How RAPIDO is secretly STEALING OLA and UBER's profits to break the duopoly? : Business Case study

Car and bike taxi platform Rapido has raised $180 million in its latest Series D financing with approximately 200 million two-wheelers on the road India is by far the world's largest market for motorcycles and scooters

uber

the ride recovery company has lost 2.8 billion dollars last year to the

rapido

taxi service they have survived an ambush by brush ola and

uber

and they seem to be surprised at what they have done well hello everyone if you want to beat to a billion dollar company then this episode is for you because the story I'm about to tell you today is the story of one of the smartest startups in the country the story I'm going to tell you today is the story of a small

business

quick call that managed to

break

into the powerful market of the ola and uber

duopoly

and while a dozen bicycle taxi companies emerged and perished n while even ola and uber fell back after failing in this segment

rapido

today stands as a dominant force in the same segment this segment i am talking about is all about pedicab segment and today Rapido is doing so well who make 4 likes rides a day have over 60,000 active passengers and have an app download of 25 million customers the question is how did Rapido manage to

break

into the big league of ola and uber while all other taxi companies on bikes they failed, what was their strategy that allowed them to break into this non-existent market in india and more importantly as

business

students what are the business lessons we need to learn from the rapid rise of this? the video is hosted by golden pie but more on this at the end of the video this is a story dating back to 2015 during this time ola and uber had already established themselves ola jio was almost here and all other companies were Jumping into the Indian taxi market that's when the founders of Rapido identified three major gaps in the market, the first gap they found was the lack of a ride-sharing service in the low-fare segment, so while wave and uber was great for taxi services the normal cost of the ride is between 200-400 rupees and the only rideshare service below this range was rickshaws and if you look at per capita income for India it is only 91 481 rupees a year which is 7623 rupees a month so obviously only a minuscule minority of 6 people out of the Indian population could offer taxi rides for 200 to 400 rupees in fact even before the outbreak of the pandemic, if you look at wave and uber growth in india, growth actually slowed down dramatically. at just 4.5 percent and travel per day peaking at 3.65 million entitlements, this clearly indicated that there was and still is high demand for the 200 ticket and under segment.

The second gap they identified was the huge two-wheeler market in India which was very, very underutilized according to the insights of one of the early investors in rapido there are 220 million bike owners in india and 20 of them are unemployed workers part-time or students and the average use of bicycles in a day is about 18 years, most importantly, the back seats of 80 percent of the bicycles on the roads are weakened, and lastly, public transport in india it is very slow and does not cover the most important places frequently enough add that With the misery of traffic whether it is uber buses or rickshaws you will end up wasting a lot of time and sometimes even hours but when When it comes to two-wheelers, we all know that we are experts at using our two-wheelers for cruising.

Both traffic and traffic regulations and this is where ladies and gentlemen, quick now if you remember from our wave

case

study

. The business strategy of these types of companies is quite simple and straightforward. The first phase that these companies implement is the cash drain phase. in which a company spends a ton of money to acquire interested parties for both demand and supply in

case

of vola they give us customers incredible discounts and ultra cheap rights to dow Download the app and on the other hand, the drivers got very very lucrative incentives so both customers and drivers were very happy so this way we got cheap rides at our doorstep and drivers earn 50 to 60 000 rupees per month driving. ola cabs and then in the 2nd and 3rd phase as the incentives of the taxi drivers went down the cost of the customers started to rise but in this process these companies incurred losses of hundreds of crores every quarter and this is where it is the biggest problem. this model comes where drivers fully commit to ola during the cash drain phase they take a loan to buy new vehicles and for the next five years they are tied to the vehicle and olaf as their main source of income and its quite understandable because if you are a blue collar worker earning Rs 20,000 a month when you see your driver friends earning Rs 60-80,000 a month that is a big enough incentive to motivate you to quit your job, take a loan and become in a wave driver, but the problem here is that over time these incentives started to wear off, but the drivers responsibilities of the car, which are loans and maintenance, remained, while a wave driver's income decreased constantly from 80,000 to 70,000 to 60,000 still had to pay Rs 15,000 installment for car loans still had to They had to incur rto approval cost which costs around Rs 40,000 a year and then they had to pay around Rs 6,000 for bi-monthly maintenance and eventually they end up only making Rs 30-35,000 in profit per month and this brought three Major issues to the market: Firstly, when extremely lucrative incentives are given, many drivers jump on board, so the amount of cash is automatically drained. second, with inflation and rising expenses, the expectation of drivers is that their income will continue to increase over time, but with both ola and uber it has been declining over time and soon in Although they began to feel the pinch, thirdly, if something like a pandemic happens suddenly, the livelihood of all these drivers is at stake, but this is where Rapido conveniently overcame these pains and avoided these issues altogether, because they didn't spend their money on convincing. people to buy a bike and become a full-time rider instead they took advantage of the existing inefficiency with two-wheelers already bought in the market and, more importantly, rapido acted as a secondary source of income for these drivers instead of the primary source of income as i said before there are 220 million bike owners in india and 20 of them are unemployed part time workers or students and this is where rapido found its workforce so you know what they designed their registration and marketing system in such a way that pretty much anyone who had some spare time could become a part time rapid captain and started earning 200-500 rupees a day d Depending on your location, time and spikes and by the way this is not income but your actual earnings after cutting fuel costs and all these factors together gave the rapid tre s main superpowers, first of all, even if the captain of the express does this full-time, the risk in comparison with wave and uber is extremely low, so a large number of captains jumped on board because the two-wheeled vehicles wheels have very low maintenance cost and very high mileage secondly for part time workers like students or the unemployed 200 to 500 rupees in a day is an absolute blessing with such a low barrier to entry so, While an older driver has to feed his family and came with the inspiration of earning Rs 30-50,000 a month, speed captains register by default with the expectation of monetizing their spare. time so they are more than happy to earn 200-500 rupees a day, in fact you will see many youtube videos where college students have vlogged on how to do speed rides.

