for offline and online businesses to help them reach out and deliver products to their customers in these challenging times. Rapido Store will help local businesses take care of multiple customer deliveries simultaneously in the most affordable and trusted manner. Rapido Auto, was launched recently across all cities we are present in, with an aim to provide an alternative safe commute option to customers to avail while travelling in this time.

  • Ensuring Safety Measures: We are committed towards providing a safe riding experience to all our customers. To ensure the same, we are encouraging customers to carry their personal helmet through Rapido app. We recently introduced Rapido Safety Shields, a first of its kind safety measure program by a bike taxi player in the country, to further increase the safety aspect of using bike taxi during this ongoing pandemic. The Rapido Safety Shield, which weighs around 400 gms, is a lightweight, PVC board that is attached to the Captain’s back like a rucksack. The shield covers the Captain’s body and makes for a considerable distance between the customer and our Captain.

  • We have made mandatory guidelines for our Captains to follow:
                   : To install the AarogyaSetu app before they can go On-duty to start accepting orders
                   : To wear a mask at all times and carry sanitizers, hair net in addition to the mandatory helmets
                   : Captains are asked to maintain personal hygiene and sanitize their bikes at regular intervals. Especially
                      sanitize the pillion seat before on- boarding customers in addition to wearing a mask at all times.
                   : Captains will also get a checklist of items and declaration that they have to adhere to before accepting
                     rides. This will be done every time a Captains goes online.

  • New Policy: We have also launched new policy support where we are providing free cancellation if any of our Captains or customers are without a mask. After every ride, customers can give feedback about Captains not using the mask or sanitizer and we will take the appropriate action against the violators.

  • Rapido also conducted a bike sanitisation and vehicle check-up camp where around 200 bikes were sanitized and checked over three days in Delhi and three days in Gurgaon. During this camp, Rapido distributed free T-shirts to the participants and spread the awareness of maintaining hygiene, while riding a bike during the pandemic.

Q. What has been the year on year growth rate observed in the industry? 

This is a very nascent industry. We grew 100 times in two years before COVID. The general growth rate observed is 4-5 times every year. According to me, two wheeler ride sharing market will be bigger than the four wheeler ride sharing market in next 5 years. During COVID, the number of Captains working with us declined. Currently, we have more than 1 million Captains. We onboard more than a lakh Captains every month. 

Q. What is the future growth scenario that the industry would witness?

Bike Taxi is a very nascent category. Major companies are focused on expanding awareness among the customers about their service offerings. The market hasn't reached maturity therefore there is a lot of room for players to create a position for themselves in the market and expand their service offerings. Companies are focusing on expanding their presence and capturing a larger market share.

Right now, the way two wheeler ride sharing has penetrated in India is way lesser than other geographies including Indonesia, US, China or Russia. With the kind of population we have, we are 10 times lesser than any other country in terms of number of users. The companies have to go lot more local. Companies should expand to Tier II and Tier III. In terms of technology, companies should look for simpler ways for booking the ride and make it easier for every age group to use the app. Inclusivity and streamlining the booking would be focus areas for companies in future.

Q. What are Rapido’s plans for the future?

Right now we have expanded our service offerings from two wheelers to three wheeler ride sharing service. Definitely we believe, three wheelersis another safer mode of commute as compared to public transport in majority of cities. It’s a very natural extension of our service offerings therefore we have expanded to this category. Currently we are highly focused on two wheeler and three wheeler segments. We don’t have any plans to expand to any other product category. 

Q. What factors should a company take into consideration before entering in this segment? 

The most difficult part for a bike taxi company in the industry is to get the unit economics. In an industry, which is a low ticket size and wafer thin margin business has to be solved in a completely different as compared to high margin business. Ride sharing category could consume a lot of money if things are not being handled in a right way. 

It’s not just putting 1000s of vehicles on the road and matching the demand and supply. It is also about getting captains on board, training them, retaining them and creating equal opportunities for them to create a profitable business.

For any queries or feedback, reach out at namit@kenresearch.com

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