New Delhi: Bike taxi provider M-Taxi, which started delivering food for online start-ups such as Yumist, Chaayos and Foodpanda about three months ago, will soon expand its delivery business to include online orders of groceries and pharmaceutical products.
M-Taxi, owned by Acefenders Travels Pvt. Ltd, is not alone in doubling up as a bike taxi and hyperlocal delivery firm. NOW, owned by TapTap Meals Pvt Ltd, also provides both services. Though the companies currently operate only in Haryana, which is one of the few states that allow bike taxis, they do undertake deliveries across the Delhi-National Capital Region (NCR).
Riders on bikes with yellow number plates double up as taxi and delivery service providers in Gurgaon. But for Delhi and the NCR, bikes with white number plates are used only for deliveries.
While M-Taxi started bike taxis in December and extended its services to include deliveries in May, NOW founder Vivek Pandey was running a food-ordering firm, much like Swiggy in July 2015. He pivoted the business to bike taxi and delivery simultaneously in February 2016.
Bike taxis are in high demand during the office opening and closing hours—8am to 11am and 4pm to 7pm. The delivery business enables the firms to optimally utilize their bikers during the hours of low taxi demand.
M-Taxi runs 75-100 bikes currently, of which 25 are owned by the company and dedicated to the taxi service. The rest are aggregated and used for deliveries.
The company charges Rs.20 for the first 2 km and Rs.5 per km thereafter for rides. On an average, a rider is able to do 12-15 rides per day. For deliveries, the average is 15.
M-Taxi has close to 20 clients and charges them on demand as well as on hourly or monthly pricing, depending on their requirements.
Founder and chief executive officer of M-Taxi, Arunabh Madhur, said unlike cab services, the bike-taxi business is still evolving in India. It thus makes sense to utilise the resources in combination with the delivery business.
An average ride with NOW costs Rs.25-30, while a delivery fetches the firm Rs.50-60, said Pandey, adding that 75% of the company’s volumes come from delivery.
NOW works with food outlets such as Pizza Hut, Subway and Burger King, besides 98.4, a chain of retail chemist stores, among others.
For another bike taxi company, the Pawan Munjal-backed Rapido, it is too early to get into hyperlocal delivery but the idea makes sense in the long run.
“We got requests from a few restaurants and online food delivery firms. We have enough inventory to fulfil their orders. In the long run, it makes sense,” said Rapido co-founder Aravind Sanka.
While expansion into delivery services may provide an immediate increase in revenue, hyperlocal is not an easy market for companies struggling to build a sustainable business model. The reason is poor unit economics, given that commission from merchants barely pays for the costs, which could be as high as Rs.60-70 per delivery.
Experts, however, feel that if companies are able to utilize time well, the expansion may turn out to be a successful one.
“If they are optimizing the available time and fleet, there is enough and more opportunity in hyperlocal because there is no incremental cost. Taxi companies globally are trying to do delivery services. However, where they are setting up a separate fleet, it looks more like a reactive plan. Much like the existing hyperlocal companies, they are likely to face challenge of full utilisation of the aggregated riders,” said Sreedhar Prasad, partner, KPMG.
Cab aggregator Uber offers express delivery and food delivery services such as UberRUSH and UberEATS in select global markets.