Rapido: A bike sharing company that takes on Uber and Ola

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Background

Rapido is a Bengaluru based bike sharing startup and one of the early movers in this sector in India. It was established by three engineering grads in 2014 as TheKarrier, changing its name to Rapido later in 2015.

AppApe data shows that Rapido’s android app in India is being used by more than 6 million monthly active users (MAU) and with estimated MoM growth of +500,000 in July.

Competition

Rapido provided employment to thousands of Indians, even to those who don’t own a motor bike. The simplicity of this startup is that anyone who is eligible to ride a two-wheeler can apply and earn money. It is one of the strengths of Rapido which can help it flex on its competition.

Speaking of competition, we can compare Rapido with Ola and Uber from AppApe’s graph. Although this is not an apples to apples comparison, it gives us an idea regarding the players in ride hailing services in India.

Rapido’s popularity since the beginning of this year shows steady growth despite being on the lower end of the graph in terms of MAU with its competitors.

Singapore-based and the largest ride hailing company in Southeast Asia, Grab, has nearly 16 million MAU in Indonesia. Grab has recently begun its operations in India and it can be seen as a head-on competitor for Rapido.

Grab has much lower user base when pitted against Rapido. The lower adoption rate for both Grab and Rapido compared to other ride hailing services raises the question whether the Indian market has not reached its saturation point in this sector. If that is the case, then there is potential for growth for such companies.

Business Objectives

Rapido’s foundation is strong because of ubiquity of two-wheelers in India. According to Forbes, for every car sold there are six motorcycles sharing hands. Anyone can apply for Rapido and can earn as long as they have a two-wheeler driver’s license. The startup currently has 60000 active riders and most of them are students and young working adults.

Its business objective is to reach 1 million rides this year (Forbes). Given that nearly 6.1% of working population are currently unemployed (Government of India Ministry of Labour and Employment), it should be easy for Rapido to hire riders without facing any hassle and to reach their objectives. So it has an upper hand in terms of efficiently hiring two-wheelers and their riders.

Bike rides are generally inexpensive and more convenient than any other transportation method in India. According to Forbes, the commuter’s ride is 40% to 60% cheaper than a cab ride. Not even cars can be matched with the unparalleled number of motorcycles that exist there and last mile connectivity is a big issue which can be solved by having smaller sized vehicles such as two-wheelers that can zoom into any street where cars cannot fit.

Incredible number of motorcycles, huge employment seeking population, and bad last mile connectivity gives Rapido a fair chance over other ride hailing companies such as Uber or Ola to compete by occupying the unsaturated market while being inexpensive due to availability of necessary resources.

Hurdles

Rapido which began its operations in Bengaluru has slowly expanded to other cities across India. Its efforts to become available countrywide is not without obstacles! Like any other startup in India, hurdles knock the door as soon as a company takes off. Even Uber, the king of taxi sharing companies, has met its fair share of hurdles with governments, local rules and regulations, restrictions and, combination of protests from taxi unions around the world to deter Uber’s plan from entering their territories.

Similarly, Rapido was banned in multiple states in India for those very reasons (thenewsminute). The app had violated provisions of law in Chennai, Tamil Nadu where it is illegal to operate two-wheelers as commercial vehicles. It was also banned in Bengaluru, Karnataka because Rapido was operating beyond the existing framework created by state transport regulatory authority.

The state governments eventually allowed the service to be resumed in the above mentioned cities earlier this month, after Rapido made a formal explanation to the judges of the state high court regarding their business practices and assuring the extended safety measures to the riders and pillion passengers.

Funding

Not only were they able to resume operations in the two most profitable cities, but they are currently in process of securing funds by local and international investors. According to Livemint, Rapido is in talks to gain $50 million from Westbridge Capital and China’s Shunwei. Earlier this year, the startup had raised $10 million in a round led by Nexus and Integrated Capital. The startup is currently valued at $200 million.

Any company could be subject to hurdles, but every now and then there comes a company that defies all the odds and truly excels in its field that stands out among the crowd. Rapido is a good example of how Indian startups can be creative, persistent and never cease to own an opportunity as soon as possible.

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Featured Image used from Rapido webpage