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From listing timetables to providing a full suite of train-related services, RailYatri has made steady progress

Shruti Venkatesh

Every day, over 40 million people hop on to the grand old Indian Railways (IR) and embark on long-distance journeys. Despite being one of the largest national public transport networks in the world, it is plagued by operational inefficiencies, perennial delays and a massive demand-supply mismatch. Therefore, travellers are gradually choosing air travel over trains.

It is this trend that Manish Rathi, Kapil Raizada and Sachin Saxena set out to reverse with their Noida-based start-up, RailYatri. “We saw the opportunity of simplifying the process for millions of travellers by providing detailed information to make effective travelling decisions,” says Rathi, who co-founded RailYatri in 2012. Six years down, what started as a crowdsourcing platform for train-related information, has evolved into a full-fledged services platform for everything related to rail travel. Today, Rail-Yatri provides a wide range of services including bus tickets, long-distance cabs, a wide selection of food, affordable accommodation on hourly packages, and of late, packaged tours to popular destinations. 

While the last reported revenue on Crunchbase is $7 million, the start-up claims to have a revenue run rate of 1 billion in FY18. Its revenue has been growing 17% YoY, for the past three years. It has a user base of 13 million, and is confident of increasing it to 22 million in FY19.

Siddharth Nautiyal, investment partner, Omidyar Network, led RailYatri’s $10 million Series B funding in April 2018. He believes that the start-up has carved a niche for itself as the go-to platform for long-distance train travellers. “Some of the information was available at multiple sources; Indian Railway Catering and Tourism Corporation (IRCTC) itself did that. But the way RailYatri used crowdsourced data and analytics to bring everything together, won it millions of users. Even before we backed it, the platform had established itself,” says Nautiyal. 

Till date, the start-up has raised $16 million from investors including Nandan Nilekani, Blume Ventures and Helion Venture Partners, with the funds raised being used to diversify and provide a wider set of features for users.

Choosing tracks

Rathi, Raizada and Saxena have known each other since their days at GlobalLogic, a California-based digital product engineering services company, where they developed a mutual interest in the consumer mobility business. “The sheer market size of 23 million daily train travellers excited us. We also realised that most of the travel companies were focused on flights or international tours. The domestic opportunity remained untapped,” says Rathi, who then co-founded Stelling Technologies in 2011.

Manish rathi, Co-founder and CEO, RailYatriAround that time, IR was exploring ways to disseminate information to its passengers more efficiently. This seemed the perfect launch pad for the co-founders of Stelling. They worked with IR on several products, including the re-launch of TrainEnquiry and creating RailRadar, which gave real-time information of all running trains via Google maps. 

The success of these projects further convinced the co-founders of the potential in this space, and they decided to launch their own, consumer-facing app — RailYatri. 

Their initial product, RailRadar, was a unique feature. In the wide railway network, to know ‘where exactly your train is’ while even between stations, using crowdsourced data, was something that helped passengers save time and anxiety. Even today, when RailYatri has re-launched a smarter version of RailRadar, this is one of the most popular features. “Our hypothesis was simple — if we could be a part of people’s rail journeys, we could set up something bigger on that. The key was to answer their specific questions,” says Rathi. They started by answering the most common question: “Where is my train”. Soon, one query led to another, leading to a system that answered a gamut of doubts. 

Along with the information, Rail-Yatri added a layer of intelligence to their platform. For instance, providing information entails giving schedules of all trains plying between point A and B. Intelligence, meanwhile, is in telling people which of the trains ply on time, and in which train your waitlisted ticket stands the highest chance of being confirmed.

Rathi says that the first layer of information came from the people themselves — crowdsourcing information on train location, and details of hospitals, hotels and restaurants around railway stations. The second layer of prediction algorithms was added by the team at RailYatri. 

Rathi says, “We are a data-analysis company and, thus, all the information that is shared with our users are based on deep analysis of historic data. Let us take Rail-Yatri’s estimated time of arrival (ETA) prediction — we have designed an indigenous algorithm, which is essentially an unsupervised machine learning model. The model takes into account the current location of the train and latest running-time performance to make the prediction. With each run, new data points are added, which further refines the prediction.” Until this deep integration of technology was put in place, information was sourced from public data. But, with the intelligence layer being added, the platform tripled its user base — from 4 million to its current count.

Anil Kumar CEO, RedSeer ConsultingAnil Kumar, CEO, RedSeer Consulting, says, “RailYatri is working to differentiate itself from its peers and IRCTC by offering a limited set of ‘more intensely needed’ services such as ticket confirmation forecasting (for waitlisted tickets) using big data tools, superior user interface and user experience (UI/UX) that makes it easy to get services such as in-train meals, and more. These new high-margin services being launched by them can support the lower-margin business of train bookings better.” Globally, ticket bookings is a low-margin business, returning around 2-3%, while in other services such as food and hotels, the margin could vary from 10-30%.

Karthik Reddy, founder and managing partner, Blume Ventures, adds that RailYatri has stuck to their mission of simplifying train travel, in turn benefitting IR. “That mission is clear when one opens the app and sees layers of services provided to the customer. RailYatri keeps pushing innovation by researching possible diversification of the business, and making their predictive analysis more accurate every quarter,” he says.

