Presented By:-Aayush Khandelwal

BM 010002

The Journey of Redbus

Introduction

Founders Phani, Sudhakar and Charan were the classmates from BITS Pilani.

They choose the name Redbus because “RED” symbolized Energy and Passion and “BUS” would help customers to connect with the business.

Internet usage within the country was growing rapidly. India was on 4th rank with 81 mn internet users.

The Initial Idea

Discussion with bus operators persuaded Phani that a third party is needed to change the system as most operators were smaller players who did not care at all about technology.

Phani thought it would be a good idea to build an IT- based system for operators.

Mentoring

The Bangalore chapter of The Indus Entrepreneurs (TiE) was running the Entrepreneur Acceleration Programme (EAP).

Phani and his team presented their idea to TiE to be a part of EAP.

The TiE team became mentors to the Redbus team.

TiE adopted the venture in July 2006, and the reason for its selection was the team’s passion and potential to scale up the venture as they were attacking fragmented space.

The Birth of Redbus

India’s first online bus ticketing portal, founded in August 2006 by a group of 3 friends.

Redbus launched its services on 18th august, 2006, with US$ 10,000.

The entire website was designed by the founders being from Engg. Background other than IT.

Testing Time

None of the bank was ready to provide them payment gateway as founders want to sell online bus tickets and they did not own any current bank account to show their financial credentials.

One of the founder of the Redbus stated that “This was the real test of our ego.” as many times people call up, harass and sometimes even abuse.

Once they had to deliver tickets at the IBM office but Sudhakar refused to go inside fearing someone would recognize him as he used to work at IBM.

Sometimes the founders stood outside the gates of big companies and handing out the pamphlets to young professionals who were their target audience.

And the operators saw them just as an online distribution channel but the founders were very clear about Redbus’ value preposition, which was superior customer experience.

Industry and Competition

India’s road travel segment was estimated to be around US$3 bn in size by 2008.

Redbus’ major competitor were the agents itself.

But it faced competition from ticketwala.com and few other players but Redbus enjoyed the top position with 70% share of web traffic.

Fund Raising

Redbus selected Seedfund among various Investors, which invested US$500,000 in Redbus.

Another funding was done in July 2008, where Inventus Capital, helion and Seedfund invested US$2.5 million.

Inventory Aggregation

To generate more Inventory the Redbus asked operators to reserve inventory until three hours before departure time.

The operators were encouraged to sell 20% of their tickets through Redbus.

To ensure a consistent inventory Redbus maintained strong relationships with bus operators & distinguished their services from travel agents.

Currently, redbus works with 700 operators, out of which 300 have fully automated their ticketing systems.

Revenue Model

Redbus charge a commission on the value of tickets sold.

Once a customer purchased a ticket and made a payment to Redbus, the company deducted 10% commission and paid the bus operator the remaining money.

Which tickets were sold through the third party, they shared 5% of commission with its partners.

On an average 5000 tickets sold daily but of which the company website sold approx. 3000 tickets.

Redbus had 7 physical call centers with 20-25 members each working from 7am to 11 pm and received about 10,000 calls daily.

These also contributed to sell the tickets about 1500 on daily basis.

And now the advertisement on the website is also a source of revenue for the company.

People

Abey Zacharia, head business development (Standard chartered)

Mayank Bidawakta, Head marketing (ICICI bank)

Aditya swaroop, head alliances (Airtel)Redbus has an employee base of 250, and

this year it is expected to increase by an additional 100.

The Growth Story

From august 2006 to september 2010 company has opened 10 offices.

Company has a network of 700 operators on more than 10,000 routes with an inventory of 500,000 tickets covering 2,500 cities in 16 states.

By the year ending of march 2008 the revenue reached US$1 mn, in 2009 it touched US$6 mn and by 2010 it crossed US$14 mn and touched US$30 million by the current year ending march 2011, which is expected to reach US$200 mn by 2015.

Future Challenges

Redbus is among forbes’ top five start ups to be watched in India in 2010.

Its challenges are to cover maximum operators to computerize their ticket reservation system.

Thank You