Case Study

on
redBus.in
Symbiosis Law School
Constituent of Symbiosis International University
Shristi Sinha, Sadia Akhter

1.1Introduction:
redBus is the Indias first online ticketing website which was started by three young alumni
of BITS Pilani proving that age and management techniques are no hindrance in the business
world. It was started in the year 2006 with only two to four seats in buses of one route and in
the small time of seven years it has acquired what many of the companies dream of acquiring
in 30 to 40 years of their business. redBus today has 700 bus operators operating more than
10000 buses in 15 states of the nation and sells about 5000 tickets every day.
The facilities provided by the redBus tempt the common people who are busy 247 working
in their office to look into the website and book tickets conveniently whenever necessary.
Delivering the tickets to people at their doorstep is another advantage of redBus.
Started from a one room office today redBus has achieved a lot and there is a lot more for
them to do in the future.

2.1 Why online ticketing?

Interstate bus travel in India was a highly unorganized sector with many private local players
and government buses. A consequence of this was the selling of bus tickets through
traditional brick-and-mortar agents. Another problem with bus travel was immediate booking
of tickets before journey. There used to be few advance bookings. Travelling to remote
corners or on an immediate basis through bus remained a cumbersome task. Moreover there
was no guarantee that if you went to a bus stand, you would find a bus.
To address these problems, in 2006, BITS Pilani alumni Phanindra Sama, Sudhakar
Pasupunuri and Charan Padmaraju started Redbus, to sell bus tickets online. The idea came
from Phanindra's personal experience with bus travel when he could not spend vacations with
his family and reach home on Diwali.

redBus realised that India has more than 5000 intercity bus operators with 5 to 500 buses
each. They realised the enormity of the task and started thinking of some idea which could
make the task easy.

2.2 The founding idea:

The idea emanated from an experience when Phanindra Sama struggled to book bus tickets to
make it to his home during Diwali vacations. Diwali is one of the peak times of the year and
every single bus agent seems to be busy in the city. As a result of this he could not make it to
his home for the vacations.
Homesick and disgruntled, he pondered and tried to understand how some agents could
manage booking tickets and some could not.
As a result of this he thought of introducing an integrated bus ticketing agency which can be
used by the bus operators to share details about the seats and fares and could also be used for
booking tickets.
The company made the first model in five months and the model was called BOSS (Bus
Operator System Software). This software was offered to the bus operators for free but none
of them showed any interest.

2.3 Mentoring by TiE:

Phanindra Sama and his friends presented the idea to TiE (The indus Entrepreneurs) to be a
part of their EAP (Entrepreneur Acceleration Programme). The TiE provided them
entrepreneurship along with 3 mentors who gave them a crash course in MBA for better
understanding of the market and business world.
They realised that unlike the airline ticketing or hotel booking business, the bus ticketing
system was missing a GDS (Global Distribution System) which is a network operated by a
company that enables automated transactions between vendors and booking agent in order to
provide travel related services to the end users.
They then build out the GDS for bus ticketing at 3 levels:

The GDS across operators which helped all the bus operators to keep a track of total
tickets in various buses.
Booking system for each individual bus operator so that they would become e-enabled
and could know that which seat goes to which customer.

The booking site at the retail level which helps the customers to view the website
from which they can easily book their ticket.

2.4 Initial business:

The business of the company started from a mere investment of five lakh rupees and two to
four seats in buses of one route. They had the strategy of winning one territory at a time,
establishing the rule in that territory and then winning the next. They started their business
from the Bangalore Hyderabad route, filled buses for operators of that route and then added
other routes. In this very way, in a small time of seven years, redBus has established its rule
in around 15 states of India.

3.1 Important dates:

- August 2006: redBus.in was launched with a capital of Rs 5,00,000 and five seats from a
single operator (via Rediff).
- Feb 2007: redBus raised its first round of funding of $1 million (Rs 3 crore) from SeedFund
and undisclosed investors. SeedFund had invested $500,000 in the company while other
investors accounted for the remaining $500,000 investment. (Via The Economic Times).
- July 2009: redBus raised $2.5 million from Inventus Capital Partners, Seed Fund and other
unnamed investors. Of this, SeedFund had invested $700,000 in the company. The company
claims to have over 500 tie-ups with bus and tour operators for 5000 routes, across 15 Indian
states primarily in South, West and North India.
- August 2009: redBus launches its Software as a service product for bus operators
called BOSS (Bus Operator Software Services), which now allows bus operators to manage
their inventory in real time as well as manage bus schedules, allocate seats to specific agents
or branch offices, manage ticket pricing on the service, route and date level and offer
online booking on their website through their own payment gateway. redBus also rolls out
another software service called Seat Seller, which allows online travel agents to aggregate
and sell tickets across multiple bus operators.
- October 2010: redBus claims to sell around 5,000 tickets on a daily basis and claims to
have 700 bus operators from 15 Indian cities onboard (via Rediff)

