Rapido introduced a taxi service and plans to compete with Ola and Uber

Rapido formally announced its foray into the taxi aggregation market on Tuesday with the introduction of Rapido Cabs. Customers of the business are already served by bike taxis and auto (three-wheeler) passengers. Rapido is now more directly competing with the industry leaders, Ola and Uber, thanks to the addition of a taxi service. Though they are less prevalent in the market, EV-based BluSmart and InDrive are also attempting to break into it.

Rapido tested its taxi service in Hyderabad for the first time about a month ago. The pilot test had then gotten off to a “fantastic start,” according to the company.

India’s market for online taxi services was estimated to be worth Rs 30.72 billion in FY 2020. From FY 2021 to FY 2025, it is expected to grow at a compound annual growth rate (CAGR) of 12.93%, with a target value of Rs 55.15 billion. There is a ton of untapped potential in the sector.

However, Bhavish Aggarwal’s Ola and the international company Uber, which have also come to be associated with taxi services in the nation, dominate the ride-hailing market. Before their arrival, individual taxi operators controlled the market, which was essentially disorganized.

Rapido can rely on both its current clientele and the steadily rising demand for its services, even though it may not have the industry’s early-mover advantage. The business may also aim to offer a better travel experience since Ola and Uber have both had trouble maintaining a high standard of service that encompasses accessibility, professional drivers, cost-effectiveness, and—above all—safety. Furthermore, the drivers have regularly thrown the two businesses at odds with one another because they have long demanded higher pay.

Initially, 100,000 cars were in the fleet of Rapido Cabs. The Ola and Uber drivers’ compensation issues are another issue that the company is attempting to resolve. Rapido Cab is moving toward software as a service (SaaS) model, in which drivers will be required to pay a dynamic subscription fee based on their earnings through the platform, as opposed to Ola and Uber’s commission-based system, wherein they charge a fee for each ride.

There are currently more than 100 cities where Rapido is available. It has completed 100 million rides so far and has close to 10 million users. With investors like Nexus Venture Partners and WestBridge Capital, the startup has raised about $310 million to date.

Rapido’s problems are clear from the FY22 numbers, even though the company has not yet disclosed its FY23 financial results. Its operating income rose by 91.5 percent, from Rs 75.6 crore in FY21 to Rs 144.8 crore in FY22. However, Rapido needed to spend more than twice as much as it did in the previous fiscal year to achieve 90% growth. Its losses in FY22 consequently rose by 2.6X to Rs 439 crore. It also revealed that cash outflows from operations for FY22 totalled Rs 437 crore, a 2X rise from the year before.

If one were looking at the ride-hailing service from a business perspective, adding a taxi service seemed inevitable. However, Rapido might be considering expanding the layers of its platform. The company is considering expanding its bus ticketing services in collaboration with Zingbus, a company based in Gurugram, as per the TechCrunch report mentioned earlier.

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