Rapido Shifts Gears: Enters Cab Market with a Zero-Commission Model

Rapido, the Bengaluru-based commute app recognized for its economical bike-taxi services, has thrown its hat into the cab market ring, challenging the dominance of Uber and Ola. Leveraging a software as a service (SaaS)-based platform, Rapido introduces a zero-commission model for drivers, aiming to disrupt the conventional ride-hailing dynamics.

At a valuation of $820 million, Rapido is yet to join the unicorn club but has secured substantial funding, reaching approximately $324 million. With investments from TVS, Swiggy, Nexus Venture Partners, and WestBridge Capital, Rapido has embarked on a new journey to expand its services beyond two-wheelers and auto-rickshaws.

Rapido Cabs, the newly introduced platform, adopts a subscription model for driver partners, eliminating the conventional commission structure. Drivers will pay a subscription fee of Rs 500 if their monthly earnings surpass Rs 10,000, signaling a departure from the traditional per-ride commission system.

Pavan Guntupalli, co-founder of Rapido, emphasized the innovative SaaS-based platform, stating that it revolutionizes the driver commission system, addressing the ongoing challenge of revenue-sharing with aggregators. The company anticipates the cab division to contribute 15 to 20 percent to its revenue in the coming year and aims to onboard 500,000 driver partners by Q3FY25.

Despite financial challenges, with losses rising to Rs 439 crore in FY22, Rapido's revenues almost doubled to Rs 145 crore. Uber India and Ola, the industry giants, also faced losses and reported varying financial performances, underscoring the competitive nature of the ride-hailing sector.

Rapido's entry into the four-wheeler space marks a significant expansion, with over 100,000 cars in its fleet, primarily concentrated in Delhi-NCR. While available in over 100 cities, Rapido Cabs will debut in Bengaluru, Hyderabad, and Delhi-NCR, with plans for a nationwide rollout in the coming year.

Safety remains a top priority for Rapido, introducing features such as SoS, share-location, and emergency buttons. The app also monitors deviations from the route, halts, and drop-offs different from the booked location. A future integration of a face recognition system and sensitivity training for driver partners underscores Rapido's commitment to passenger safety.

Additionally, Rapido is venturing into sustainable transportation by incorporating electric vehicles (EV) into its fleets. Collaborating with the government, the company is actively assessing barriers to electrification, including costs, charging infrastructure, and financing, aligning with broader environmental initiatives.

As Rapido steers into the competitive cab market, challenges await, with industry insiders noting potential hurdles for the relatively smaller player. The company's ambition to disrupt the market, prioritize safety, and embrace sustainability reflects its commitment to redefining the ride-hailing experience.