Rapido Expands User Base and Market Share in Ride-Hailing Sector
Rapido has solidified its position as India’s top ride-hailing service, capturing nearly half of the market share and outpacing competitors Uber and Ola. Initially seen as a niche bike-taxi provider, Rapido’s growth has significantly impacted Ola’s operations and put pressure on Uber in a key market. Recent data indicates that Rapido surpassed Uber in monthly active users on Android, highlighting its rapid ascent in the ride-hailing sector.
Market Dynamics and User Engagement
Rapido’s impressive market share is largely attributed to its dominance in the two-wheeler taxi segment, which has proven to be a lucrative area. The company has also made inroads into the four-wheeler cab market, claiming nearly 30% of that sector. In contrast, Uber retains a 50% share of the online four-wheeler market, with Ola holding the remainder. According to a report by Sensor Tower, referenced in a Citi Research analysis, Rapido achieved approximately 50 million monthly active users (MAUs) by July 2024, compared to Uber’s 30 million. This shift is particularly significant in a market where Android users dominate. Uber CEO Dara Khosrowshahi has acknowledged Rapido as a formidable competitor, indicating a shift in the competitive landscape.
As Rapido continues to grow, Uber has responded with traditional strategies, including fare reductions in cities like Bengaluru, Gurugram, and parts of Mumbai where Rapido has gained traction. Reports suggest that Uber has cut fares by 20-25% in these areas to retain its customer base. Additionally, Uber has introduced a subscription model for drivers, allowing them to pay a fixed daily fee for unlimited access to the platform, rather than a per-ride commission. This model aims to enhance driver earnings while maintaining competitive pricing for riders.
Strategic Shifts and Financial Health
Despite facing financial challenges, Rapido’s co-founder and CEO Aravind Sanka emphasized the company’s commitment to sustainable growth over aggressive market leadership. He stated that user engagement has been a key factor in their success across bike, auto, and parcel services. Rapido’s approach focuses on enhancing driver earnings and service quality rather than engaging in price wars or heavy subsidies. The company has reported a decrease in losses, with figures dropping from Rs 74 crore in the same quarter the previous year to Rs 17 crore in July-September 2024.
Uber’s strategy has also evolved in response to Rapido’s rise. The company has shifted its focus from solely enhancing customer experience to competing on both supply and demand. An Uber executive noted that the company is now addressing reliability issues and service quality, which had previously affected its reputation. Internal reports indicate that Uber is under pressure to improve reliability metrics, with a target of completing 60% of booked rides. However, the current completion rate hovers around 50-55%.
Investment and Future Expansion
Rapido’s financial backing has strengthened its position in the market, with the company securing over $200 million from investors, including WestBridge Capital and Nexus Venture Partners. Ongoing discussions with Prosus could lead to an additional $300 million in funding, valuing the company at $2.7 billion. This financial support is crucial as Rapido plans to expand its services beyond urban transport into the food delivery sector, a market currently dominated by Zomato and Swiggy.
Uber previously exited the food delivery market in India after acquiring Uber Eats, which faced mounting losses. As Rapido ventures into this competitive space, it must navigate the challenges of cash burn and unit economics. The parallel between Rapido’s expansion and Uber’s past struggles in food delivery highlights the complexities of the ride-hailing and delivery markets in India. As both companies adapt to the evolving landscape, their strategies will play a critical role in determining their future success.
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