Startup Sunday Season 1 Episode 12 (redBus.in)

“Sometimes not having pre booked travel plan fetches you an idea recognized as one of the top 5 hottest start-up ideas by Forbes!”

image-1Like many of us, Phanindra Sama, one of the co-founder of a leading online Bus Tickets Platform, also used to travel to his home town from Bangalore to Hyderabad, very often. In 2005, during the festive season and his last minute plan left him with no choice than to travel by bus. He had to hunt for the tickets all around the city himself before going to the travel agents and realized that even the travel agents did not have full information regarding all the bus operators and most of the agents were not able to sell return bus tickets. These major issues in the then existing model laid the foundation of redBus.in, in August 2006, thus bringing innovation to a bus travel industry which was highly unorganized and offline.

Soon, the three alumni of Bits Pilani namely, Charan Padmaraju, Phanindra Sama, Sudhakar Pasupunuri decided to come together to bring convenience to the travel industry in a way that nobody in India had ever done before. They knew that their idea was compelling, but to gauge the feasibility of their idea they met various people ranging from bus operators, venture capitalists and consumers. They received a good response; however, the bus tour operators, who were earlier, interested in the software, turned hostile and refused to buy it. It was then that the trio approached The Indus Entrepreneurs (TiE) and created a successful business under the mentorship of Sanjay Anandaram, a founding partner of JumpStartUp Venture Fund.

The idea serves solution to the problems of bus travellers by linking bus operators across both big and small cities through an online platform, but the key is that of booking tickets for the return journey before-hand. Among other services, redBus also offers customized option of selecting seats (position), standardised fares and facility of comparison of rates between operators.

The revenue model of this start-up is simple. RedBus’ revenues come from the commission it charges from bus operators for the tickets sold through its site. Apart from that, it also sells software solution named BOSS (Business Operators Software System) to bus operators and travel agents in return of a subscription fee which helps them look at their seat inventory on a real-time basis and computerises their operations completely. The software namely, Seat Seller that is sold to travel agents helps them use a single log-in to look up seat inventories with different bus operators.

In the recent time, RedBus.in, which was acquired by the Indian joint venture of South Africa’s Nasper and China’s Tencent i.e., Ibibo for $100 million in 2013, expanded its operations globally by making available inter-city bus tickets between Singapore and Malaysia and between cities within Malaysia. This expansion is a part of new redBus global platform’ that supports multiple currencies, languages, time-zones and integrated with international payment systems. Today, it holds a network of over 2300 bus operators worldwide with a base of 8 million customers globally and having over 75 millions trips booked through its software.

The Ibibo Group raised $250 million more from Naspers Ltd in the month of February this year. A significant part of this fund will be used by redBus firstly, to shift its focus from the south India and penetrate deeper into western and northern India, for a uniform representation across the country and secondly, towards marketing efforts to build the redBus brand in these locations. The company currently retails hotels aggregated on Goibibo.com on its platform and also plans to focus on growing its hotels category, a segment which it entered in April 2014, especially because commission in the hotels category could be almost double that of buses.

“Startups, as we know are built with limited resources and funding. Once you build something out of nothing, it’s a different high on its own. That’s how entrepreneurs are made.”

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