Exploring the Redbus Application Ecosystem in India

Abstract
Despite being used by millions of people, the bus travel industry in India is
highly fragmented as well as unorganized and it took a while to witness some
innovations in the bus ticketing industry in India. This paper attempts to explore as
well as evaluate the extent of the transformation and its impact by focusing on
‘redbus’which is the largest bus ticketing company operating in India. The first
section of this paper discusses the nature of bus travel industry alongside the
challenges faced by the Indian bus travel industry. The second section of this paper
enumerates the challenges encountered by ‘redbus’ which presently covers
geographically 80% of the overall market. Subsequently, this paper examines a
growth model in existence for ‘redbus’ which would provide a sustainable growth
in the long term.

Keywords: bus ticketing, Redbus, bus travel industry, India

Introduction
The bus travel industry in India is unorganized and highly fragmented. It is a
120 billion annual turnover industry with a growth rate of 25% per year. (Note 1)
This industry is growing phenomenally in India, being one of the most preferred
modes of transport for millions of Indians. There are around 2000 private bus
operators which function with almost 20000 buses on point to point routes. (Note
2) In the Indian bus travel industry, most of the private players were regional
players and did not have a pan India presence and therefore there was a lack of a
centralized platform for organized scale of operations. The market for online car
rentals and bus reservations business was anticipated to arrive at $150 million in
the year 2011 as per Applied Travel Intelligence. (Note 3) The two carriage
categories when it comes to Indian bus travel industry operations are contract
carriages and stage carriages. The contract carriages are usually long distances
from city to city with less number of stop points whereas stage carriers are
comparatively short distances with several stop points. The contract carriage
industry in India is fragmented, with more than 65% of the bus operators
possessing over less than 20 buses each. Despite of growth of online ticket
reservations in India through renowned players like makemytrip.com (airline) and
IRCTC.com (train), there was a reasonably slow growth when it came to online
bus reservations. The role of IT in revenue management is prominently discussed
by many researchers (Kimes, 2001; Bakos, 1997). The reasons for this slow growth
could be attributed to several reasons like the unwillingness of the majority of the
Indian population to book their bus tickets online, low internet penetration and
more than that, the unavailability of a proper online platform to book their bus
tickets. The Indian bus travel industry could be also segmented on the basis of
regular and luxury bus travel catering to the entire population. Volvo buses have
played a greater role in increasing the comfort level of the bus passengers. The
growth of this industry is accredited to the fact that airline tickets are relatively
expensive and train tickets are booked well in advance, which makes bus travel a
viable option. This travel industry in India is predominantly driven by cash and
scattered on the regional basis. Most of the firms in this industry are regional
players who operate on a small scale and rely heavily on manual systems for ticket
bookings and reservations.The industry was highly decentralized with travel agents
playing a major role in managing the bus ticket bookings.

The major challenge with the Indian bus ticketing industry is that despite of
being used by millions of people it took a long period to witness some innovations
in this sector. Moreover, within the travel industry it is noticed that the train and
flight ticketing had centralized booking and reservation process implemented much
earlier than bus travel industry. The bus operators are scattered across the country
largely supported by conventional travel agents.There was an absolute need for
transparency within the industry so that consumers can avail the services of a
centralized system where they could be acquainted with the information regarding
the total number of bus routes in operation, prices, availability, seat preferences,
cancellations, refunds and feedback options. E-ticketing or electronic ticketing in
India is changing the landscape, especially air travel and railways ticketing coming
a long way ahead. There are research studies which have discussed that service
providers could increase their transactional efficiencies and expand their services
by adopting modern IT in revenue management (Li etal., 2009; Devaraj & Kohli,
2003; Zhu & Kraemer, 2005; Zhu et al., 2006). The Indian eRetail report 2012 says
that travel and leisure comprise of 76% of the overall share in the ecommerce
market in India. The online ticketing market had witnessed a phenomenal growth
in the Indian market with 30% of railway tickets and 40% of air tickets sold
through online channel. Over the last decade, we saw an exponential rise in the
number of bus ticketing portals in India. The online bus ticketing market is
estimated to be 5-6 billion which is around 3-4% of the overall market. (Note 4)
This transformation in the travel portal space is noticeable with the private bus
travelindustry growing at a rate of 30% and estimated to reach 350-400 billion by
2015.(Note 5) E-ticketing utilizes global distribution systems such as Galileo,
WorldSpan, Sabre and Amadeus which are technology platforms to carry out the
transactions. In the year 2002, Air India initiated the e-ticketing. The Indian
Railway Catering and Tourism Corporation Limited website (www.irctc.co.in ) is
one of the largest and most visited e-commerce sites in India and it has registered
the highest ever per day booking (4.96 lakh e-tickets) on 13th July,2012. (Note 6)

