Necessity is the mother of invention. But for Phanindra Sama, it was inconvenience! He found a simple process of purchasing a bus ticket to Hyderabad very complicated due to the disorganized and chaotic nature of the ticketing system. While bus commuters are constantly on the rise in India, they still face a basic problem – purchasing tickets. He decided to turn this set back into a profit-making opportunity and thus formed redBus.
Bangalore-based redBus is a bus ticketing company that enables a consumer to book bus tickets through several channels including online, offline, cash-on-delivery, SMS, or even brick-and-mortar outlets they partner with.
The parent company
Started by Sama, Sudhakar Pasupunuri and Charan Padmaraju in 2006, redBus is part of the parent company Pilani Soft Labs, which focuses on the bus-ticketing sector with redBus and two other brands Boss and Seat Seller.
Our focus is on bus ticketing and it is a huge industry that has to be captured. Our hands are full for the next three years and we’re completely focused on the bus industry for now,” says Sama.
While Bus Operator Software Services (Boss) offers inventory management software for bus operators, Seat Seller acts as a middleman between travel agencies and bus operators. Seat Seller offers an opportunity for other travel agents who want to sell bus tickets. Sama explains, “Our model for Seat Seller is similar to the model that exists in the airline industry where a single company has already tied up with all the airlines and offers a product that can be used by travel agents.” Seatseller actually presents an opportunity for redBus’ competition to gain from their services. It powers bus-ticketing for yatra.com, makemytrip.com, post offices, and many other prominent travel companies in India.
Operational details
While the online model (www.redbus.in) plays a significant role in redBus’ revenues, it isn’t the only revenue stream. They plan to cater to every need in the bus-ticketing front and capture the entire market. “We use technology to streamline operations and increase efficiency in this segment,” says Sama, speaking about what differentiates redBus from any bus ticket selling outlet. With over 75,000 outlets selling bus tickets, covering over 4,500 routes and 350 bus operators, redBus has a whole lot to offer. Additionally, they are also being mentored by TiE-EAP (Entrepreneurship Acceleration Program), the Bangalore chapter of The Indus Entrepreneurs (TIE). The mobile platform which offers the SMS booking facility is a partnership with Ngpay and mChek, both early-stage mobile money enterprises. Their physical outlets include post offices and cyber cafes across the country.
Experiencing challenges
Sama had three and a half years of experience at Texas Instruments before starting the redBus journey. “In those days, it was okay to quit a job since jobs were available in plenty. By then I had enough experience so it wasn’t as risky as one would expect,” says Sama. But, taking up entrepreneurship, particularly in the bus industry was a huge challenge, he adds. He was suddenly on the other side of the table, where the customer was king.
“I was used to getting importance in my earlier job, be it from my colleagues or clients. That feeling of being pampered was suddenly taken away, so emotionally and psychologically it was a drastic change,” explains Sama. The biggest challenge for the company is the ability to cope with the growth and all the three brands have grown well. “We are a young team and all the innovation happens because of this reason,” explains Sama. But the flipside is we have to spend a considerable amount of time learning on the job, he adds. He feels that there is a need to improve their internal growth process and make sure it is compatible with the growth of the business. A mismatch between these two would pose a problem for him.
Visibility mode
With redBus being a one-of-a-kind ticketing company in India, one would expect marketing to play a huge role in their success but Sama says otherwise. “We rely on word-of-mouth marketing. Right from the beginning we have been investing only on fixed assets, internal processes or technology and never on attracting consumers and advertising,” says Sama. They have always believed that if the foundation is strong, everything else would fall in place. The company has one person who takes care of nation-wide marketing, besides other duties as well. “Even if we do start marketing in a big way in the future, it would be to understand the customer’s needs in an unbiased manner,” feels Sama.
Future perfect
With two rounds of funding in place from Inventus Capital and Seed Fund, redBus has raised around USD 2 million so far. “We do not plan to raise any money in the future since we are currently profitable,” says Sama.
Right now their target is to take the parent company’s turnover to Rs 500 crore as quickly as possible, from the current level of Rs. 80 crore. “Our focus is on bus ticketing and it is a huge industry that has to be captured. Our hands are full for the next three years and we’re completely focused on the bus industry for now,” says Sama. redBus is definitely dedicated to their task of getting the country on the road and on its wheels.
