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We are leveraging online and offline models for car rentals in India: Bhavish Aggarwal, co-founder, Olacabs

20 Jun, 2012

The online car rental space has been hotting up with several startups entering the segment with funding from both angel investors and VCs. In 2012 alone, there have been five deals in this sector. One of these players is Mumbai-based startup ANI Technologies Pvt Ltd that runs an online marketplace for cabs and car rental services under the brand Olacabs. The company was co-founded by Bhavish Aggarwal (CEO) and Ankit Bhati (CTO) in 2010 and at present, it offers car rental services in Mumbai, Delhi and Bangalore.

The firm raised an angel round of funding from Anupam Mittal, Rehan Yar Khan, Kunal Bahl and Rohit Bansal (of Snapdeal), and some smaller investors in April 2011. And a year later, Olacabs raised its Series A funding from Tiger Global. The company has also launched for the Android platform last week, which will be followed by iOS and BlackBerry apps.

In an exclusive interview with Techcircle.in, Bhavish Aggarwal talks about his company, the competition and the online car rental market in India.

Why did you decide to enter the online car rental space?

After graduating in Computer Science from IIT Bombay, I worked for Microsoft for two years. But even then, I wanted to start my own company and explored various options (travel, retail etc.). When I looked at the car rental industry, I suddenly realised that it hadn't changed for decades. No one had leveraged technology to improve the services and modern operational processes were missing. That's when we decided to make use of technology for this space and came up with the idea of Olacabs. Also, the car rental market in India is around $5 billion, which means there is a huge market opportunity.

What is your business model?

We aggregate the fragmented and small-scale taxi operators, and single taxi owners onto our technology platform and get them bookings from the customers who call our call centre or make bookings through our portal/app. In return, we charge commissions from taxi operators.

Since you don't own the cabs, how do you ensure quality of service?

We do a number of quality checks on the cars every fortnight. These include taking pictures, checking the interiors and other measures. We also conduct in-house driver training programmes for all the drivers. Plus, drivers have to undergo police verification and background checks. We also provide soft skill training, so that our chauffeurs are not found lacking when it comes to customer interaction. It's something you won't find in most of the cabbies on the road.

How many cars do you have in your network?

Currently, we have close to 1,000 cars in a number of categories, including compact (Tata Indica), sedan (Swift Dzire, Etios, etc.), SUV (Innova), luxury sedan (Honda City, Altis, etc.) and also a number of Audis, BMWs and Limousines.

How do you compete with physical players who operate more cars and actually own those?

Owning the cabs is not a big differentiator since customers don't care whether you own a cab or not. What really matters is getting a cab when you they want it. That is our USP and we are targeting a 10 minute window for the cab to reach a customer. Also, the fact that we don't own the cabs works to our benefit since scaling is not a problem for us. It's a very elastic supply chain and we can easily scale up by tying up with more operators whenever we want.

What's the traction now? How many transactions are done on a daily/monthly basis?

We get lakhs of visitors on a monthly basis. Our daily transactions are close to 500, which roughly translate into 15,000 bookings a month. While our primary focus is on retail bookings, we also do corporate bookings and have started focusing on that area as well.

How would you invest the money raised?

Most of it will be spent on expansion and product development. Right now, we have two offices in Mumbai and one in Delhi, and have employee strength of 120. We are planning to add a city a month and want to be in the top 10 cities by the end of 2012. We will also increase our employee count to 300 by that time.

Have you become profitable yet?

We will be profitable by the end of 2012 – that's our target.

What are the challenges you face and what's your marketing strategy?

The biggest challenge is to maintain the quality of service across cities and the vehicles since providing a uniform experience to customers all over the country is the key. As for marketing strategy, it has mostly been word of mouth till now. That's how we got most of our customers. But once we enter more cities, we will start advertising on TV.

A lot of players in this space are raising funds. How would you handle the competition?

As far as online players are concerned, we were the first to enter this category. We are not just a basic ticketing site. Instead, we are also looking after the operations side like conducting driver training programmes to make the experience better for customers. In fact, we are leveraging both online and offline models for car rentals in India and that is our core strength. Also, we have the first-mover advantage, and our head start and momentum pose a big entry barrier for other players.