Rapido on Tuesday officially announced its entry into the cab aggregation space with the launch of ‘Rapido Cabs’. The company already provides bike taxis and auto (three-wheeler) passengers to its customers. The addition of a cab service brings Rapido into closer competition with the market leaders Ola and Uber. EV-based BluSmart and InDrive are also trying to tap into the market, but have a relatively smaller presence in the market.
About a month ago, Rapido conducted a pilot test of its cab service in Hyderabad. The company then said that the pilot test had got off to a “fantastic start.”
India’s online taxi services market in India was valued at Rs 30.72 billion in FY 2020 and is projected to grow at a CAGR of 12.93% between FY 2021 and FY2025, reaching Rs 55.15 billion by FY 2025. Clearly, there’s enormous potential for the industry.
The ride-hailing space, however, is dominated by Bhavish Aggarwal-led Ola and global firm Uber, which have also become synonymous with cab services in the country. Prior to their arrival, the market was pretty much unorganized and run by individual taxi operators.
Rapido may not have the early-mover advantage in the industry but it can bet on its existing customer base as well as the always-increasing demand for such services. The company can also look to provide a superior travel experience as both Ola and Uber have struggled to deliver consistent quality, which includes affordability, availability of cabs in the proximity, professional drivers, and more importantly safety. Also, the two firms have often found themselves at loggerheads with the drivers, who have long demanded better remunerations.
Rapido Cabs has kicked off with a fleet of 100,000 vehicles. The company is also looking to address the remuneration problems faced by drivers of Ola and Uber. Instead of a commission-based system, wherein Ola and Uber charge some money on each ride, Rapido Cab is approaching the SaaS model wherein drivers will have to pay a dynamic subscription fee based on their earnings through the platform.
Rapido is currently available in more than 100 cities. It has nearly 10 million customers and has done 100 million rides so far. The startup has raised around $310 million so far and is backed by the likes of Nexus Venture Partners and WestBridge Capital.
Rapido has not filed its FY23 financial earnings yet but the FY22 numbers highlight the company’s struggles. Its revenue from operations grew 91.5% to Rs 144.8 crore during FY22 from Rs 75.6 crore in FY21. To achieve a 90% growth, however, Rapido spent more than two times as compared to the last fiscal. Thus its losses swelled 2.6X to Rs 439 crore in FY22. It also reported cash outflows from operations of Rs 437 crore in FY22 which soared 2X during the year.
From a business point of view, the addition of a cab service seemed inevitable for the ride-hailing service. Rapido, however, may be looking to add more layers to its platform. According to the TechCrunch report cited above, the company is also mulling over adding bus ticketing services in partnership with Gurugram-based Zingbus.