You have a meeting about four to five kilometres from your office in half an hour. How do you get there on time? This is 2019, so you are probably opening your taxi app. It’s not cheap.
Back in 2015-16, Ola used to charge Rs.8 per km. Today, it’s more to the tune of Rs.15-20 per km. Mind you, even Ola Auto charges Rs.10-12 per km. Multiply that amount by 1.5 and you have Uber’s rates. How about a solution that can take you from point A to point B at Rs.5 per km? That’s what companies such as Quick Ride, sRide, and even international brands such as BlaBlaCar offer.
Their service, carpooling, is by no means a new idea. Perhaps, the odd office colleague already offers a ride back home or a morning pickup when driving by your place. But that is not really reliable. If the colleague falls sick, despite having planned a shared ride with you, you can hardly haul him/her up. That is where the young companies promise better.
Quick Ride co-founder KNM Rao says, “The app offer facilities such as real-time ride matches, to help you coordinate without having to make calls back and forth.” These start-ups tie up with car owner and drivers who pick up people on the way to their destination. The drivers do not really earn from this, instead they get to share their fuel costs and get a few perks.
As per Rao, “Carpooling has a current market potential for $3 billion, of which just 2% or so is being tapped.” He expects the market to grow to $5 billion by 2025. The cities that are plagued with traffic congestion and infrastructure troubles, such as Mumbai and Bengaluru, are quick adopters. For instance, Bengaluru has roughly 500,000 of Quick Ride’s user base, while sRide claims 300,000 users each in packed cities such as Chennai and Hyderabad. Both are spreading their roots in Mumbai but refrained from divulging the number of users in the city.
Pune-based sRide’s co-founder Lakshna Chadha Jha estimates that Indian roads see 150 million commutes a day. Out of this, about 1.5 million rides are taken care of by the Olas and Ubers. What if we could we convert a paltry 5% of the total commutes (7.5 million) into carpools?
Suppose each trip is roughly 10 km-long (going by the average fuel-efficiency for a car) and, at Rs.5 per km, fetches Rs.50. That’s Rs.375 million generated in revenue without increasing our present rate of fuel consumption. In fact, if passenger cars pool with all four seats occupied, the number of vehicles on the road could drop by about 22 million.
Jha says that she was tired of seeing one person each in every car, and sRide turned on the ignition in late 2015. Today, the app has two million users (by downloads) in six major cities — Pune, Mumbai, Kolkata, Chennai, Hyderabad and Bengaluru. Among the users, she says, 30-40% are active carpoolers, a term for those who use the services regularly. There are 700,000 vehicles partnered with sRide and they are seeing a 25% month-on-month growth in the number of trips for the past two years.
Unlike Uber and Ola, Jha’s company doesn’t require huge daily capital expenditure. Apart from marketing and tech expenses, there is no cost to acquire drivers as the app doesn’t pay the drivers. sRide gets a 6% cut from their drivers’ earnings. It seems like a promising company but funding raised, at Rs.1.4 million, has not been significant so far.
The next step for sRide is to venture into NCR. Why the delay? Jha says, “The team didn’t want to rush into NCR since it’s equivalent to three cities — New Delhi, Gurugram, and Noida — and you can’t just launch in one. People in these three cities commute back and forth frequently.”
That aside, the app plans to deepen its reach in the metro cities which, she says, have a potential one million users each. In fact, Jha (who does not reveal the current trip number) hopes to hit 1.5 million trips a day by end of 2020. That’s the same as what Ola does today. Jha adds that these numbers barely scratch the surface.
Bengaluru-based Quick Ride too is making big strides in the carpooling space. Recently, the spotlight fell on the start-up for bagging Rs.1 billion from Sequoia, Venture Highway and Naspers, with Naspers leading the round at Rs.576 million.
Quick Ride’s Rao claims that his app does about 1.6 million rides a month with competitors such as sRide and Germany-based Wunder adding another 600,000 monthly rides to the tally. The international brands are on a retreat, but more on that in a bit.
Rao started Quick Ride with Subhro B Chakraborty and Shobhana BN in 2015. The app has built quite a following in Bengaluru where Rao boasts of half a million active users. With Delhi NCR, Mumbai, Kolkata, Hyderabad, Chennai and Pune taken together, the app claims to cater to 1.5 million regulars (or active users). The app has also gained traction in the intercity routes in the west such as Mumbai-Pune transits.