Redbus-History
Redbus started its operations in August 2006 with its headquarters in
Bangalore, India. It started expanding its operation in many cities and the first
branch was established in December 2006 itself by opening a branch in Hyderabad
and since then it has become the largest bus ticketing company operating in India
and it reaches as far as 850 bus operators with physical presence in 22 states
through a total sales of around 1.3 million seats annually. redbus is first online
portal for bus ticketing in India and its first mover advantage has permitted it to
gain trust among all its stakeholders. redbus presently covers geographically 80%
of the overall market. Its website“redbus.in” is the 4th most visited website in the
country and 60% of its total bookings are procured through this website.The
organizational roles and responsibilities were clearly defined by the partners so that
there are no conflicts in the overall management. The organization to begin with,
commenced with 6 employees and at this point in time it has grown to an
organization having more than 500 employees catering to the needs of millions of
people.(Note 7) The employee satisfaction and motivation levels at redbus are
given due importance. The roles and responsibilities are clearly defined and
feedback system is well in place. The organization departments are divided among
various functions like marketing, finance, business development, alliance
activities. The major strategic decisions are formulated in the headquarters and
other decisions are delegated to the regional offices. In 2007, redbus changed
brakes and started expanding rapidly with the investment aid of around Rs. 3
crores received from Seedfund. Similarly in May 2008 it acquired finances from
Helion Ventures and in June 2009 from Inventus Capital which facilitated its path
towards development. From the year 2007-09, redbus was announced as the fastest
growing companies in India as per All World Network. redbus promoted itself
through various mediums like search engine marketing, word of mouth, public
relations and radio advertising.

What’s Next?
Redbus has adopted a low cost model by expansion across India through
establishing call center at various low cost locations. It was quite difficult for him
to service operators and consumers across India from his headquarters alone which
propelled him to open more offices. It also helps in providing regional assistance to
the local population which results in better customer services and satisfaction at the
regional level. redbus call centers are known for their breakthrough technology. It
has employed the software that receives signal through Public Switch Telehpone
Network (PSTN) line and routes to multiple locations after converting it into
digital signals. This approach not only helps in saving cost but also optimum use of
every single call received at the centers. The customer satisfaction and customer
expectations (Oliver, 1997) had been the top priority since the inception and it was
necessary since customer satisfaction (Mittal & Kamakura, 2001; Bolton, 1998)
leads to customer retention, purchase intentions and loyalty (Mcdogall &
Levesque, 2000; Fornell, 1992) which has been discussedin many research studies
(Cronin & Taylor, 1992; Rust et al., 1995; Innis & Londe, 1994; Mittal et al., 1999;

