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Delhi-based bus aggregator is trying to create a niche for itself in a crowded market
Megha, an executive with a corporate firm, is tired after a day’s work.
The very thought of travelling back home in overcrowded public transport would have left her further exhausted. She also does not want to dip into her savings for a cab ride.
Instead, Megha pulls out her mobile phone and taps on an image.
Her ride is booked and she gets an assured seat in a minibus that will take her back home comfortably.
This drive back is being made pleasant for Megha and scores of others like her by Shuttl, a bus aggregator that offers an online seat booking service.
The start-up has tied up with vehicle owners to run air-conditioned minibuses/tempos on fixed routes.
The model has attracted investors, with Lightspeed, Sequoia India and Times Internet having invested $20 million in Series-A funding, in December 2015.
The service is targeted at those who do not own cars but do not wish to take an auto-rickshaw or depend on overcrowded public transport.
Currently, operational in the National Capital Region, the app has crossed 100,000 downloads and facilitated half-a-million rides in only six months since its launch.
Back to beginning
Founded by IIT-Delhi alumnus and Jabong’s former director (operations) of Amit Singh, and IIT-Kanpur alumnus Deepanshu Malviya in April 2015, the start-up was born from their own experience.
Getting a seat while travelling in public transport, especially during rush hours, is next to impossible, says Singh.
“As engineers, we always resolve complex problems and transportation being one, needed a solution,” he added.
To address this, the duo created an app in a day and tried it out with two customers, using two Innova cars.
To their surprise, the two customers brought five new ones with them at the end of the day.
In two weeks, they were facilitating 100 rides a day.
The challenge, however, was getting buses on board, attracting talent and raising money.
Here, their past experience and contacts, created during the Jabong days, helped.
Almost a year down the line, the start-up has nearly 500 air-conditioned minibuses and claims to have facilitated around 15,000 rides a day on 60 routes.
Shuttl operates in Gurgaon, Noida, Faridabad and parts of Delhi.
“Despite not spending much on marketing, more than two-thirds of our users are coming from the organic channel. We are growing at 30 per cent week-on-week,” says Singh.
"The ticket size ranges from Rs 20 to Rs 100, depending on route and distance.
This is slightly costlier when compared with public transport but Singh says people don’t mind paying a little more for an assured and comfortable ride.
During peak hours, the occupancy rate is nearly 92 per cent.
Way forward
Shuttl plans to use the investments for building technology products, expansion and achieving deeper penetration in existing geographies.
“Solving daily travel issues in a safe, affordable and green way has great potential,” says Bejul Somaia, managing director, Lightspeed India Partners Advisors, on choosing Shuttl.
He adds, people are slowly but surely embracing the idea of shared urban transport, provided they get a safe, comfortable and affordable ride, and “The team at Shuttl is providing just that.”
By 2016-end, the company is targeting 100,000 rides a day and hopes to achieve operational profit on a few routes. In the next two years, it is aiming to facilitate 500,000 rides a day. Singh declines to share revenues and profitability.
“In the next one and a half to two years, we would see profit at operational level on some of the old routes.”
It works on a commission model.
The company says it could break even with 10 customers on many of its routes, on the back of its ‘suggest a route’ feature that invites customers to suggest their routes and rail to start a new one.
Completion of new metro lines would add to the opportunity, as the company can act as the first and last mile connectivity for commuters.
Singh says they would be focused on Delhi for at least the next six months as there are at least 20 million rides happening in the capital itself. It might look at Mumbai and Hyderabad, in the future.
Challenges
Every day, about 400,000 cars ply on the Delhi/NCR roads, along with four million metro rides and four million Delhi Transport Corporation bus rides.
Shuttl sees a case in taking its services where public transportation is not doing well.
It is also working with stakeholders to operate along with the recent plying odd-even initiative of the Delhi government. For the next one and a half years, it says it has sufficient fund to support its plans.
The start-up sees the biggest challenge in developing and constantly upgrading the technology and data cracking. The market is also getting crowded, with more players coming into this space.
About 150,000 buses transport some 70 million people every day in India, according to industry estimates.
In comparison, 23 million people travel by train.
Bengaluru-based Zipgo and Mumbai-based rBus are the biggest players in the segment.
Both are spreading their wings to other cities, including Delhi. Cab aggreator Ola too has plans to invest Rs 120-150 crore to launch a bus service.
Creating the right supply of buses, routes, optimising services and customer loyalty will be the other challenges for the company.
FACT BOX
Founders: Amit Singh and Deepanshu Malviya
Founding year: April 2015
Fund raised: $3 million as seed funding in June 2015; Series-A of $20 million from Lightspeed, Sequoia India & Times Internet in December 2015
Operations: 500 buses in Delhi/NCR; 60-plus routes with average ridership of over 15,000 a day
Revenue: Not disclosed
Target: 100,000 rides a day by 2016-end; operational profitability on select routes in two years
EXPERT TAKE: Jitender Sharma
Daily commuting in metro cities is a major challenge.
Ride-sharing solutions, like ZipGo, are targeted at people who find public buses overcrowded, taxis too expensive and driving in traffic too stressful.
We estimate the market to be 100 million passengers a day, translating into a $60-billion size. ZipGo crossed 1,000 rides a day in less than a month after launch.
So, there is demand and acceptance for such solutions.
The only challenge we see is our laws are a bit antiquated and do not address app-based services in the transportation sector.
But, as we have seen in the case of taxi aggregators, this is expected. Regulations tend to lag innovation.
We are working with state governments and the Centre to address this.
Shuttl’s business model is the same as ZipGo.
They launched in Gurgaon with a goal to address last-mile connectivity from metro rail stations to office complexes.
They have seen rapid adoption as well. ZipGo also launched a women-only service in the NCR in December. There is a demand for such services in not only Tier-I cities but also in Tier-II.
Jitender Sharma is co-founder & CEO of ZipGo
