HomeEntrepreneurPavan Guntupalli’s Plan to Expand Rapido in India's Ride-Hailing Landscape

Pavan Guntupalli’s Plan to Expand Rapido in India’s Ride-Hailing Landscape

Rapido, backed by Swiggy, has entered the four-wheeler cab-hailing segment, challenging established players like Uber, Ola, and BluSmart. Guntupalli highlighted the stagnant growth of the cab-hailing industry, citing a CAGR of under 5% in the past five years. Rapido aims to disrupt this trend with its zero-commission model, reducing cancellations and increasing market participation. 

The company plans to keep commissions low and explore alternative revenue streams, such as in-app advertisements.

About Pavan

Pavan Guntupalli, Co-Founder of Rapido, India’s bike taxi service, brings a background in software development, having previously worked at Samsung Research India. With a B.Tech degree in Electronics & Electrical Communications from IIT Kharagpur, he also co-founded Roppen Labs before venturing into the transportation industry.

Current strategy

To navigate the challenges faced in the ride-hailing industry, Pavan Guntupalli, Co-founder of Rapido, outlined the company’s strategy. Recognizing the decade-long disruption in cab ride-hailing, he emphasized the rising price per kilometer, declining availability of four-wheeler cabs during peak demand, and reduced earnings for drivers. 

Guntupalli acknowledged the high commissions that contribute to the challenges for both drivers and companies with substantial cost structures.

Rapido, positioned as a low-cost player since its inception with bike rides, adopted a cost-conscious approach. Despite handling 15 lakh rides daily with less than 10 people managing Indian payments, the company maintains low operational costs. In extending its services to four-wheeler cabs, Rapido introduced a zero-commission subscription model, aiming to operate on super-low margins. This approach not only benefits drivers by increasing satisfaction levels but also enhances the overall user experience by reinvigorating driver participation in the online cab-hailing system.

Scaling up

To scale up its operations, Rapido, currently operational in over 100 cities in India with more than 35% of revenue generated from tier-II and III cities, has outlined its expansion strategy. Presently boasting 1.5 lakh drivers across Hyderabad, Bangalore, and New Delhi, the company plans a gradual city-wise expansion over the next year. Mumbai, Pune, Chennai, and Kolkata are among the immediate targets.

Rapido’s investment focus includes the electrification of its existing fleet, anticipating a substantial reduction in operational costs. The company is also considering entering the e-rickshaw segment, recognizing it as the next mode of transportation prevalent in smaller cities.

Safety measures

Rapido has implemented several measures to enhance user safety and ensure the quality of its workforce. In addition to standard background checks, the company offers a one-tap 24/7 emergency button connecting users to internal teams and local police stations. For rides taken post 10 pm, Rapido initiates a proactive safety check by contacting users and verifying the journey. Users receive prompts for any deviations from the suggested route or unscheduled stops, ensuring transparency.

To maintain the quality of its drivers, Rapido closely monitors their performance during the initial ten rides and collects subjective feedback from users. In case of any issues, the company takes swift action by placing profiles on hold to uphold safety standards.

Pavan also underscored the company’s commitment to women’s safety in its ride-hailing services. Guntupalli stated that Rapido actively verifies with users regarding any deviations from the planned route or changes in destination during rides. He says,

“The concerned incident happened during an offline trip. We are trying to educate users to always opt for an online trip as we have several safety features that they can use.” However, he added, “Despite it being an offline ride, we have identified the driver and handed him over to the police for further investigation.”

Revenue growth

Rapido’s core product, bike taxis, currently records close to a million rides daily, contributing significantly to healthy revenue growth. Bikes still constitute about 50% of the revenue, with the remainder divided among autos, local parcel delivery services, and cabs. Over the next year and a half, the company anticipates cabs to contribute around 15% to the total revenue. Rapido handles over a lakh rides for on-demand delivery, encompassing both deliveries and parcels.

With a year-on-year growth rate of 50%, Rapido is prioritizing profitability and has achieved operational profitability. The company aims for an overall 40% growth in the next fiscal year. While the cab service operates on a zero-commission model, bikes incur approximately a 15% commission, and autos follow a subscription model.

Promising future

Regarding the expansion, Pavan says,

“Rapido Cabs is going to be a profitable business model itself. Starting with the break-even business model, we are eventually going to have a profitable model soon. In the span of up to 1.5 years, Rapido Cabs revenue will account for 15-20 percent of our overall revenue to start with.”

Rapido Cabs aims to expand its services to major Indian cities, including Chennai, Mumbai, Kolkata, Pune, and others by mid-2024. The company, emphasizing its eco-friendly commitment, currently incorporates electric vehicles in its fleet. To bolster this green initiative, Rapido plans to forge additional partnerships to increase the number of electric cabs in its fleet.

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Snigdha Basu
Snigdha Basu
A multifaceted writer, Snigdha Basu is a freelancer and a columnist at Entrepreneurs Today. She also spearheads Chic Life Edition - her own Digital Magazine with sustainable fashion, beauty, and culture at its core. Reach out to Snigdha at [email protected] for inquiries.
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