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Can Roder’s Algorithm Help It In Cracking The $9 Bn Opportunity In Intercity Cab Market?

Can Roder’s Algorithm Help It In Cracking The $9 Bn Opportunity In Intercity Cab Market?

‘Don’t just start a business, solve a problem.’

This is one of the chief tenets of entrepreneurship. For three students of IIT Kharagpur, they faced their ‘problem’ a couple of years ago. Whenever either of them wanted to travel away from campus, they had to shell out an exorbitant amount for a taxi ride to Kolkata – as there was no other mode of transport available. The amount would be arbitrary and always unaffordable as the drivers would charge for the return journey as well.

Today, just a year after their launch, Abhishek Negi, Ashish Rajput and Siddhant Matre are solving that problem, for close to a million people in over 300 cities through their outstation cab aggregator – Roder.

When InstaCab Turns to Roder!

The trio’s first foray into entrepreneurship began in August 2014 with InstaCab, as a cab aggregator for outstation travels. In a bid to differentiate themselves from ride-hail giants Uber and Ola, they decided to install a ‘different-vendor different-pricing’ model based on demand and proximity. With a range of cars to choose from- Hatchback, Sedan, and SUV, Instacab eliminated, “the return fare concept” by optimizing resources so that the customer only pays for the distance travelled.

For example – a typical Delhi to Agra one-way journey costs around INR 6000. InstaCab provides one-way fare to Agra at just INR 2600 (inclusive of all tolls, taxes, and driver allowance), which is more than 50% cheaper than the market.

By July 2015, they were working with a pool of 2500 drivers and had completed 1000 outstation cab rides catering to a GMV of INR 50 lakhs. They also raised a seed round of $350K from Unicorn India Ventures in September last year.

When they took stock of their performance in December, they found that 60% of the demand was for intercity cabs and only 10% of those were converted into customers. Also, the inter-city cab market being valued at $9 Bn, offers an opportunity to cater to the needs of a wide array of travelers. This includes solo travelers, trekkers, family outings, business travelers etc. They decided to pivot their focus and rebrand as Roder early last year.

“While InstaCab was more focused towards providing a cab as soon as possible; Roder emerges as a travel companion for a passionate traveler, and a partner to rely upon for a hardworking Cab Driver, “ said Siddhant.

It is currently working with a team of 18 and is based out of Gurgaon.

Changing Lives: For Themselves As Well As Drivers

The first customer of Roder was someone who had recently secured admission into the Indian School of Business (ISB) and was to travel from Delhi to Mohali for his orientation, ready to start a new chapter in his life, when disaster struck. In the wee hours of the morning, a truck coming from the opposite side of the road lost control of the vehicle and almost smashed into the Roder cab. The driver and customer both escaped without a scratch but this was a wake-up call for the Roder team.

They thanked their stars that the driver and customer were safe and began to institute policies to ensure travel safety. Police verification of the drivers was mandatory. They instructed their drivers to drive in the 80 kmph range on the highways to ensure the safety of the customer.

With these systems in place, they slowly started to get a foothold in Delhi. With the capital city as a starting point, they soon increased to 30+ (Punjab, Himachal Pradesh, Uttar Pradesh, Uttarakhand,Rajasthan) in next few months.

They have now increased their focus on the most remote areas like Mandi, which churned out its own challenge. The drivers from those areas were not familiar with technology and were initially hesitant to use the platform.

The Roder team contacted each one of these drivers and multiple vendors on the phone to avail the service for their clients. Once they managed to increase the business for them, the drivers started trusting the team and became ready to embrace technology. This led to a further improvement in livelihoods of drivers too.

“One car owner from Chandigarh – an early user of our service – originally had three sedans and two innovas. He bought 3 more just to keep up with the demand created by us,” said Ashish. Siddhant further added that there are drivers who are earning between INR 15000 to INR 25000 per day with Roder.

There are many other instances of drivers seeking their advice as to which car to buy based on the demand. Such was the level of trust built up that the account managers and the core team received an outpour of invitations from the drivers on Eid.

This ‘word-of- mouth’ publicity went a long way in achieving the statistic of 6000+ drivers, close to 9.5K app downloads, along with 20K+ registered users spread majorly across Tier 1 cities. Currently, Roder gets its major traction from Delhi, Mumbai, Pune, Chandigarh and Agra.

Overcoming The Mistakes During The Early Phase

As Siddhant admits, in very early days, they started working with travel agents to aggregate cabs. However, within 3 weeks they realised the importance of onboarding a cab owner than an agent. This gave them better control over driver documentation and ensure a better quality of cabs.

He further said that initially all bookings made through them were cash on delivery. However, they soon started to experience last minute cancellations made by customers which hamper operational flow. Also, there were cash collections issues from the vendors. “We now have a mandatory online payment procedure to pay either partial or full amount to maintain cash flow,” added Siddhant.

Other initial challenges faced by Roder team were the quality of cabs, convincing drivers, and driver authentication as the drivers was from different cities located in remote areas and it was difficult to verify each of them. “However, technology has helped us to eradicate these barriers now. Other current challenges are to study and adapt to the travel needs of the customers,” said Abhishek.

The Game Changer For Roder

Roder currently faces direct competition from similar startups in this space like AhaTaxis, Wiwigo, and MyTaxiIndia. However, Roder thrives on its technology backed innovative approaches and fare generation algorithms to maintain an edge over others.

For instance, Roder’s route management algorithms follow on-ground flight model wherein a flight crew goes in for a well-defined route from one place to another and then the next and then came back within 3-4 days. Similar algorithms are applied to manage route options, as well as optimise the driver base.

However, the game changer for Roder was their adaptivity, need-based marketing strategy. A careful scrutiny of the market revealed that intercity travel demand fluctuated seasonally. When it’s hot outside, people prefer traveling to the cooler regions of Kashmir and Leh-Ladakh. In the monsoons, Mumbaikars and Punekars all flock to Lonavala in droves.

This analysis helped Roder team in efficient decision-making and to scale their business to over 300 locations across India and is growing 30% month on month. They have recently launched in Bangalore, Mysore, and Ooty and are already operational in the northern and western region.

“We would also be launching some new features on our website and app so make intercity booking a breeze. iOS app will follow soon after that. In the short-term, we want to have every motorable road to be part of the increasing Roder network. In the long-term, we know that the market opportunity will be bigger than just taxis and we will be ready for it, ” said Ashish.