At the start of 2018, the app recorded just about 7,000 trips per day. By December last year, Rao states his app facilitated 30,000 trips per day, and that number today stands at 80,000 for weekdays. That’s healthy growth but Rao is shooting for one million trips per day within the next one year. The revenue is growing at a healthy rate too — approximately 300% per quarter — the same as the rise in number of trips per quarter.
Two ambitious apps down, time to discuss those who lost their plot. Among the ones who bet big on making carpooling a household concept in India, BlaBlaCar stands out. It was big on the radio, and for those who remember, its ‘BlaBlaCar, BlaBlaCar!’ jingle even had a ring to it. However, the concept never really caught on. The Paris-headquartered company does not have officials in India, and didn’t respond to queries on why it left India around two years ago.
The Germany carpooling app Wunder too will soon shut shop here. It began its India operations in February 2017 with Mumbai, Bengaluru and New Delhi. Having gained little traction, the app relaunched exclusively in the NCR region in mid-2018. At the time, the company stated that they had included inputs from the community on their specific needs and added features such as ID verification, and live tracking to its features-list. Vivek Kumar, Wunder India’s market manager, states that the app has 400,000 installs of which, 30% are active users.
How did the two carpooling services weaken in a country that blatantly professes its love for international products?
Jha has an interesting take on the subject. She says, “You cannot sit in Paris or Germany and figure out how India works. Unlike Uber, this is a peer-to-peer service and requires more engagement from both the user and the developer.”
Prashant Pansare, co-founder, Eagle10 Ventures and a proponent of carpooling, states poor timing, inconvenience and lack of trust as triple-whammy for Wunder and BlaBlaCar. “I tried carpooling in Europe and it’s very convenient. On the other hand, using services such as Ola Share in India is quite a hassle. You hire a cab, it then drops a fellow passenger at another location (way off the route), and you lose a lot of time.”
Thanks to the increasing awareness among Indians, Pansare is optimistic about carpooling developing into a viable mode of commute. In his opinion, one way of solving the trust issue is to have fixed pick-up and drop-points for carpoolers.
Besides awareness, Pansare expects the positive investment sentiment in the market to boost growth in the ride-sharing/carpooling space. “After 2015-16, there was a slump in investments. Year 2018 gave a better environment for investors and 2019 is likely to see larger volume of capital flowing in via investors in the USA, Japan and China.”
Where’s the hitch?
The challenges to making carpooling in India work are not many, but the ones that are there, are major. First is habit. We simply aren’t used to sharing rides because, well, “Why should I share?” The vehicle is one’s own sweet bubble. It’s your music, your AC temperature, your pace, and the entire back seat for your laptop bag. When Wunder came to India, after Philippines and their home market Germany, they observed that sharing was a cultural habit in the Southeast Asian country. In India, people were pooling to split the fare.
Second, who’s the new guy? Imagine a stranger occupying the passenger seat. He/she slides it rearwards, reclines the back-rest, and stretches out. God help them if they tinker with the radio, or scratch the upholstery of your spanking new car. Gaurav Vangaal, information handling services (IHS) - country lead, LVP Forecasting, says it’s a ‘culture thing’. “We live in a culture where driving for others is looked down upon. Driving for co-workers is okay today. However, driving strangers around makes us uncomfortable.” There is no profit to be made too. Regulations in our country do not allow private car owners to earn by offering carpooling services.
According to Rao, these are cultural challenges that need to be tackled. Like incumbents in the carpooling space, Rao and team approach their corporate clients and raise awareness about carpooling among the client’s employees. He adds that the adoption rate is also directly linked to the amount of effort the companies have put into promoting the concept. Incentives to try pool are simple ones, such as a company offering parking spots to the driver.
Third comes muscle-memory. Opening the Ola/Uber app (and opting the share/pool option) has become a habit. You see, brands such as Ola have gone to town to build their 150 million odd customer base. Be it via touching ad campaigns, announcing their big backers or luring you with offers on their platforms.
Lastly, and most importantly, there is the stranger danger. How do you know if you car-mate has criminal tendencies? Even today, there’s the risk of women getting the raw end of the deal. This holds true whether they are in the driver’s seat or the passenger’s.
If an Ola or Uber driver misbehaves, s/he’s in trouble. The drivers get paid for transporting people, which put their livelihoods at stake. And if things go wrong, the name of a big brand too. For a carpooler, what’s there to lose? The user can delete the app, and walk away scot-free.
