Something curious is happening in India’s mobility sector. While you continued to wait for your Uber cab, which you know deep in your heart will get cancelled (again!), a low-key desi operator has come out of nowhere and taken over the nation’s ride-hailing sector.
If you thought Bengaluru startup Rapido was just some small bike taxi service, think again. Purely on the strength of its monthly active users, Rapido had already surpassed Uber last year itself—but that was only based on numbers, with Rapido scoring with low-value bike ride hailers compared to Uber’s repertoire ranging from autos to premium cars and even mobile homes.
With the company venturing into taxicabs just over a year ago, a fiefdom of Uber and Ola, both the existing giants are now feeling the heat. Rapido now is said to have grabbed three out of every 10 taxi cars being hailed in India. And while the number of taxi cars for Uber and Ola still may be higher, once you put together the entire gamut of ride-hailing from bikes to autos to cars, the writing on the wall is unmissable—Rapido is now India’s ride-hailing champ. At least for now.
Uber global CEO Dara Khosrowshahi famously said on a podcast recently, “Ola used to be our main competition. Now, the tougher competition in India is Rapido.”
The decade-old startup founded by Aravind Sanka, Pavan Guntupalli, and S.R. Rishikesh, that is now Rapido, struggled a lot, including trying to be a logistics provider, before hitting upon the billion-dollar idea—two-wheeler taxis as the easiest possible way out to get around India’s intra-city transportation gridlock.
Despite the low-value rides and the mounting losses, Rapido, over the years, notched up a reputation, something that made the Ubers of the world sit up and take notice. In 2018, Rapido had an average 30,000 rides, a number which has grown exponentially since (except during the Pandemic blip). As per the new figures, Rapido has 5 crore active users on Android, compared to Uber’s 3 crore.
What worked for Rapido was the one basic factor that bike taxis are not only dexterous in dealing with the bumper-to-bumper traffic of cities like Bengaluru, they were also affordable, which meant the young crowd took to it with gusto. It’s post-Covid growth can also be attributed to the fact that while its rivals were struggling hard to get the drivers back from the villages as well as make them agree to their terms, Rapido followed a subscription model instead of a commission model – leading to lower fares for the riders and higher income for the drivers (who are called ‘captains’ in the Rapido-verse).
Despite its growth in the bike taxi scene, Rapido's ride to the top was tempestuous, to put it mildly. The lack of clarity on bike taxis legality led to several skirmishes with the authorities, especially in Tamil Nadu, Karnataka and Maharashtra. There were also street-level pressures, with auto and taxi drivers in Bengaluru complaining that Rapido’s use of anyone with a bike who was ready to join in was not only illegal, but was also hitting their means of income. Instances of auto or taxi union guys roughing up Rapido bike drivers were reported commonly at one point of time—the matter of legality getting some sort of resolution after it reached the courts.
“Rapido’s agile and innovative business model has given it an edge compared to Uber and Ola,” said Jayatu Sen Chaudhury, professor (finance & analytics) at Great Lakes Institute of Management, Gurugram, adding, “But it needs to be careful about a few things.”
Chaudhury explained, "First, regulatory hurdles, second cash flow pressures – high cash burn rate erodes profitability and hits one hard if funding slows. Third, reputation risk – fines for misleading ads leading to customer trust issues. (And) fourth, service issues while trying to stretch operational efficiency in new markets.”
He has a point. Rapido is yet to make profits, even as it faces off against a profit-making multinational giant that is notorious for its competitive streak. Uber is reported to be striking back with competitive fares, incentives for drivers and surprise, surprise, apparently even focusing on customer satisfaction and issues like driver cancellations which has plagued Uber riders for years.
The ride-hailing scene in India presents a pretty checkered picture. Before the apps and technology, it was scattered owner-led scenario with a few professional cab companies who catered primarily to corporate clients. The arrival of app-based cab hailing has also seen churn, with initial players like ‘Taxi 4 Sure’ being gobbled up by Ola, another Bengaluru unicorn, which itself went through major existentialist troubles since the pandemic, with the promoter himself moving onto electric scooters, AI and the likes. The all-electric BluSmart from Gurugram had also seen a meteoric rise, before allegations of financial mismanagement did it in.
It was a duopoly for long, between Ola and Uber, until Rapido came out of nowhere and stole the crown. But the bigger question is whether it can hold on to it. Competitors like Namma Yatri are gnawing at its heels, while Uber will always be a thorn on its side. The company has also expanded into last-mile delivery, and is eyeing another field where duopoly rules – the food delivery sector, which literally has just two players, Zomato and Swiggy.
“Rapido has to keep a close watch on (all these) factors and be ready to play a long term game to win the heart and mind of Indian customers.”