New junction

Realising the value created by the intelligence layer, the next step was to cater to the transacting needs of the user. “In 2016, we started building the marketplace model for RailYatri. The first thing we did was tie up with restaurants located along railway stations, connecting consumers to these outlets and delivering food onto trains,” says Rathi.

At present, RailYatri provides food services across 210 cities, and this contributes to 20% of its total revenue. From beverages and regional dishes, to kids’ special, snacks and desserts, RailYatri offers the user a wide variety of meal options and combo offers. In January this year, the company also acquired Kochi-based food delivery start-up YatraChef, to improve last mile delivery.

Following this, they then added bus tickets and long-distance cab booking service on their platform. In 2017, RailYatri started providing train-ticket booking service too. “Even today, 80% tickets are booked through agents. Hence, we have tied up with offline agents who book tickets for users at a nominal fee. We don’t charge anything from the user,” he says. With the addition of this service, the number of monthly active users has seen a 10% month-on-month growth in FY18.

Here, however, the start-up faces stiff competition not just from peers such as Trainman and Confrmtkt (see: Peer pressure) and larger online travel aggregators such as ClearTrip and Yatra, but also from IRCTC, a subsidiary of IR, which enjoys a dominant position and sells about 1.2 million tickets every day. 

Recent reports state that instead of the earlier flat annual maintenance charge, IRCTC has decided to charge a fee of 12 plus tax on every ticket booked. The new fee structure is touted to be a move to tap into a new revenue stream ahead of its IPO, and is likely to impact the already low-margin railway ticket booking service. 

Reddy explains, “Technically, RailYatri has no competition from IRCTC, which is the only authorised agency for any e-ticket transaction in India. But, RailYatri has built technology to simplify access to authorised ticket channels.”

Rathi adds that ticket booking is anyway not the main revenue generator for RailYatri. “It is simply a way to connect with the customer in the early stage of their journey, and then provide ancillary services,” he explains. For its growth, RailYatri is looking largely towards three verticals — food, hospitality and tour packages. 

To strengthen the hospitality vertical, RailYatri has partnered with hotel aggregators across the country. Of these, around 50 hotels, situated close to railway stations, allow one to book on an ‘hourly’ basis. 

“Hourly bookings is the next big thing. This is important because more people are travelling for quick meetings, and there is always a need for stay options where travellers can take a quick shower or change and move on. RailYatri hotels with hourly stay options are situated close to the stations, and hence, this is our great differentiator,” says Rathi.

Karthik Reddy Founder, Blume VenturesThe start-up has also taken their first step towards curating travel packages over the past couple of months. Important religious events such as Maha Kumbh, Sabarimala festival and special celebrations at Shirdi and Vaishno Devi are attended by millions from across the country. RailYatri offers travellers end-to-end solutions — from train, bus and cab bookings, station or airport pickups and hotel stay, to assured darshan at temples and special pujas. For religious packages, RailYatri has local agents who source VIP passes as well as arrange for special pujas at these sites. 

For a first-time visitor, it becomes difficult to find out specific local details, and this is one of RailYatri’s Unique Selling Points (USPs). “We even have on-stop guides to help devotees,” says Rathi, adding that while they also have leisure-destination packages, the focus is on religious ones.

Curating tour packages was an idea conceived by IRCTC as early as 2007. Coupled with years of experience and a dominant position, IRCTC already has an edge over start-ups. RedSeer’s Kumar, though, states that there isn’t reason to worry. “Right now, this whole sector is evolving, as players are small and clear differentiators are yet to emerge. We will see more innovation from players such as RailYatri and others to better cater to specific customer needs.”

Scaling up

In the travel space in India, the largest segment is ‘package holidays’, with a market volume of $4 billion in 2018, according to online statistics portal Statista. Omidyar Network’s Nautiyal adds that the next half-a-billion people who will come online in India will be very different from the folks who have been online for the first 10 years of Internet penetration. “They will be crucial, and RailYatri seems to have the pulse of what it takes to succeed here.”

What could be a challenge, instead, is the fact that nine out of 10 customers coming online in the next five years may not be fluent in English. RailYatri, therefore, has to be available in a lot more languages than they are available right now (English and Hindi).

Harminder Sahni, founder, Wazir Advisors, holds a similar opinion. “The most important factor for all online services companies will be convenience of booking, payment, cancellation and refund. With consumers becoming more and more impatient with their time and increasing attention deficit, UI/UX will become major differentiating factors,” he says.

The co-founders at RailYatri are already working on these aspects. The start-up recently launched ‘Rush-o-meter’, a feature that predicts the sell-out time of available tickets. Based on historical data and machine learning algorithms, RailYatri calculates the number of hours or days the available tickets will get sold out by, thereby helping customers buy confirmed tickets. “The target is now to expand into more verticals, and eventually, be the most preferred mass-market travel app which harnesses the intelligence associated with travel, be it trains, buses, taxis or flights,” signs off Rathi.

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