Rapido's Roving Eye
Barely months after wading into the food delivery arena dominated by Swiggy and Zomato, Rapido is shifting gears again. Having built its empire on bike taxis, the ride-hailing major now wants to milk the massive $23 Bn Indian travel tech industry.
Just last week, the company, in partnership with established giants like Goibibo, redBus and ConfirmTkt, forayed into online travel aggregation (OTA), integrating flight, hotel, bus, and train bookings directly into its app. The experiment is audacious, especially for a company still wrestling with the high-stakes, cash-guzzling worlds of ride-hailing and food delivery.
To Rapido’s credit, it has always been known for its ambition and penchant for disrupting markets – be it via the subscription-led model in ride-hailing or the “zero commission” strategy in food delivery.
However, the latest foray isn’t just another expansion — it is a fundamental test of the company’s ride-hailing identity. For a startup that raised $200 Mn just last year, chasing the “super app” dream suggests aggressive ambition, but does Rapido have the bandwidth and capital to pull off this multi-front war? Or is it risking the very focus that made it a leader?
On the surface, Rapido’s move into the OTA segment seems reactive – patching an affiliate service to its existing app to capitalise on the booming travel market and capture a larger share of its users’ wallets. However, the new launch is less about an immediate revenue grab and more about laying the groundwork to become a super app.
By embedding travel, Rapido aims to deepen user engagement, increase the stickiness of its platform and ramp up average ticket sizes. It’s a strategic play to own the entire value chain.
And the timing is no coincidence either.
India is witnessing an unprecedented travel boom. Having built trust and a high-frequency usage pattern, Rapido is betting on its 50 Mn monthly active users across 120+ cities to become a one-stop shop for all mobility needs – from a 5 km bike ride to a 5,000 km flight.
Then, it has its sights set on non-metro cities. With tier II and tier III India also driving a travel boom, Rapido aims to capture this aspirational base that rivals have to spend heavily to acquire. It’s a classic cross-selling strategy built on network effects.
Finally, its long-term vision is to own the entire travel journey in a bid to become a mobility super app. However, the competitive play would not be to beat rivals on price, but on convenience – bundling the taxi to the airport, the flight, the hotel, and the local commute at the destination within a single, familiar interface.
From afar, Rapido’s super app vision may look compelling, but the reality seems somewhat brutal.
Should the ride-hailing giant go all-in on travel tech, it will take on rivals that have spent decades perfecting supplier networks, earning customer trust, and running highly efficient, differentiated operations. Fintech major Paytm and ecommerce giant Amazon have vied for the same customer with similar network effects, yet they remain minor players in the OTA space.
For now, Rapido’s aggregator model shields it from the high costs of inventory and customer support. But to truly compete in the long run, it will need to offer competitive pricing, a frictionless booking experience, and reliable post-sale support – three things that are notoriously difficult and expensive to master in the travel tech segment.
However, the biggest red flag appears to be India’s not-so-strong penchant for super apps. This is because the challenge lies in execution. Each vertical requires deep domain expertise and sustained capital. Merely adding new services creates a fragmented value proposition, where users continue using best-in-class standalone apps rather than jack-of-all-trades platforms.
Rapido’s OTA ambitions land while its other major diversification, food delivery, is still in a pilot phase. Launched under the brand ‘Ownly’ earlier this year, the service took on the Zomato-Swiggy duopoly with Rapido’s signature model – a flat delivery fee, no packaging charges, and zero commission for restaurant partners.
However, nearly three months on, Ownly remains confined to a few pockets of Bengaluru. While the service is gaining some traction, it is nowhere close to the momentum needed to challenge the incumbents. Even then, the competition is intensifying – Swiggy recently launched Toing, a budget-focussed new app, while Zomato is dishing out discounts to woo users.
But, the real challenge is internal. When a company pursues multiple verticals, execution quality inevitably suffers as teams compete internally for capital, engineering talent, and leadership focus.
This makes us ponder: Already battling on two fronts in mobility and food delivery, can Rapido realistically launch a third attack?
Reigning In SpeedWhile its food delivery experiment is yet to take off, Rapido’s core ride-hailing business is also far from a settled, cash-generating machine. Regulatory hurdles persist and profitability remains elusive.
For context, Rapido churned a loss of INR 370 Cr in FY24, despite revenues soaring 1.5X YoY to INR 648.1 Cr in the fiscal year under review.
On top of this, the challenges of managing driver supply and ensuring service quality are ever-present. Competitive pressure is also intensifying not just from Ola and Uber, but from new disruptive models like Namma Yatri’s zero-commission platform.
All said and done, Rapido’s market position in the ride-hailing sector, while strong, is not unassailable. Every ounce of capital and every hour of operational talent devoted to new ventures is an investment not being made to fortify the core business that pays the bills. Taking focus away from these operations could allow rivals to exploit weaknesses in its primary market.
Ultimately, Rapido is at a crossroads.
One path leads to becoming a focused mobility player, while the other, a more perilous path, leads towards creating a multi-billion-dollar super app for transport, food, and travel. The latter is a far grander prize, but it also risks stretching the brand, its capital, and its focus to the breaking point.
As Rapido dips its toes into the travel tech economy, the company itself is embarking on its most uncertain journey yet.
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