Swiggy-backed Rapido enters 4-wheeler cab-hailing segment; will take on Uber, Ola

To be called Rapido Cabs, the ride-hailing service has been rolled out in Delhi, NCR, Bengaluru, and Hyderabad.

In a move that aims to take on the triopoly of Uber, Ola, and BluSmart, Bangalore-based Rapido, which is backed by Swiggy, said it has entered the four-wheeler cab-hailing segment. To be called ‘Rapido Cabs’, the ride-hailing services have been rolled out in Delhi, NCR, Bengaluru, and Hyderabad, with around 1.2 lakh cabs. The company plans to scale it to around 35 cities by September 2024.

Moneycontrol was the first to report that Rapido was pilot testing the cab aggregator model .  Moneycontrol had also reported that the company had applied for a ride-hailing service licence for four-wheelers .

While launching its services, a senior company official stated that its product is differentiated since it offers a "lowest price guarantee" as well as a “zero commission” model for its drivers. In an official statement, the company claimed that the SaaS-based platform serves as a “seamless mediator," exclusively connecting drivers and customers without exerting control over the marketplace.

“Our SaaS-based platform revolutionises the conventional commission system for drivers, tackling the persistent challenge of commission sharing with aggregators,” said Pavan Guntupalli, co-founder of Rapido. He added, “The service has just been launched and we will work with cab partners to get the cheapest fare across 80 percent of route in the city where it operates.”

It is to be mentioned that the Bangalore-based ride-hailing firm Rapido already provides bike taxis and auto (three-wheeler) rides to passengers in the metro cities.

“We believe cabs as a category have been stagnant. The number of drivers participating on the online platform has also been stagnant for the past four or five years. The root cause, we believe, is that the existing business models and products are not conducive enough for all the drivers to participate on this (online) platform,” stated Guntupalli while interacting with reporters.

According to Guntupalli, around 20–22 lakh active cabs are running in the country, out of which not more than five lakh are operating on online platforms like Ola, Uber, etc. Furthermore, most of them accept online bookings for daily runs, and not weekly, monthly, or yearly assignments.

“Over 10 years, not more than 25 percent (of drivers) have been participating in app-based services. Our motive is to bring all these people online and expand the market. With a zero-commission model, we will maximise their revenues in a way that it is not a burden on the users,” added Guntupalli.

Founded in 2015, Rapido has raised around $310 million to date. It is currently valued at around $830 million and counts TVS, Swiggy, Nexus Venture Partners, and WestBridge Capital among its investors. Meanwhile, the company told CNBC-TV18, Moneycontrol’s sister concern, that it will become a unicorn in the months ahead.

“Rapido is operationally. We will soon become EBITDA profitable as well. Becoming a unicorn is just months down the line,” Guntupalli was quoted as telling CNBC-TV18.

Going electric

The ride-hailing firm, which is largely inducting CNG-driven vehicles into its fleet, is also drawing up plans to go for an all-electric fleet in the next seven years.

“We are constantly electrifying our two-wheeler fleet by partnering with Gemopai, etc. We have partnered with multiple EV providers and are trying to electrify our existing two-wheelers. And we are going to follow the same partnership approach even in our Rapido Cabs to electrify them," he said.

While the company will be luring drivers from Ola and Uber, it also aims to bring on board offline-centric drivers on its platform. The driver partners will get direct payment from customers without any cut in commission by Rapido. However, they will have to pay a subscription fee after crossing a certain level of earnings.

“If our platform does not create new drivers, we believe that we are not revolutionary enough. Our major motive would be to bring in the existing drivers of the current player s. But we are going to create new drivers who have not been active in the online medium for the last five years," the co-founder of Rapido further added.

Furthermore, Rapido plans to expand its services to Mumbai, Pune, Kolkata, and Chennai in January-March 2024 and cover a total of 35 cities by September 2024.