Cronin et al., 2000). One of the most important strengths in this business for
redbus had been the relationship building with the bus operators. The flexibility to
adapt to the market and significantly change course was instrumental in ensuring
redBus’ success. The bus operators are briefed initially about the advantages of
redbus and offered to sell 20% tickets through redbus system. If they are convinced
with the redbus system then a contract is signed to sell more tickets along with
better service and information network. The ticket inventory aggregation is based
on whether the bus operator is using a computerized or manual system. The
computerized bus operators contribute around 40% of total ticket sales and the
manual system users contributed the majority of 60% of the total sales. The
inventory data with the computerized bus operators is updated consistently by the
redbus servers. Although within few years of its existence, redbus has proved to be
a major platform for bus e-ticketing across the nation, it desires to penetrate among
the bus operators who are using manual system to further improve the market share
of redbus. The co-founder member Charan Padmaraju believed that to build the
competitive edge it was necessary to innovate which was the major motive behind
adopting the cloud technology provided by Amazon Web Services (AWS). It
helped the developers of redbus to focus their efforts towards development of IT
applications leading to overall cost savings, innovative solutions and higher
scalability. The real challenge was retaining of customers which is a daunting task
on Internet (Parasuraman & Zinkhan, 2002; Evans & Wurster, 1997). The servers
and infrastructure based on cloud platform has led redbus to differentiate his
business. Redbus plans to gradually move towards Amadeus or Sabre used in the
Airline travel reservations for higher level of integration.

Competition in the Marketplace

With the redbus revolution, the potential in this arena is not out of sight. The
competition in this business comes from basically travel agents and ticketing
companies who have presence locally, nationally and few of those who even have
an international presence. redbus over the years has adopted a business model
which is quite difficult for the competitors to replicate due to which redbus is
ahead in the contest. It has followed a model where the technology has been suited
to the requirements of the bus operators enhancing long lasting relationships. There
are few prominent players in the industry which have been described below:Via
world (Note 8).Via world was launched on July 28th, 2006 as flightraja.com and
incorporated in May 2007. Today its presence is scattered across 2,400 towns and
cities of India with more than 4 crore customers base. Via world has its
headquarters in Bangalore. It has more than 650 employees and an annual sales
around 500 million USD. Via world started with the reservations of bus bookings
around 2007 and also brought out an automatic ticket booking kiosk. Via Bus
Tours, which is a part of the Via Group is right now concentrating on the domestic
pilgrimage tourism market and planning to expand its multi-axle luxury Volvo
buses to connect the pilgrimage destinations across India. Via has partnered
associations with Indo US Venture Partners (venture capital firm) and Sequoia
Capital in India.Abhi bus (Note 9). AbhiBus started in the year 2007, is led by Mr.
Sudhakar Reddy (Founder and CEO) for offering online bus booking for
customers. Since they found it very difficult for them to integrate the fragmented
bus operators and since the internet penetration was very low in the Indian market.
AbhiBus started with designing websites and APIs for operators. It provides Online
Passenger Reservation System (OPRS) to State Road Transport Corporations
(SRTC) and private operators for managing the ticket inventory and online ticket
sales. The OPRS automates and provides the web based online interface for the
entire workflow of the bus operators. The revenue flow of the customer across the
various ticket sales channels is managed through Abhibus. It manages the ticket
inventory of around 32 private bus operators and UPSRTC involving 10,000
buses.Ticket goose (Note 10). TicketGoose.com started in August 2007 to provide
online services to bus passengers. Ticket goose provides information and booking
facility for more than 5000 bus destinations in South India and deals with more
than 500 bus travel partners. Ticket Goose allows the customer to avail the benefits
on online booking through its channel partner outlets which includes corporate
sectors and several ticketing agents. It is also rapidly expandingits software
solutions for private Omni Bus Operators to facilitate them to go online and offer
real time inventory.The Company TicketGoose is promoted by Efficsys InfoTech
India Pvt. Ltd. which is a leading technology driven organization working in the
fields of e-commerce, software development and training.Customer Needz (Note
11). CustomerNeedz.com is an online travel ticket booking site providing bus
booking facility.

