Shared bus service operators fail, but Shuttl has a plan to keep going

Ola’s exit from the app-based bus aggregation business early last year was seen as a prelude to the decline and exit of smaller players in the segment. A year down the line, the industry is grappling with the imminent scale-down of operations by Bengaluru-based ZipGo. It’s learnt that the company is contemplating suspension of its service in a few select cities. While these developments have cast a long shadow on the future of the bus aggregation business, Shuttl, the largest player in the market with 1,200 buses on its platform, appears to be defying the naysayers. The company is now present in multiple cities having completed 20 million rides in January this year. It’s competing in the segment with players like Hoppr, rBus and Cityflo.

If a big player like Ola with deep pockets found it difficult to crack the market, how is a relatively smaller player like Shuttl preparing to face the headwinds? Indeed, does it have what it takes to survive the rough and tumble of ride sharing?

Amit Singh, co-founder and chief executive officer, Shuttl, says the key to the company’s successful ride till now has been the team’s single-minded focus on the three pillars of the business — efficiency, reliability and scalability. “With limited infrastructure supporting the transportation needs of people, there is a great trade-off between comfort and affordability. However, the moment one provides a user an assured seat and a direct route to her destination, we get the solution to address that trade-off. So, our fundamental job is to match demand with supply,” says Singh.

Given the infrastructure constraints, last mile-connectivity is a key demand of people in cities, both big and small. “The new generation of customers seeks mobility more than ownership. Eventually, private vehicles will account for a smaller share of kilometres driven worldwide as a growing number of users adopt ride-hailing and car-sharing services,” says Ashish Pandey, managing director for automotive, industrial equipment and travel, Accenture India.

Technology allows for deep learning and helps us meet consumer needs: Amit Singh, Co-founder & CEO, Shuttl

Accenture’s global research shows that by 2030, revenues from manufacturing and selling vehicles which is currently estimated at €2 trillion will be only marginally higher than what they are today, and that the profits from car sales will even shrink, from approximately €126 billion to €122 billion. By contrast, revenues from mobility services are projected to soar to almost €1.2 trillion by 2030, with profits reaching as much as €220 billion.

That is the future Shuttl is looking forward to. Established in 2015, Shuttl is leveraging technology to address the need to move people efficiently and affordably. At the moment, the focus is on deepening its network and introducing more buses on the road. Currently, it runs 1,200 buses and clocks in 60,000 rides every day. In 2018, Shuttl rolled out its services outside Delhi covering cities like Kolkata, Hyderabad, Pune, Mumbai, Bengaluru, Chennai, and Jaipur.

So, what is the fastest way to scale-up operations in multiple cities?

“Our business is very demand responsive. It’s critical for us to identify the preferred time of travel of potential customers, determine and design optimum routes and stops along the way. Here, technology allows for deep learning and helps us meet consumer needs by getting the product right.”

Shuttl’s in-house technology team comprising 100 members focuses on developing machine learning and artificial learning (AI)-based solutions to get the service-related part of its offering right. This includes being precise with variables like buses stopping at the designated pick-up points on time, ambience (working air-conditioner), cleanliness etc right.

As urban infrastructures become smarter and better connected — with 5G on its way and intelligent sensors becoming mainstream — intelligence will become more pervasive, rather than isolated, say experts. “Edge computing in and around the vehicle will create new flows of data and information to enrich AI algorithms. Internet of things will give drivers continuously enhanced experiences, from traffic jam-free journeys, to smart vehicle charging and even the opportunity to allow others to seamlessly share their vehicles,” says Pandey.

That said, getting the unit economics right would be key to survival. While deciding on its pricing structure, the company takes into account the cost that an average consumer incurs with the available mode of transportation covering home-mile, middle-mile and office-mile. For example, middle-mile is cheaper with commuters having the option of using metro and bus. The home mile turns out to be the most expensive where one ends up paying Rs 30 for an auto even for covering a distance of one to two km. Using these pricing matrices as benchmark, Shuttl has priced its daily two-way services at Rs 90 or so. It also offers monthly subscription options to consumers to help them bring down the cost of travel if they use the bus service regularly.

The occupancy levels of buses also play a critical role in running operations efficiently. The team targets occupancy levels of 80 per cent per bus. Being a shared service, passenger safety would be a key parameter on which Shuttl’s service will be judged. It uses in-house built apps wherein unique consumer identification codes are issued to each traveller. Every time a user boards a Shuttl bus, a buzzer rings out and the driver concerned sees a right mark or cross mark on the driver app, ensuring that only an authentic user is boarding the bus.

Clocking miles

• 60,000: Average daily ridership
• 1,200: Buses in the fleet
• 35%: Women commuters
• 730: Total operational routes (B2B plus B2C services)
• 12: Number of cities it operates in (B2B plus B2C services)
• Rs 350-6,500: Cost for pass depending on periodicity (5-90 days)
• $34 million: Funding till date; investors include Amazon, Sequoia Capital & Lightspeed India Partners