Boosting firm’s efficiency through technology

Mumbai: A bad cab experience on the way to a wildlife sanctuary in Wayanad helped Bhavish Aggarwal, co-founder of Olacabs, make up his mind about his new venture.

add_main_image“On our way to a wildlife sanctuary in Wayanad, the cab driver threatened to abandon us in the middle if we did not give him ₹ 2,000 more,” said Aggarwal. “That day I realized there were not enough organized services in this market, not enough technology in this domain.”

Having worked with Microsoft Corp. for two years gave him the required management and software development experience. Aggarwal and co-founder Ankit Bhati always wanted to be entrepreneurs and get into the travel business. NextMAds

Aggarwal has been a frequent cab user himself and knew there was a huge void that had to be filled. “Being a consumer and frequent user of cabs, I faced issues that I wanted to solve.” So in December 2010, Bhati and he started operating from Aggarwal’s house in Mumbai. Today, Olacabs has three offices and over 500 employees.

The main aim of the start-up is to use technology, bring efficiency and a seamless customer experience to the car rental and taxi industry.

The problem with cab companies is that they run in a very capital-intensive way. Radio cab service providers were into buying cabs. “I did not have the money to buy cabs, and that forced me to think of a more efficient way to go about this,” Aggarwal said.

Unlike many traditional operators, Olacabs does not own or operate its own fleet but aggregates small fleet operators and single vehicle owners. Olacabs charges a commission on each ride that is booked through it. Cab owners benefit from the Olacabs network and technology platform and that in turn helps them procure customers and enhance their income through better inventory utilization. The company’s business model is simple. It does not charge the customer anything, but generate revenue by charging a 15% commission on average on the fare cab drivers earn from using the company’s service. The average ticket size is ₹ 800-900. It has partnered with local operators across the national capital region, Mumbai, Bangalore and Pune. Over 100,000 people have benefited from its services, the firm claims.

The company swears by technology that sets it apart. It has developed innovative apps for the Android and iPhone’s iOS platform that enable customers to view and book Olacabs in real-time. All a user has to do is press a button. After that, the app provides the position of all available Olacabs near the customer on a map. The customer can simply click on the button pick-me-up to book the nearest Olacab. No address detail needs to be fed. sixthMAds

The mobile-phone app has an in-built feature to identify the customer’s location through GPS and the same is forwarded to the nearest driver. Once booked, the app displays the details of the allotted cab to customers, including the distance of the cab from the customer and expected time taken to reach the customer location, instantly and customers can track the particular cab on a map on the cellphone till it reaches their location. The business model does not require much capital and the initial funding was a few lakh rupees brought in from the founders’ savings.

Last year, the company secured ₹ 40 crore in funding from venture capital firm Tiger Global Management. Employees technology and marketing is where the money was used. Olacabs is now investing for growth. “Whatever we make, we put it back in the business and are not targeting break-even anytime soon,” said Aggarwal.

The company saw growth of 40% month-on-month till last year, but now due to a higher base, it is growing at 20% every month this year, the firm said.

The founder duo is not too bothered about the slowdown in the radio cab industry. “Slowdown is not from the demand side, and for radio cab industry, it is primarily from the supply side. And their business model has a lot of challenges,” said Aggarwal. “Our business is independent of capital. We work with the unorganized segment-people without technology, just 2-3 cars and no big brand.”

It is a “game of execution” at the end of day, said Aggarwal.

Mint has a strategic partnership with Digital Empowerment Foundation, which hosts the mBillionth Awards.