Rapido cofounder: Subscription model has halved customer acquisition cost

Ride-hailing company aims to become profitable in a year, says cofounder

Rapido’s customers have doubled after launching a subscription model 18 months ago, and the cost of acquiring them has halved, said a senior executive of the ride-hailing company.

 

The startup aims to be profitable in a year and go public if it makes business sense. “Though the number of customers we started acquiring has doubled on our platform, our cost of acquisition has come down by 50 per cent. This is the advantage of having a platform [subscription model],” Aravind Sanka, cofounder of Rapido, told ‘Business Standard’.

 

“We get 60 per cent of our business from customers who use more than one service on our platform — bike taxis, auto-rickshaws or cars — from us. One of the big costs in our business is acquiring more and more customers, and that has come down substantially,” he said in a video interview. 

The subscription model will help Rapido to become profitable as its expands to more cities. “We are already operationally profitable, so we don’t lose money to run our operations. But at the same time there are some costs, as we are investing for our growth. Scale wise also we are just a year away from turning the company profitable.” 

Asked about the company’s finances, Sanka said: “Because we are operationally profitable, we have enough capital to take care of our fixed costs for many more years. We are not looking at a fund-raise actively.”

 

About going public, he said: “We are not chasing any timelines but obviously we want to be ready by next year, so that we can take a call whenever it is good for business. We do not have a capital need to go public. It will be a business call.”

 

Rapido is in more than 300 Indian cities and will expand to 500 cities in 12 months to reach 500 million people. It disrupted the mobility business with a subscription model where drivers pay a small fee for the days they use the platform. The earlier commission model had drivers pay 25 per cent of the total trip bill to mobility operators, reducing their incomes and making rides expensive. The subscription model has led to a sharp increase in drivers and rides on Rapido’s platform.

 

Namma Yatri, a community-driven ride-hailing app in Bengaluru, started the subscription model that has now caught on. A week ago, Uber India announced it will shift to a subscription model nationwide for its driver partners of cars, auto-rickshaws and bikes.