redBus: Moving India's Transportation Industry in a New Direction Published : September 23, 2010 in India Knowledge@Wharton Booking an inter-city bus ticket in India is fairly simple these days. A few clicks on the Internet or a phone call is all it takes to complete a process similar to the one used to purchase airline tickets. The process was very different a few years ago and Phanindra "Phani" Sama learned of its limitations the hard way. The experience got him thinking, turned him into an entrepreneur and changed the way bus ticketing is done in India. In October 2005, Sama, an engineer working with Texas Instruments in Bangalore, wanted to go to Hyderabad -- some 562 km away -- to spend Diwali, the festival of lights, with his parents. Sama knew the drill. He used to travel by bus from Bangalore to Hyderabad almost every alternate weekend. But on this occasion when Sama reached his travel agent, he hit a brick wall. Being festival season, there was heavy demand; there were no seats available, he was told. Sama was frantic. His parents were expecting him and he didn't want to disappoint them. He went from one travel agent to another but with no luck. He finally ended up spending Diwali by himself. "I kept thinking that if only I had tried harder and gone to some more agents perhaps I could have managed to get a ticket," says the 29-year-old Sama. More importantly, he wondered why (unlike with airlines and railways) there was no centralized database of bus operators, bus routes and information on availability of seats. Also, why was the information not available on the Internet? Less than a year later, armed with market research and mentoring from The Indus Entrepreneurs (TiE), Bangalore chapter, Sama set out to launch an enterprise that would fill the gaps in India's bus transportation system. He partnered with fellow Birla Institute of Technology & Science-Pilani alumni Charan Padmaraju (then with Honeywell) and Sudhakar Pasupunuri (then with IBM) to set up a bus ticketing company with a centralized information database, online ticketing and an offline distribution network. They named their company Pilani Soft Labs and their brand redBus. The firm is currently the largest bus ticketing organization in India. "RedBus has revolutionized the bus ticketing industry in India," notes Sanjay Anandaram, co-chair of the TiE Entrepreneurship Acceleration Program and founding partner of JumpStartUp, an early stage U.S.-India cross-border venture capital fund. He says redBus has found success because it offers customers a wide range of information and choices, in addition to convenience. Satyajit Majumdar, professor at the Tata Institute of Social Sciences (TISS) who has been studying redBus closely, is impressed by the problem-solving approach of the co-founders. "This industry has been a problematic sector for many years. [Sama] and his team are trying to address both the macro and the micro issues and improve the efficiencies from a holistic perspective." Ground Realities
The Indian bus transport industry has long been a highly fragmented and unorganized sector. Some 2,000 private bus operators run about 20,000 buses on long distance point-to-point routes. The buses are formally known as "contract carriages" and tickets have to be bought in advance. Short-distance "stage carriages" form the other category of buses in India; to ride these buses, commuters buy tickets on the vehicle itself and can get on and off at multiple points. RedBus operates in the contract carriage space. While a few contract carriage operators have large fleets of about 100 buses each, most are small players with five to 10 buses. Some firms operate with only one or two buses each. The bus operators are all This is a single/personal use copy of India Knowledge@Wharton. For multiple copies, custom reprints, e-prints, posters or plaques, please contact PARS International: firstname.lastname@example.org P. (212) 221-9595 x407....
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