Making sure nobody misses the bus

What do you do when you miss your bus to another city and cannot find a ticket on another bus?

Start a company that makes ticket buying easy, seemed to be the answer that Phanindra Sama stumbled upon when he missed a bus in Bangalore to go to Hyderabad.

Thus post the winter of 2005, after Diwali, began the journey for Pilani Soft Labs, a company founded by Sama along with Sudhakar Pasupunuri and Charan Padmaraju.

Pilani Soft Labs started redBus.in which sells bus tickets online. All the three founders have been friends from their BITS Pilani days.

“I ran around town hunting for a ticket, but they were all sold out. Every agent told me that he would try to get it from another one and that added to my frustration. I wondered why people cannot book bus tickets online like they were beginning to do for railway tickets (using IRCTC Web site),” says Sama.

redBus’ business is built around enabling travellers book tickets at their convenience online and when they need it the most, and helping bus operators make sure all the seats are sold.

But, the journey was far from smooth. “When we took the idea to bus operators, they told us that others have come with a similar idea and it won’t work,” says Sama. The trio decided to go to The Indus Entrepreneurs (TiE) for guidance. Sanjay Anadram, their mentor, advised them to change the strategy. “He told us that instead of going to bus operators, why don’t you go directly to travellers,” says Sama.

The unorganised nature of the transportation industry used to be such that travel agents do not have all the information regarding all the possible bus operators, which, in turn, resulted in an information gap. Also, there was no system whereby customers could choose their seats. Bus operators too had cash flow problems because agents paid them on a monthly basis.

This resulted in the setting up of the Web site and initially, the company would block two tickets that it bought from the agents and sell them. In a few months, it started buying four tickets and the tide turned in its favour. Once bus operators started feeling confident, they were open to doing business, according to Sama. The company has tie-ups with all major bus operators.

“Using the data we get from people searching for sleeper buses, boarding points, the bus operator can make informed decisions,” says Sama. A bus operator in New Delhi, who was hesitant to launch bus services on the Delhi-Shimla route in winter, ended up doing so after Pilani Soft Labs showed him the results of people searching for the bus in that route. Till date, the company has joined hands with 350 bus operators all over India, servicing around 100 bus routes. The company has a 65 per cent market share and has sold 1 crore tickets till 2012. The company is looking to tie up with State transport corporations.

Pilani Soft Labs has got funding of Rs 42 crore from venture capitalists such as Inventus and Helion Ventures. It hopes to clock revenues of Rs 600 crore this fiscal and has grown at a Compounded Annual Growth Rate of 250 per cent since the last five years. Bus ticketing has a lower entry barrier, something similar to online retailing. The technology to put up information and linking it back to databases of all the stakeholders is not something new.

Add to that low margins in selling tickets and this business is entirely based on volumes of tickets sold. Sama disagrees.

“Our proposition in the form of new business opportunities for bus operators coupled with a reliable tech platform and our mindshare amongst travellers would be our differentiators,” he adds.

While other online bus service aggregators are gnawing at the heels of the company, Pilani is confident of staying ahead of competition with the investment in technology that it has made over the years. But can’t technology investments be made by competitors too? Sama draws parallel with airline travel aggregators such as makemytrip.com.

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