I can empathize with the market Rapido is targeting. This is why Mr. Sanga says and I quote that our motto is to use existing vehicles and create employment for the underemployed. Our product is very appealing to part-time workers and provides much more flexibility. for captains and because of this the third benefit was that they didn't have to implement super fancy incentives to keep the workforce happy, as a result the consumption rate of rapid during the cash train phase was and still is extremely low and if you look at their funding history for the first three years through May 2018, they survived with only $2 million seed funding, and by the way, all thanks to our super efficient two-wheelers, ticket size for these customers is so low that discounts matter less compared to ola and uber rides now the question here is all this could be done by other bike taxi companies too why other companies and even giant companies like olan uber not could? break the market and fast you got it right this is where one of the most critical hurdles of the bike taxi market arises which is regulation because in india you can't have a wide license plate acting like a taxi and in the law of motors no provision to buy taxis so regulators didn't allow bike taxis in several states and it got even more complicated; in fact, this is one of the reasons why ola uber and others initially opted to create new fleets of yellow number plate bike taxis for a somewhat unique regulation. it was literally changing the entire business model of Rapido, but this is where the Indian mindset of the founders came into play. their visibility all of this while most authorities didn't even know Rapido existed now obviously this wasn't a long term solution but this is where they found a loophole you see the rules do. did not allow buying taxis but there was no rule that prohibited car sharing on a cost sharing basis so you know how rapido was positioned as bike sharing services and while operating under this positioning rapido and its investors went to the ministry of transport by road and highways and pushed to legalize the use of private bicycle taxi services, the committee was finally convinced and recommended that states promote bicycle taxis now, although many of the states are still against this concept, Regulatory heat has dissipated over the years, and Rapido's daily commutes have held up. increasing and today has more than 25 million customers has 60,000 cyclists and now aims to serve more than 50 million customers by the end of this year makes about 20 million orders per month and there are 5 women cyclists and almost 20 women customers today as of now, bike taxis are their main category, but they are also venturing into cars and deliveries.

This is how fast, being a small company, it broke into the market. ole and uber

duopoly

market and they avoided their mistakes to become pioneers in indian bike taxi segment now the question here is with the whole story what are the lessons to be learned from the rise of this wonderful efficient company long before Moving on to that, I want to thank our partners for this episode and that's a golden cake, people, all the stock market investors, having enjoyed their bull run, are now starting to face the mark of the market, inflation. it has crossed seven percent and the banks are eating. waste your money on low yields on fixed deposits that barely give five to six percent during uncertain times like these, you need to play it smart and you need to diversify the portfolio and fixed income instruments like bonds this way even if the market stocks go down even when the world economy is in recession your portfolio can give you a stable return bonds can give you a fixed return of up to 11 since interest payments are made on a regular basis, so investing in bonds will give you a additional stable cash flow previously only hnis had the privilege of investing in such high quality bonds but now golden pie makes these bonds accessible to retail investors like you and me through easy to use platforms golden pie is backed by zero gives and has partnered with axis direct iifl securities bajaj financial securities limited 5 pesar and many other brokers leaders and acts as a transparent market with the largest variety of bonds from all reputable institutions such as nbfcs, banks, psus companies, etc.

The best part is that the minimum investment isonly 10,000 rupees in the case of ncd ips and currently indian bulls euro equity and house finance initial public offerings are live so if this sounds useful to you check them out from the special link in the description moving on to the first business The lesson to be learned from Rapido is that whenever a new market opens up, the big players often try to push giant cakes out of the market. they often ignore breadcrumbs and that could be their business opportunity for example while amazon and flipkart battled for electronics and fashion segments nika started small with personal care and today is a billion dollar giant dollars in this case while ola and uber were shaking hands in the cab market rapido tabulated very cleverly in lesson number two of the bike taxi segment whenever you are involved in a cash draining mode in india you can attract consumers to use your product but when you use the cash drain for your workforce it is more likely to collapse after a certain point because you are creating unrealistic expectations as much as incentives are necessary it is very very important not to create unrealistic expectations realistic in this case we clearly saw how rapido is very careful with cash while ola and uber promised drivers the moon and lastly as an entrepreneur I love the fact that these Rapido guys first operated under the radar.

They got a proof of concept. nvestors that this market deserves an investment and then went on to scale their business, they know it just says a lot about the chugadu spirit of the entrepreneurs, so now all we have to do is wait and see how Rapido collaborates with Swiggy and achieve profitability , that's all from my side for today guys if you learned anything available please be sure to hit the like button to make youtuber happy and for more such insightful political and business case studies please subscribe to our channel thank you so much for look, see you next time, bye.