Interstate bus travel in India was a highly unorganized sector with many private local players and government buses. A consequence of this was the selling of bus tickets through traditional brick-and-mortar agents. Another problem with bus travel was immediate booking of tickets before journey. There used to be few advance bookings. Travelling to remote corners or on an immediate basis through bus remained a cumbersome task. Moreover there was no guarantee that if you went to a bus stand, you would find a bus.
To address these problems, in 2006, BITS Pilani alumni Phanindra Sama, Sudhakar Pasupunuri and Charan Padmaraju started Redbus, to sell bus tickets online. The idea came from Phanindra's personal experience with bus travel when he could not spend vacations with his family and reach home on Diwali.
Phanindra and his two co-founders took market surveys to understand the market and they developed a plan for their business. Their business plan was among one of the winners at the TiE (The Indus Entrepreneurs) mentorship competition. Their portal was created with the help of the mentoring and seed funding provided by the competition.
Today Redbus has managed to transform an entire system of age of travel in this country. One of their major achievements has been in convincing bus operators to try their system. I feel this is one major barrier they've overcome as changing minds of old business owners is a herculean task.
Redbus operates in a two sided market much like credit card companies. They have two sets of customers 1) Use their portal to buy tickets, 2) Bus operators. These markets are tricky to get into as for you getting one customer is contingent on having the other and the vice-versa. So for Redbus to have people buy tickets, it needed bus operators on its site and for bus operators to see viability, they needed to see people buying tickets.
There are importantly 3 factors that are responsible for RedBus.in's success.
1. Customer orientation
Their business idea from its inception focuses on reducing customer hassle. Customer orientation and user experience is the core. Their first customer i.e. the ticket buyer was always easy to get as they had a sound pain point. The other important factor i.e. getting bus operators to sell tickets also proved to be an important pain point for operators. Many operators were running on unprofitable routes with low occupancy and an increasing salary bill. Thus their business model addressed to needs of both sets of customers.
2. The right mix
A great team is on key ingredient of any successful startup. Many startups with great ideas fizzle out because of the wrong people. Redbus has done it by bringing in veterans of the online market on board. One such employee is its chief product officer Alok Goel. Alok spent around three years at Google India and became the head of mobile search and products. Alok put in his papers at Google and joined Redbus in October 2012. Drew Olanoff at Techcrunch in his story on TechCrunch said that Alok clearly has a Google mind. A Google mind is something I’ve noticed from current and former Googlers where they attack a problem as if they have all of the world’s resources at their fingertips, whether they have $1 or $1 billion. That type of moonshot thinking is what propels a startup into a world-class business.
3. Long term vision
Redbus is constantly in the mode of pushing the boundaries of improving user experience. One such innovation they brought in 2012 was the SMS ticket feature. Before that users had to take a printout of the ticket. In a country like India, which is still low on internet penetration leave along printing facilities SMS was one feature that would've been easy on users and the environment. Redbus implemented it by persuading drivers to accept SMS as a ticket.
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Read more interesting articles on Redbus
- RedBus Continues To Dominate In India, But That’s Not What Makes Them Special (TechCrunch)
- Redbus Has The Hot Ticket (Forbes India)
- Redbus company profile (Crunchbase company profile)
- Redbus (Story of Redbus)
- RedBus.in Weekly Startup Profiles (NEN)