Building The Largest Online Bus Ticketing Company in India: redBus.in Co-founder and CEO Phanindra Sama (Part 11)

Sramana: What percentage of the bus operators ticket business do you have now?

Phanindra Sama: We are at 1% of total business. We have 70% of the automated bus ticket business. The automated ticketing occurs through a computer-based system, and ticketing is increasingly shifting to that automated bus ticketing system.

Sramana: How are you organized as a company?

Phanindra Sama: We have three businesses today. The first one is our consumer-facing travel agency, redBus.in. In addition to the website, we also sell in our call center. We have seven call centers in the country where people can call in and buy a ticket. We have delivery boys who will deliver those tickets to their homes, collect the money, and return. We started that business because consumers needed the service.

The second business we have is the software business where we sell software to bus operators. Some pay on a monthly basis based on the number of buses they have. Others pay on a per-person basis. The fees vary, but they all pay. We do not give anything free. Our mentors have brainwashed us that giving things away free does not add value to the system.

The third business is a reseller business. We have access to many bus operators, so we give other players who want to sell bus tickets access. We power the back end for them, and we make money on every transaction that they sell.

Sramana: The redBus.in operation seems to have logistical complexities.

Phanindra Sama: It is very complex. You can’t predict ticket sales precisely to the point that you make the delivery boy schedules optimized. You can’t tell how many trips to the same areas they will have to make. If consumers book a ticket but don’t actually pay for it, or the delivery boy can’t find them, then you lose money because bus operators charge for cancellations. Our innocence got us into that business, but we have not developed a lot of business around it. Today we are the only ones who offer that service. Other players have had to close delivery.

Last year I was invited to speak at an Asia Travel Conference in Singapore. I then realized that there was a company in China whose entire story revolves around their ability to personally deliver tickets. They had 5,000 people in the call center taking calls and making reservations. In September I went to China to speak at a conference, and I found they now have 12,000 people in the call center. The majority of their business happens on the phone. That has given me a lot of confidence that delivery is the right way to go. A lot of people tell me how inefficient that manner of business is, and how cost consuming it is. However, if you work in a profitable manner, everything is scalable, and you need consumers to use it.

Sramana: How does your revenue split among the three businesses you have described?

Phanindra Sama: The majority of revenue, 70%, comes from redBus.in. That is our flagship product. The majority of our value as a company is in making sales. We help sell to the consumer, and that is where we have value in the industry. In our third business other companies are making the sell, and as a result we have to part with a lot of revenue.

This segment is part 11 in the series : Building The Largest Online Bus Ticketing Company in India: redBus.in Co-founder and CEO Phanindra Sama
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