It is a venture started under the leadership of IIMB (Indian Institute of

Management, Bangalore) Alumni. Bus ticket reservation system in CustomerNeedz
is a web based ticket booking system offering seat allocations in the buses as per
the requirements of the passengers. It has ensured safety of the online transactions
through a tie up with India's leading payment gateway (www.ccavenue.com) which
uses Secure Socket Layers (SSL) for data encryption.Yatra.com (Note
12).Yatra.com was launched in August 2006 and is based in Gurgaon and is
emerging as the one stop shop for all travel related services. Yatra.com offers
reservation facility for around 3,800 hotels across 336 cities in India over 90,000
hotels around the world. The customers can access Yatra.com through website, call
centers, holiday lounges, Yatra Travel Express stores and mobile devices. Yatra had
a gross turnover of US$500 million in the year 2011 and average revenue of $60
million a month with a volume of over 10,000 tickets and 600 rooms a day. It has
partnered for investors companies like Silicon Valley-based Norwest Venture
Partners, Reliance Venture Asset Management, Television 18 Group and Intel
Capital. Travelyaari.com (Note 13). Travelyaari.com is started in 2007 by IIM
Ahmedabad graduates and industry professionals. Travelyaari.com is a 100% real
time bus ticket booking service and is the flagship brand of Mantis Technologies
Pvt. Ltd. Travelyaari.com was started with the objective of making bus tickets
booking accessible to individuals. Travelyaari.com has been maintaining good
relationship with bus operators helping them to computerize all their activities.
Travelyaari.com has been encouraging mobile bus ticket booking. One India has
been the privilege card used by Travelyaari passengers. Bus Safar.com (Note 14).
Bussafar.com was launched by OSS Group which established in year 2006, as an
online service portal for consumers. OSS group is emerging leader in the travel
business.Bussafar.com works closely with VRL, Kesineni, Nita and Paulo bus
travel operators. It has over 2,000 buses, 100 bus operators, and 1000 routes
spreading across 14 states in the country. It provides bus commuter an efficient
platform to buy tickets for destination in Southern part of India. Bussafar aims to
become the largest bus ticket selling portal across India. The OSS Group has a
turnover of more than 1500 crores with regional offices in metropolitan cities.
Simplybus (Note 15). SimplyBus.com is a online bus ticketing service provider
with an of inventory of more than 500 Operators and more than 5000 routes all
over India at the operator indicated prices or less.SimplyBus.com is also provides
special discounts for frequent travelers. SimplyBus.com offers you a wide choice
of Bus Travel services with high quality service. SimplyBus.com utilizes highly
secure e-commerce and internet technologies to provide you with real time
bookings. It has partnered with Bitla Software Pvt. Ltd which is young and
dynamic software company that is dedicated to building web based enterprise
software solutions at an affordable cost. makemytrip.com (Note 16) (Ticketvala).
makemytrip was founded in the year 2000 by Deep Kalra and began its operation
first in U.S. and its Indian operations started in the year 2005 as an online travel
agency. It offers customers various options from seater, sleeper, seater cum sleeper,
Volvo air-conditioned buses and non air-conditioned services. makemytrip
additionally offers chartered buses, hotel bookings and holiday packages in its
portfolio making it one of the most successful online travel portal in India.
Makemytrip had acquired Ticketvala.com in the year 2010 to consolidate its bus
ticketing services. Ticketvala.com was started by the former CTO of Worldspan
and it was the first mover in the online bus ticketing industry of India. Ticketvala
had followed a model where they had provided free software to bus operators to
aggregate inventory. Since most of the bus operators were not willing to use
computers for the software supplied, Ticketvala intalled computers and then
employed staff to train the bus operators with an expenditure of around 25-30
crores. Moreover, they took out quarter page advertisements every alternate day
offering Re.1 tickets to anywhere within India.Conventional Travel agents .The
conventional travel agents have been in this ticketing business for quite long and
have fruitful relationships with bus operators and passengers. The majorities of
these travel agents have restricted reach and lack flexibility in operations. They are
averse to usage of new technology and are pleased with the usage of manual
system. The bus operators are habituated to execute business transactions with
these agents despite of limited flexibility. The majority of these agents are regional
players who lack a countrywide presence.

