How bike-taxis are gradually gaining rider confidence

By: |
Updated: November 25, 2019 7:06:28 AM

Currently, the market consists of three players including Ola Bike, UberMoto, and Rapido

Rapido- the bike taxiRapido was the first to introduce bike taxis in India back in 2015.

Ola Bike, UberMoto and Rapido have been making the most of traffic congestion, narrow lanes, poor public transport systems and lack of last-mile connectivity in India. The bike taxi services offered by these players have of late seen an uptick here. According to data from PGA Labs, bike taxi service is now a $150 million market, growing at 20% month-over-month. The growth has been attributed to the consumer’s need for affordable means of transportation.

 

Riding the wave

Rapido was the first to introduce bike taxis in India back in 2015, followed by Ola and Uber in 2016. According to PGA Labs, Rapido is the largest player in this market today, with 50% share, while Ola Bike commands approximately 25% share, and UberMoto and other players own the rest. The business model of these players involves tapping the large pool of two-wheeler owners in the country. According to data from the Society of Indian Automobile Manufacturers, 2.1 crore two-wheelers were sold in India in FY 2018-19.

“Two-wheelers are the most widely used vehicles in India; using them, ride sharing can be scaled up to every city in the country. We want to solve this fundamental need with the existing infrastructure of two-wheeler owners, instead of adding new two-wheelers on the road,” says Aravind Sanka, co-founder, Rapido.

Rapido operates in over 80 cities, and has plans to expand to 200 cities by the next year. Its competitor Ola Bike, meanwhile, claims to be present in 200 cities, where it has partnered with over three lakh bike partners.
Because bike taxis are more affordable than cabs, and can zip through congested roads, they are popular among millennials. On an average, a bike taxi ride costs `60-70, whereas a cab ride costs `200 for the same distance.
In tier I towns, the service is used frequently for last-mile connectivity. In Gurugram, for instance, one out of every two UberMoto trips begin or end at a metro station; in Noida, the same is true for one out of every four UberMoto trips.
“Bike taxis are a convenient, reliable, affordable and safe first/ last mile solution for riders,” says an Uber spokesperson.

Read Also: Godrej Security Solutions to up its marketing spends to Rs 20 crore this year

In tier II cities and beyond, bike taxi services are popular because of the lack of public transport infrastructure. Arun Srinivas, chief sales and marketing officer, Ola, says, “Ola Bike has seen large-scale adoption among people living in India’s hinterlands which have not had access to convenient, affordable and reliable on-demand transportation so far, unlike the larger cities.”

 

Speed bumps

Even though these bike taxis are plying in full force, regulations for this service are still unclear in 14 states in India, which limits their expansion. Experts say the lack of regulations also mean that players face uncertainty about their operations in cities like Bengaluru. Earlier in the year, the Bangalore Metropolitan Transport Corporation reportedly asked Ola Bike and Rapido to cease operations in the city.

Ankur Pahwa, partner and national leader, e-commerce and consumer internet at EY India, says legalities around insurance are also missing. “There are separate categories of licences for commercial and personal vehicles. A bike with a personal number plate offering commercial services might not be eligible for insurance in case of an accident,” Pahwa adds.

However, the biggest challenge for these players is the rising competition from two-wheeler rental services, which also have been scaling up of late.

Aryaman Tandon, director, Praxis Global Alliance, says “Two-wheeler rental services are perceived to be safer by many consumers, and are also 50% cheaper compared to bike taxis.” The average price per km charged by a two-wheeler rental service is `6-7, whereas for bike taxis, this would be around `10-12.”

Bounce and Vogo, the largest players in the rental space, together have 8,000-10,000 scooters on their platform and claim to clock 70,000-1 lakh rides every day. Meanwhile, Rapido, with its 15,000 enlisted bike captains, claims to do 30,000 rides in a day.

To ensure a healthy number of riders, companies need to offer a consistent experience for consumers, such as good quality bikes and helmets, as they scale up their businesses, notes Vikram Janakiraman, managing director and partner, Boston Consulting Group.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Next Stories
1Canvs partners with trade finance firm Drip Capital
2Likee expands reach by collaborating with Indus App Bazaar
3The Swiggy conundrum: How the food-tech platform waived off the ‘waiver’