redBus is profitable, online bus ticketing as a standalone biz is sustainable: Phanindra Sama

17 Jul, 2012

Online bus ticketing site redBus, a part of Bangalore-based Pilani Soft Labs Pvt Ltd,  is currently looking at acquiring offline bus ticketing companies in Singapore and Malaysia. redBus has managed to sells tickets worth Rs 300 crore in FY12. Till now, redBus has raised more than $7.5 million from three rounds of funding. Last May, it raised $6.5 million from Helion Venture Partners, Inventus Capital Partners and Seedfund.  Earlier, it had raised $1 million in Series A funding from Seedfund, followed by an undisclosed sum from Inventus Capital Partners and Seedfund in July 2009.

redBus, which has gained significant traction, claimed  a few days ago, it has sold more than one crore bus seats in India. caught up with CEO Phanindra Sama, who talks about the company's plans, the industry and customer behaviour.

How have you managed to continue with so less funding?

Through these years, we have done something, in which we were comfortable in and tasted success. We took the approach of being very conservative spenders, which worked wonders for us.  redBus doesn't have any flashy offices, and waited patiently to see growth.

Last year, after the fundraising, we could have doubled the sale by doing some marketing activities. But, we chose not to do that.  TV advertising would have eventually led to the acquisition of more customers.

Would we see any marketing activities this year?

Until now, the word of mouth strategy has been working really good for us. We may do television campaigns and use other mediums like Print and Radio, as they give good ROIs. And we will continue to do Digital as always.

Any plan to raise more money?

We are self sufficient now, with no intention of raising more money. Till now, we have spent just 25 per cent and the rest of the raised money is still there in the bank. Over that, we broke even last year, and has been making profits since then.

Can the bus ticketing business be a standalone platform?

Absolutely!  In India, far more passengers travel by buses, compared to other means of transport like trains and flights.  Moreover, we are already profitable, which means it is a sustainable business. We have probably about 60 per cent of market share. With the market itself growing two times year-on-year, we'll see very good growth even by retaining that percentage. Right now, we are a Rs 300 crore company and we intend to touch Rs 3,000 crore soon.

What are your expansion plans?

We will continue with our core business -- bus ticketing. redBus will believes in focusing on vertical department, and  we have a scope to grow 10x. We will not get de-focused ever.  Once, we scale up to Rs 3,000-4,000 crore turnover, we will think what to do. Right now (we have) a team of 200 (excluding call centre), redBus plans to have 680 people on board by March 2013.

Any plans of starting your own fleet of buses?

Redbus will never start bus service operations of our own. Rather, we would always help the bus operators, to start operations in new routes, where there is a need. In our search engine, anybody can put any name on the source and destination. This is like a lead to us. We, then pass on the information to the bus operators, stating, there is interest among the passengers. We then try and identify the routes, find out how frequent is the interest.

How do you track the customer behaviour?

We are basically tracking the customer need. As, I mentioned earlier, we track every searches made by the customers. We even record what kind of buses they are looking for, AC ones, non-AC or sleeper buses. redBus then try and record, which route, the customer is looking for that consistently. Then, the bus operators decide if it is a viable decision to operate buses in that route. Otherwise, we do a lot of surveys.

For example, earlier there were buses from Bangalore to Hyderabad, by recently, tracking the consumer behaviour, we have started bus services from Bangalore to Shirdhi and Bangalore to Ahmedabad.

How do you compete with other online travel operators (OTAs) who are also in the business of online bus ticketing?

I feel this world is for the experts. And, consumers go to experts. Our understanding about the whole industry is different and far better than the rest. We concentrate only on bus ticketing, but on the other hand an OTA does 20 other things. redBus understands, every operator, every route inventory, and the kind of  technology needed to sell bus tickets in a much superior way than others. Our call centre executives are far more equipped than others. Their USP is knowledge and expertise.

You have recently launched ticketing service on the mobile? How is it gaining traction? What percentage of your ticket sales comes from mobile booking?

It has been fantastic. Right now, 10 per cent of our online traffic is coming through mobile, which is significant, considering the fact that we launched it just a few months back.  Moreover, we have not marketed it at all. Now 5-10 per cent of our business is coming through mobile. In future, it will turn around soon. Through mobile, majority of our business will come, than web.

What are the new trends coming up in the bus ticketing industry?

Four years back, about 80 per cent of our businesses came from Tier 1 cities. Now, we see a shift. We are selling online tickets to Tier 2, Tier 3 cities as well. Now it is evenly distributed. Last month we sold tickets in 4,200 cities, villages and towns.

(Edited by Prem Udayabhanu)