The brands do have a user-driven rating system, like taxi-hailing apps have. Drivers and passengers are rated by fellow carpoolers based on their behaviour; akin to ratings on Uber. On some of these apps such as Quick Ride, users can set their preferences about who they want to share their ride with. They could limit their visibility to people of their own company, locality, gender and so on. Also, most carpooling apps have multilevel verification processes.
For instance, take Quick Ride. It first ratifies your phone number via an OTP; verifies you as a human by capturing your photo where you click yourself in a pre-set pose; and does an e-mail verification. The app also asks for an official e-mail ID that it verifies like the remaining details via OTP. As of now, they do not do a criminal background verification check.
Be it carpooling apps or carpooling WhatsApp groups, which these start-ups are trying to bring on board, building the member-base has largely relied on word-of-mouth. There’s a reason for that. Who would spend money to promote an idea where the ostensible profit is negligible?
Let’s look at the business model of carpooling apps. The driver (who puts his vehicle on the app) gets to charge about Rs.4-6 per km from a passenger. The idea is to allow the driver to share his running costs with his passengers and not let him swindle fellow travellers.
The app charges between 4-7% of the driver’s earnings and that’s their revenue stream. Given the margins, the revenue depend on expanding your user base. But, how do you achieve scale? The answer is corporate tie-ups. In fact, as per Rao and Jha, about 80-85% of their users come from their corporate collaborators.
Quick Ride’s and sRide’s website shows that the apps have partnered with companies such as Wipro, Cognizant, Tata Consultancy Services, HCL, Infosys and the likes. In case of any adverse incident, the liability of the company is limited to sharing rider information with the law authorities. All users need to share their employment information on the app on Quick Ride; sRide isn’t as comprehensive. But women make the majority of their regular users; 60% and 57% in the case of sRide and Quick Ride respectively.
The corporate deals take up to six months to come through. Both Jha and Rao state that changing mindsets at companies is tough, despite the money-saving and ecological benefits to employees. It could also be the ambiguity around the carpooling laws. As Kumar says, “Regulations and laws around carpooling currently are very unclear. The government needs to help to form regulatory policies for carpooling possibly after a discussion with the current players.”
Vangaal adds, “Our market is not mature like the US or the UK where such concepts work well. We don’t have regulations in place.” That said, apps such as Quick Ride and sRide have presented their concept to the NITI Aayog. Pilot projects are already in place in government institutions.
Kumar adds, “Alongside this, a push from governments will encourage corporate companies in all major Indian cities to adopt carpooling.”
Another way of growing their user base is by incentivising referrals through the app. The users get points for adding new customers to the app’s user base. These points can later be redeemed for free rides (in Quick Ride and sRide), and even products such as car-insurance (in Quick Ride) if you have a vehicle on the platform.
The other incentive, especially in the case of Quick Ride, is badges. Because be it a badge of honour from the local poker club or that of a school prefect, we love them all. There’s a badge for carpooling at certain distances, saving a preset quantity of fuel, and plenty more to keep you from quitting pooling.
If done right, carpooling can contribute to solve the pollution and traffic problem without any expense to the exchequer. Rao says his app alone saves 80,000 litres of fuel a day — an average trip length of about seven to twelve kilometres, which would consume about a litre of fuel and the company does 80,000 such trips a day. Multiply that with the number of trips carpoolers can cumulatively do in a day and you end up with a lot of fuel saving.
Carpooling also has potential to decongest our streets. No wonder auto-tech brands such as Bosch are also developing experimental carpooling and bike-docking platforms and software. They remain tight lipped about their roll out plans.
“If you want to be a leading mobility company, you cannot stop at the engine and the after-treatment solution. You have to go into application and be a part of the mobility solutions,” says Jan Roehrl, executive vice president, CTO, Bosch.
Refraining from specifics, he continues, “We won’t get into public transport, but we are exploring solutions for platforms such as carpooling.” Bosh has a two-wheeler (e-scooter) fleet called COUP in European countries such as Germany and France. Launched in May 2017, the service deploys about 5,500 scooters; its fleet grew by 40% in 2018-19. But will India get such a solution from Bosch?
Roehrl is succinct: “No. Our view is that we are a technology company providing solutions for the future of mobility.” COUP runs on electric bikes, and unlike European countries, India doesn’t have any infra to support that.
Carpooling is a cheap model, which should help people keep a heavy wallet and a light conscience. But, with security concerns still largely unaddressed, why would a person trust a stranger driver/passenger when neighbourhood carpools often run empty? Pool also means larger commutes which does not address the urgency with which people usually call for a private cab. There are way too many speed bumps on the road ahead.