Conclusion
Over the years, redbus had reached the milestone of 10 million bus tickets.
The success of redbus is for the reason that it had been all this way a customer
centric model which focused on sales rather than automation of bus operators.
redbus had so far a successful journey to leap ahead from a revenue of 0.3 billion
in the year 2008 to around 3 billion revenue in the year 2012. Although it
monitored around 20% growth in ticket sales month on month, to achieve higher
growth rate redbus has to either discover newer sales channels or utilize the
available channels to a greater capability. The statistics with the company showed
that around 25% of the redbus passengers are first time bus travelers. redbus has to
meet this challenge by increasing ticketing sales through themobile devices.
Several research studies utilizing information systems and information technology
to achieve superior performance (Fairbank et al., 2006), have shown interest in
mobile ticketing technologies (Elmaghraby & Keskinocak, 2003; Talluri & Van
Ryzin, 2004). The redbus ticket booking through mobile devices could be executed
through an SMS or installing a JAVA application and after recording the details;
the customer has to provide his card details during the registration. A secure
payment gateway would be a major decider in the success of e-commerce
transactions. In India, besides low internet penetration, there is also reluctance to
provide the card details for executing the transactions which is a major barrier for
redbus to make the most of this channel. redbus has introduced one click payment
option for bus ticketing to make the online transactions quicker and easier. The use
of mobile ticketing technologies leads to profits from revenue management
perspective (Eisenhardt, 1989). Moreover, redbus has a volume driven business
and it plans to expand further into the Indian market by opening regional offices to
serve the customers better. The current strategy followed by redbus is to aggregate
bus ticketsby any means close at hand and later delivering to the consumers
through any channel that is accessible by them. Redbus has to put forward a
growth model in existence which would provide a sustainable growth in the long
term. Redbus owners have a challenge that maintaining strong relationship with
bus operators and gaining thetrust of new operators/agents was a challenge right
from the inception. The trust that redbus had built with the bus operators and
agents provided it with a competitive edge and proved instrumental in their long
term realization of objectives. redbus certainly required a lot of bus operators and
ticketing agents to unite with redbus network for scaling the operations and grow
substantially. Even though redbus has expanded its offices in the major cities of
India, scaling of operations to further extent was required to survive the
competition. There were small operators who went online as well as there were few
big players like Yatra who dominated. Earlier redbus had faced stiff competition
from players like Ticketvala (now makemytrip.com) but in this industry playing on
price was considered the last alternative. redbus focused on offering a unique value
to the consumers rather than to succumb under the pressure from competition and
change the rules of the game. Likewise there was also an entry barrier in this
business for a new player and the industry had taken a turn where, it would be
tough going for any new start ups in this bus ticketing business. redbus had to
explore further and take strategic decisions to sustain the competitive advantage.
redbus has to cope with the challenge of building a robust technology base to
handle the web traffic effectively and do all the transactions real time. The future
of redbus can be defined only with superior technology alongside an enthusiastic
team to competently handle the capability. With more and more bus operators
joining redbus portal, it is additional responsibility of redbus to deliver the service
efficiently and consistently at the desired level. Although it is acknowledged that
there is still some way to go before the existing technology can be fully utilized, it
is certainly expected that it is only superior technology which can bring home the
competitive advantage for redbus. The opportunity of cross selling and
customization of products to suit the demands of the customers is still an
impending region to be explored. The careful selection of value added services
were another dimension to look ahead of time. The value added services like
touring packages, travel insurance deals, cargo deliveries etc. could be further
offered to customers to supplement the service levels. It is a fact that building
brand awareness for redbus was one of the most important challenges faced to this
point. redbus has been aided by word of mouth advertising (Devlin et al., 2002) but
presently it needs aggressive allocation of their advertising budget. redbus had
used the radio advertising to reach the masses and Google advertising to target the
internet users. redbus had a mammoth task to make the most of the social media
that has been integral part of advertising medium for the internet users. Now that
redbus has been taken over by Ibibo Group, it has to set the priorities right for the
near future while being watchful for emerging opportunities to stay ahead of the
competition.

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