| Type | Private |
|---|---|
| Industry | Electronic commerce |
| Founded | Bangalore, India (August 2006) |
| Founder(s) |
|
| Headquarters | Bangalore, India |
| Area served | India |
| Key people | Phanindra Sama(CEO) |
| Revenue | 60 Crore (March 2010) [1] |
| Employees | 250 (October 2010)[1] |
| Website | Redbus.in |
redBus, also known as redBus.in, is an online travel agency offering bus tickets in India. It has offices in Ahmedabad, Bangalore, Chennai, Coimbatore, Delhi, Hyderabad, Mumbai, Pune, Vijayawada and Vishakhapatnam.
redBus' CEO, Phanindra Sama was recently selected by Endeavor as a high impact entrepreneur. [2][3][4]. Also, Businessworld voted Phanindra Sama as one of the top 5 most promising entrepreneurs in India[5].
Tickets used to be booked through the traditional brick-and-mortar agents till 2006 when redBus introduced online bus ticketing[6][7][8]. IN October 2005, Phanindra 'Phani' Sama could not get a bus ticket to go home for Diwali. An electronics engineer with Texas Instruments in Bangalore, he visited his parents in Hyderabad every alternate weekend.His agent said no tickets were available, but referred him to someone else. This struck Phani as odd; how could one agent have tickets and another have no idea about seat availability on the same bus? To vet his curiosity, he visited a few bus agents and realised a bus agent had inventory only for a few seats on each bus. "Why can't there be a common server where all bus operators could offer tickets on a first-come-first-served basis? If it is so easy to book airline or train tickets online, why can't we have a similar system for buses?" he wondered. Phani did not get a bus ticket home for the festival weekend, and this spurred him to think deeper about the issue. An electrical engineering graduate from BITS, Pilani, Phani was happy in his Texas Instruments job. But when he saw the potential of a common bus ticketing platform, he immediately brought in partners. He also proposed his idea to a few travel agents, bus operators and friends who were frequent bus travellers. They all felt it would be of great help to them, and this gave Phani the initial confidence. But his start-up came with its set of challenges. Along with six friends from BITS whom Phani convinced to join the venture, he went to the registrar of companies with the idea of calling his company 7D, or 'Seven Dudes'. The registrar declined this name, telling them a company's name cannot start with a number. The proposal to name the company Pilani Soft Labs, with redBus as their brand, was accepted in their third visit to the registrar. Soon after, four of his friends left the venture for various reasons. This left him and his college friends, Sudhakar Pasupunuri and Charan Padmaraju, with a registered company but no idea of how to write software for their product. "After spending many sleepless weekends for four months, we had version 1.0 of our product ready," says Phani.
But this confidence diminished quickly when he took this software to bus operators across Bangalore and Hyderabad. Few of them were comfortable with technology; fewer had computers. At this point, Phani and his friends came in contact with global professional network The Indus Entrepreneurs (TiE), whose mission is to foster entrepreneurship.
One of Phani's mentors, Sanjay Anandaram, formerly of Wipro, told him that instead of selling a software product, he should sell tickets directly so bus operators could see the power of the offering. "We ended up selling bus tickets online as travel agents, something we didn't at all plan to do initially", says Phani.
RedBus started operations in August 2006 and broke even by the end of that year. Phani credits this initial success to the August-December festive season, when the demand for bus tickets is at its peak.
Today, RedBus has 230 employees, offices in nine cities, and tie-ups with over 700 bus operators across the country.
From a turnover of 50 lakh in the first year of operations, redBus expects revenues of about 150 crore this year. redBus posted revenues of 60 crore in the previous year.
Phani predicts that this year will be the first profitable financial year of the company. The company was not profitable last year due to expansion costs. "We are selling twice the number of tickets today compared with last year. At the same time, our fixed costs are taken care of, so this has enabled us to build scale and profitability," says Phani.
Around 7,000 seats are booked daily on red-Bus, giving it a 1% market share. Nearly 6-7 lakh bus tickets are sold everyday in the country. However, in sectors such as Mumbai-Hyderabad and Mumbai-Bangalore, Phani says redBus has a 30% market share.
The business operates on a traditional travel agent model, where bus operators pay redBus a per-ticket commission.
In February 2007, redBus received 3 crore from seedfund, a Bangalore start-up fund. It received 8 crore last year from Helion Venture Partners, another Bangalore-based VC fund.[9]
Helion funded redBus because of the unique nature of the business. "Phani and team have been able to demonstrate great success in singlehandedly taking an extremely disorganised market and putting a lot of process and organisation behind it," says Kanwaljit Singh, MD of Helion.
Bus operators aren't sore about redBus' entry into their domain. In fact, redBus' network of operators is so large that it runs a Global Delivery System (GDS) for bus tickets, from which all other ticketing websites, like MakeMyTrip and Yatra, retrieve their offerings.
"We have benefitted greatly from redBus. They have singlehandedly brought about transparency and put in place a system. Our sales have increased greatly, as they have given us access to a wider network," says Khalid Qureshi of HKB Tours and Travels, a Bangalore bus operator.
The company plans to offer tickets through mobile booking, call centres, delivery partnerships and even retail outlets. In the past few weeks, it has opened offices in Coimbatore, Vijaywada and Nagpur. redBus also plans to expand to the North East and central India.
With this kind of network, it's hard for anyone to hop on to a bus.