How Rapido is not just another pseudo-disruptive innovation of the Digital Age?
Disruption has nowadays become one of the most abused words in the business dictionary.
I have heard managers using ‘Disruption’ in a Presentation multiple times, only to make their arguments sound more plausible, to showcase any change or even a hint of a change in the industry’s dynamics. In history, the term ‘disruptive innovation’ was coined by Clayton Christensen, it was supposed to represent a business that grows through the bottom of the market, but over the time for its lower price, accessibility and other factor have taken on the incumbents of the industry. ‘An example of same in the digital era is this bike taxi service from Bangalore, Rapido’.
Recently, I moved to Hyderabad and in a matter of a few days, I realized that Ola-Uber duo is half dead in peak hours in the city, and other times they are just unaffordable. After suffering for a couple of days, I was redirected to Rapido, a bike hailing service that was affordable and available most of the time.
Founded in 2015, 3 engineering grads envisioned Rapido to solve the commuting problem for a user segment that was primarily either ignored or troubled by Uber-Ola either through increased pricing or longer commute time. Rapido empathized with the segment to offer a service that can mitigate the problem. According to data, on an average, time saved in commute by Rapido is 30–40% and cost saved is around 60–70%. The trio saw a blue ocean opportunity in this segment and same can be observed by Chan Kim and Renée Mauborgne’s strategy canvas.
Over 2 million downloads, with availability in 40+ cities and with support of 1 lakh captains (drivers), Rapido exhibit the user’s need for low-cost and fast commute with availability, even at the cost of losing luxury like air conditioners in cabs. Understanding it’s a major segment is traveling to offices or colleges and these people are short on time and prefer affordable services, the proposition of Rapido has been to provide the same.
Rapido also went ahead and tried to resolve a major concern of safety with two-wheelers with the implementation of safety regulations like helmet check on application and insurance policy up to 5 lakhs for both rider and driver. It also kept focused on the niche market to not dilute the efforts. Overall, the strategy helped Rapido penetrate through the target market and become a preferred source of commute in just a small time.
Rapido also has been applying different strategies to improve its Go-To-Market. It Provides a high-level product experience with competitive UX that uses technologies like AI/ML to enhance its predictions of time and cost. As a considerable sell to the market, it relies on availability and price. Rapido has been promoting itself with initiative ranging from initial membership discounts to more creative and social-friendly such as free rides to voters or distribution of free helmets.
Rapido has raised a total of $19.4M in funding over 7 rounds. Their latest funding was on 23 April 2019, which amounted to $11.2 million in its series A funding from Nexus Venture Partners. It has built confidence among investors and has a product to build a market to shift the dynamics of the industry.
Like given graph on disruptive innovation, the reliance of the least demanding user is developing for Rapido in all major cities of India. With the trajectory, it is highly possible that users start building confidence toward the services and affordability of Rapido and we see the customer base rise rapidly. And if Rapido continues with excellence in product and affordability, it will take over the incumbents in the taxi market and soon become the most preferred conveyance mode.
As famously said by Geoffrey Moore “Sustaining innovations are the key to consistent performance, whereas disruptive innovations are the key to dramatic changes in power.” Rapido can be one of the early ones to take on another product that itself changed the industry dynamics a few years back.
As the industry of taxi service is hitting slowdown of growth with as low as only 10–15% growth, numbers show that Rapido has been making an MoM growth of 20% on rides in 2018. The latest round of funding in April 2019, the behemoth funds can be a game changer for the company as now it can afford to make losses by fostering its marketing and growth Business Units. With the company claiming 85% repeat rate, a large fund at hand and a market to explore with clear value proposition, we can expect the growth of Rapido rides to take a plunge and temporarily grow at as high as 30–35% MoM for the next few months and thus making a stronger on ground in metros and tier-1 cities. Undoubtedly, Rapido is one of the current start-ups in India that has the potential to make an impact to change the way people perceive taxi commute in India.