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RedBus and the art of not missing the bus

How the ibibo-RedBus deal has delivered a fresh fillip to e-commerce in India
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First Published: Tue, Jul 23 2013. 09 50 PM IST
RedBus.in co-founder and chief executive officer Phanindra Sama. Photo: Hemant Mishra/Mint
RedBus.in co-founder and chief executive officer Phanindra Sama. Photo: Hemant Mishra/Mint
Updated: Wed, Jul 24 2013. 01 18 PM IST
When ibibo Group, a unit of South African media company Naspers Ltd, bought Pilani Soft Labs Pvt. Ltd, which runs the bus ticketing website redBus.in, on 21 June, it delivered a fresh fillip to e-commerce in India. The deal value wasn’t disclosed, but people close to the development said it was around $135 million (around Rs.805 crore today). Promoters of redBus.in, who started the site with initial capital of Rs.5 lakh, went home happy.
RedBus.in co-founder and chief executive officer Phanindra Sama has overnight became the new poster boy of e-commerce start-ups.
The takeoff
Redbus.in was founded by Sama, Sudhakar Pasupunuri and Charan Padmaraju in 2006, when one of them found that all bus tickets had been sold out by Bangalore travel agents when he was hunting for a ticket to go home to spend his Diwali holidays with family. Sama and his friends, all from BITS Pilani, wasted no time in launching redBus.in. E-commerce initiatives such as e-Choupal by ITC Ltd and irctc.co.in by Indian Railway Catering and Tourism Corp. Ltd had just begun gaining traction those days.
The ticketing website started with just two bus transporters offering the inventory of around a dozen seats daily. Later, it created a single platform where travel agents, bus operators and passengers could all transact.
The thrust
Many online travel agents started selling bus tickets online, posing competition to redBus.in. But it stayed focused, adding more channel partners and forming partnerships with state-run bus services. By June 2012, redBus.in had turned profitable. In addition to the Internet, redbus.in now sells tickets through phones and physical stores.
RedBus.in passed up on options such as selling other travel products like air tickets and hotel rooms, to selling advertisement space on the website or going international.
“We had to trade off many other things to be focused on selling bus tickets. We could afford to do this because of the large untapped market in India. We believed in the market and it proved us right,” Sama says.
In February, redBus.in launched a mobile application for Android and Windows phones under the guidance of chief products officer Alok Goel, who joined the company in November from Google Inc., where he was heading search and mobile products.
“Even within the scope of bus ticketing in India, we further focused sharply on our b2c (business to consumers) channel, the redBus.in. Every bit of bandwidth we had, we put it on redBus.in,” Sama says.
Redbus offered customers a wide choice between using credit cards, debit cards, Internet banking, cash-on-delivery, cash cards and mobile phone payments for buying tickets.
Happy landing
By the time redBus.in was sold to ibibo last month, it was handling one million passengers every month. This figure could reach 10 million in a few years, given the opportunity to scale across more cities and routes.
RedBus.in has already grown to be the country’s largest bus ticketing service, selling tickets worth more than Rs.600 crore on over 10,000 bus routes in fiscal 2012. Its revenue that year was Rs.350 crore.
The $135 million acquisition by ibibo not only cheered the redBus.in founders, but it has also imparted fresh momentum to India’s start-up ecosystem.
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First Published: Tue, Jul 23 2013. 09 50 PM IST