Bootstrapped Wagon Cab is taking on Ola and Uber with its flat-rate model
- Delhi-based cab aggregator Wagon Cab has done away with surge pricing, waiting/cancellation charges or per-minute ride charge for consumers, and is offering drivers a subscription model.
Startup: Wagon Cab
Founders: Arpan Aggarwal and Uttam Bose
Year it was founded: April 2017
Where is it based: Delhi
The problem it solves: Cab aggregation
Funding raised: Bootstrapped
Even if you have a car, chances are you often opt for a cab to and from work. And despite the presence of Ola and Uber, consumer demand for cabs continues to increase.
Many believe that existing cab aggregators aren't enough to satisfy the growing consumer need and demand. And with issues like surge pricing and lack of availability of cabs becoming commonplace, consumers are facing a rough ride.
Arpan Aggarwal, and his friend and now Co-founder Uttam Bose experienced the same problem, more so one evening while getting back home after a long day at work.
Arpan says that at 11 pm, a time when there was no traffic on the road, they had to pay for per minute spent in the cab due to surge pricing. They ended up paying a little more than double the regular fare.
Looking at a flat fee
“This was the moment we started our market research and brought up the idea of a flat rate without per minute, no surge and minimum fare. We and decided to start Wagon Cabs,” Arpan explains.
The company was registered in April, and Wagon Cab started operations in October in Delhi-NCR.
Arpan says the team started with the mission to ensure hassle-free transport, where the commuter knows the cost at the start of the journey. When he started with primary market research and spoke to drivers on a flat rate model without targets, Arpan realised it was the need of the hour.
Arpan comes with experience in the finance industry; Uttam has worked with the likes of JK Tyres and BMW, and has expertise in sales and marketing. The duo soon roped in Poonam Bose for HR and Mayank Agrawal for technological development. Registered in Startup India with DIPP, Wagon Cabs now has an 18-member team.
A tough space
“The idea was clear - something different so that riders have to pay less and drivers can earn more. That moment we decided to solve this really challenging and complex problem for Delhi-NCR and soon for the nation,” says Arpan.
Since the beginning of this year, with the drop in driver incentives, several players have been looking to break into the space. Hyderabad-based Vihik Cabs claims to have over 7,500 customers and over 1,000 drivers, with as many as 200 drivers in Hyderabad. The team hopes to connect with over 10,000 customers by the end of this year.
Apart from that, in an effort to take on cab aggregator giants Ola and Uber, taxi drivers of Bengaluru launched a similar platform of their own, Namma TYGR. The new platform has the backing of former Karnataka Chief Minister and leader of Janata Dal (secular) HD Kumaraswamy.
There are rumours that Reliance may enter the space, but despite that, the cab aggregator market is tough and requires players to bleed a lot of capital. It took over four years for Ola and Uber to break into the market and transform consumer behaviour. And yet they continue to burn money as cab aggregation is a capital-intensive business.
Ola, valued at $4.2 billion, is already allegedly looking to raise additional capital from Tencent, while Uber, valued at $68 billion, has consolidated its presence in China and Russia, and remains strongly focused on India.
Focus on technology
“We need to work for at least 18 hours to get our incentives. It was much easier earlier. We aren’t getting what we were promised; how will we be able to support our families at this rate? Nothing seems to have changed even after the strike,” says a frustrated cab driver associated with Ola and Uber apps.
“Building an app isn’t difficult, but sustaining it is going to be a problem,” says an employee of one of the unicorn cab aggregators.
Independent app developer and technology expert Kausthubh Adhikari says: “Building it isn’t hard or that expensive —what will really cost are the servers and maintaining that app.”
Agreeing, Arpan says the first focus has been building the app and onboarding drivers. The company is working on a subscription model with drivers by reducing the cost of travel for customers and passing the benefit to drivers.
The numbers game
Arpan adds that there are no false promises of business to drivers or hidden terms for customers.
“We have a dedicated operations team for driver engagement which is available 24X7,” he says.
Currently, Wagon Cab isn't charging a subscription from the drivers for using the platform.
The team claims to have successfully completed the target of 1,000 rides in the first week of service and 2,473 rides till the second week. As of November, they had completed over 4,219 rides.
“We started with 5,000 drivers on the portal, of which 500 are on road after triple verification process. After two weeks, we have 750 drivers on road after the same process of verification,” Arpan says.
Like most cab aggregator apps, Wagon Cab has a customer and a driver-facing app. The customer can book a ride only when a driver is available within a radius of 2 km.
Arpan adds that they are on-boarding drivers by understanding the day-to-day challenges they are facing with earnings – most have to give away a huge cut from their earnings to aggregators and are left out with very less to take home. But the drivers are earning more now that they understand the benefits of the subscription plan.
“We are not in a fight with anyone as of now, as we are looking for investors to expand and enhance our business operations and technology. Our USP of flat rate Rs 10/km is playing the most important role in capturing both riders and drivers. There are no hidden charges or deductions at the end of the trip,” Arpan says.
In the short term plan, Wagon Cab is focusing on penetrating the market and getting established, with cabs as their main source of revenue.
“In the future, we plan to empower women and invite them to join the fleet. We have plans to set up and expand in other cities. We also have other ideas, but will go step by step,” Arpan concludes.