Announcing Our Investment in Zingbus
A full stack technology enabled fleet of intercity buses offering standardised experience at an affordable price.
India has 20mn+ people travelling between cities on a daily basis with a majority of 55% using intercity buses, 40% via railways and just 5% split between airlines, taxis and personal vehicles. Inter-city bus travel constitutes a $20bn annual opportunity.
With a growing economy and an accelerating macro trend of urbanisation, the need to travel between cities is expanding exponentially. Railways as an option for such travel has limited scope to scale with strained infrastructure, constrained capacity, limited capital and prioritization of cargo, etc, resulting in over a million customers not getting confirmed reservations every single day. Airlines, taxis and personal vehicles are not affordable for the vast majority of Indians. This leaves buses as the only real affordable and scalable solution for inter-city travel, hence the segments historic growth of 20% CAGR (much faster than the overall growth in the inter-city travel market). This trend has been further amplified by the rapid expansion of the road network by NHAI at an unprecedented pace (adding a record 30km daily) as well as constant improvement in road quality resulting in reduced travel times.
Despite the large number of consumers, the entire inter-city bus travel experience is broken. redBus noticed this over 10 years ago and built a very successful company by solving the discovery and booking piece of the puzzle. However, no one has been able to solve any other part of the stack post booking of a ticket and the actual travel experience from finding the bus, boarding, departure times, service & safety standards remains broken to date.
The industry remains highly fragmented with 1,500+ operators with the largest operator having a fleet of only 300 buses (<1% of the AC bus market). The average fleet operator has less than 20 buses and due to limited scale, is stuck in a vicious cycle of low utilization and low margins. This results in them optimizing costs, declining service standards (including delays and cancellation of buses) and ultimately prevents them from expanding their network and providing customers flexibility of destinations or timings. As a result, the State Run Transport Corporation (SRTC) buses are able to charge 20–30% premium over private operators, only because they stick to their estimated time of departure and have larger regional networks (due to their mandate, SRTCs are not focused on making profits).
Zingbus is looking to break this endless loop of low margins and low standards in the industry by building a full stack technology enabled fleet of intercity buses in a marketplace model, offering standardised experience at an affordable price. In order to do this, the company has executed a number of strategic optimisations from higher asset utilisation by extending route lengths from the current average of 300–350 kms per day, non-traditional curb-side pick-up/drop-off points and creation of a hub/spoke model allowing for one-stop connections in their fast growing network. These optimisations enable higher margins by reducing the cost per seat km and increasing both the revenue per seat km and occupancy & utilization levels. Finally, higher margins enables the business to invest in delivering a superior product resulting in a much more satisfying customer experience.
Run by a highly motivated team of three experienced founders, Prashant, Mratunjay and Ravi, whose earlier startup, Tipihomes was acquired by Oyo Rooms in 2016. The team has very deep domain insights and years of inter-city travel industry experience with Prashant and Mratunjay running the intercity bus operations at ZipGo and Ravi leading technology at AhaTaxis (a leading intercity taxi company).
We have been working closely with the team for a while and are super excited to partner with them in building something big!
Original article here.