A ride-hailing unicorn little known outside of India is gaining users faster than Uber Technologies Inc, disrupting the San Francisco titan’s effort to conquer a key growth market.
Rapido, based in the southern city of Bangalore, has upended the local transportation sector with its inexpensive motorcycle taxis and unique pricing model, racking up more downloads last year than Uber and fellow Indian rival Ola. The start-up has now achieved profitability for the first time, its co-founders said in an interview, setting them up for a potential public listing.
Cut-rate pricing and a huge supply of drivers have been integral to Rapido’s unexpected ascent. By charging each driver a tiny subscription fee — rather than commissions on each ride as Uber does — Rapido is shaking up one of the world’s last major arenas for ride-hailing growth.
Photo: AFP
“What the four-wheeler is to the US, we believe two-wheelers are to India,” co-founder Pavan Guntupalli said. “Even in a small village, you can find a farmer or a farmer’s son owning a two-wheeler.”
India is crucial for Uber because its massive population of more than 1.4 billion people represents an unparalleled opportunity for expansion. While the company derives most of its revenue from developed markets such as the US, hundreds of millions of Indian consumers are entering the digital economy, transacting online and forming brand loyalties. Uber sold its China business in 2016 and exited populous Southeast Asia two years later.
“India is not just one of Uber’s biggest markets, it’s one of our most strategically important,” Uber Asia Pacific head of mobility Dom Taylor said in Mumbai on Tuesday. He was speaking at an event to announce new features for the platform, such as one that allows riders to pay lower fares if they wait longer to be picked up.
Ola was founded in 2010, three years before Uber’s India launch and five years before Rapido began operating. With billions of dollars in funding from top global backers, Ola and Uber have deployed vast sums to compete for customers, shelling out for advertisements and building out their driver networks as they expanded from cars into motorcycle and auto rickshaw taxis.
While the duo traditionally generated revenue by taking a commission on rides, Rapido has pioneered a new system.
Its motorcycle drivers pay a subscription, as small as 9 rupees (US$0.10) per day, to gain access to its platform. They can then accept as many rides as they want, charging fares that they keep, beginning at 20 rupees. In a sign of Rapido’s success, Uber and Ola have followed suit with similar zero-commission pricing options for some drivers.
Rapido has been able to lure legions of drivers to its platform, ferrying workers, students and shoppers around cities where public transportation can be limited and many people do not own cars.
The Rapido app was downloaded about 33 million times last year, outpacing Uber’s 21 million downloads and Ola’s 19 million over that period, according to data compiled by Appfigures. While Uber and Ola have more cumulative downloads, when it comes to new user acquisition, “Rapido is managing it best,” said Randy Nelson, head of insights at Appfigures.
“Our business is growing sustainably at an incredible pace, and we are well-positioned for long-term success,” an Uber spokesperson said, adding that Uber leads India’s auto sector, which is a higher-margin business.
Rapido has raised US$200 million from WestBridge Capital, Nexus Venture Partners, Prosus and others, with the last round of funding coming at a US$1.1 billion post-money valuation. It is now investing to expand beyond the more than 250 cities in which it operates, targeting India’s many smaller locales.
“Do we want to IPO [initial public offering]? Definitely yes,” but the company has no timeline set, has enough funding and is focusing on long-term growth, Rapido co-founder Aravind Sanka said.
To be sure, Rapido faces challenges. Last month, it suspended its motorcycle taxi services in its home state of Karnataka, after the local high court ruled that using personal motorbikes for commercial services is illegal.
The matter is now under judicial consideration, a Rapido spokesperson said. Uber and Ola, which offer motorcycle taxis in the state and elsewhere, also suspended operations.
There are also questions about whether Rapido and other zero-commission ride-hailing services are liable to levy India’s goods and services tax on their zero-commission rides.
In addition to offering more affordable transportation options, Guntupalli and Sanka said safety has been a key focus. Rapido offers taxis for women that are driven by women, and in recent years, has begun installing seatbelts in auto-rickshaws, which typically do not have them.
The pair said they, along with fellow co-founder Rishikesh SR, simply understand better than their rivals what local consumers want. “We ourselves are middle-class Indians,” Guntupalli said.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, booked its first-ever profit from its Arizona subsidiary in the first half of this year, four years after operations began, a company financial statement showed. Wholly owned by TSMC, the Arizona unit contributed NT$4.52 billion (US$150.1 million) in net profit, compared with a loss of NT$4.34 billion a year earlier, the statement showed. The company attributed the turnaround to strong market demand and high factory utilization. The Arizona unit counts Apple Inc, Nvidia Corp and Advanced Micro Devices Inc among its major customers. The firm’s first fab in Arizona began high-volume production
VOTE OF CONFIDENCE: The Japanese company is adding Intel to an investment portfolio that includes artificial intelligence linchpins Nvidia Corp and TSMC Softbank Group Corp agreed to buy US$2 billion of Intel Corp stock, a surprise deal to shore up a struggling US name while boosting its own chip ambitions. The Japanese company, which is adding Intel to an investment portfolio that includes artificial intelligence (AI) linchpins Nvidia Corp and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), is to pay US$23 a share — a small discount to Intel’s last close. Shares of the US chipmaker, which would issue new stock to Softbank, surged more than 5 percent in after-hours trading. Softbank’s stock fell as much as 5.4 percent on Tuesday in Tokyo, its
COLLABORATION: Softbank would supply manufacturing gear to the factory, and a joint venture would make AI data center equipment, Young Liu said Hon Hai Precision Industry Co (鴻海精密) would operate a US factory owned by Softbank Group Corp, setting up what is in the running to be the first manufacturing site in the Japanese company’s US$500 billion Stargate venture with OpenAI and Oracle Corp. Softbank is acquiring Hon Hai’s electric-vehicle plant in Ohio, but the Taiwanese company would continue to run the complex after turning it into an artificial intelligence (AI) server production plant, Hon Hai chairman Young Liu (劉揚偉) said yesterday. Softbank would supply manufacturing gear to the factory, and a joint venture between the two companies would make AI data
The Taiwan Automation Intelligence and Robot Show, which is to be held from Wednesday to Saturday at the Taipei Nangang Exhibition Center, would showcase the latest in artificial intelligence (AI)-driven robotics and automation technologies, the organizer said yesterday. The event would highlight applications in smart manufacturing, as well as information and communications technology, the Taiwan Automation Intelligence and Robotics Association said. More than 1,000 companies are to display innovations in semiconductors, electromechanics, industrial automation and intelligent manufacturing, it said in a news release. Visitors can explore automated guided vehicles, 3D machine vision systems and AI-powered applications at the show, along
RSS