- May 2011: redBus raised $6.5 million from Helion Venture Partners, Inventus Capital and
Seedfund. It claims to have clocked 3.5 million ticket bookings (via StartupCentral)
- June 2012: redBus claims to have broke even sometime in 2011 and is profitable.
(via TechCircle)
- March 2012: Goa State Road Transport inks a tie-up with redBus to launch an online
ticketing portal powered by redBuss BOSS. This is the companys first tie-up with a
government owned bus service. (via Forbes India)
- July 2012: redBus inks a tie-up with Rajasthan State Road Transport Corporation (RSRTC),
following which its starts offering RSRTC bus tickets on the portal. The company claims to
have sold more than 10 million seats and claims to have registered consumer base of 2
million, reporting an average growth rate of 250% during the last 5 years.
- July 2012: redBus plans International operations in Singapore and Malaysia and is
apparently in talks with a few offline bus ticketing companies in Singapore and Malaysia. It
also claims to have clocked 1 crore ticket bookings. (Via TechCircle).
- August 2012: redBus inks a strategic partnership with the online travel agent Expedia India,
to offer bus ticket booking service on Expedia website.
- February 2013: redBus launches its Android app, allowing users to search and book bus
tickets form their mobile phones. It also introduces Virtual Bus Stop feature on its website,
which allows users to search for their preferred boarding point on a Google map and view
a 360 degree view of the boarding point.
- February 2013: redBus claims to have clocked $120 million in gross merchandise value
and claims to have more than 1,000 bus operators onboard, of which more than 800 operators
are using its BOSS product.
- March 2013: redBus launches real-time bus tracking on its portal, in partnership
with YourBus and Asset Tracker which provides in-bus GPS tracking solution.
- March 2013: redBus is looking to raise $20 million in its next investment round and was
apparently in the final stages of the transaction, as per a Business Standard report. The report
also says that redBus has clocked net revenues of Rs 55 crore and a gross merchandise value
of Rs 600 crore for the year and is expected to post a net profit of around Rs 2 crore for
FY13.
- May 2013: redBus inks a tie-up with Karnataka State Road Transport Corporation
(KSRTC) to sell KSRTC bus tickets on its portal. The company claims that it now has
complete access to both state owned and private bus operators in Karnataka.

- Jun 17, 2013: Naspers subsidiary and Ibibo owner MIH Group is reportedly in advanced
talks to acquire a controlling stake in redBus.in. The company claims to offer ticket inventory
across more than 12,000 routes from more than 1,000 bus operators in 24 Indian cities.
- June 21, 2013: Ibibo Group confirms that it has acquired redBus and plans to operate it as a
separate business in its travel portfolio which includes Goibibo and Travel Boutique Online.
(Via TechCrunch)

4.1 INITIAL FUND RAISING:

Funds are the most essential part of a business without which a business cannot run its
operations. redBus raised first round of funding of 1 million dollar from SeedFund and some
undisclosed investors. In may 2011 redBus raised 6.5 million dollar from Helion Ventures,
inventus capital and SeedFund.

4.2 BUSINESS STRATEGIES:

Brand name
Name is the foundation of brand in the market. Once in the market, brand name will
greatly determine the position in the fight for consumers. Far more than just a series
of letters, a successful brand name can help a product survive for a long time if it is
able to stand the test of time. Phanindra Sama chooses the name of his brand as
redBus as red signifies energy and bus signifies the line of business they deal with.

Marketing methods
Phanindra Sama did not believe in advertising. He believed that when the foundation
was strong everything else will fall in place. He believed in enhancing the customer
satisfaction which would help in the long run. Whenever there was any problem with
the tickets they would book flight tickets for their customers. They even charged zero
booking fees.

Quality mark
redBus is a safe and secure website for booking online bus tickets and is verified by
Verisign

4.3 SWOT ANALYSIS:

Strength
The most important factor for the success of a business is employee satisfaction.
Only when the employees are satisfied they will contribute to the business. In
redBus employees live like a family which contributes to the success of the
business. Even after redBus was sold to ibibo.com redBus continued to function in
the same way. The employees remained unchanged.

Weakness
Every company has its own strengths and weaknesses. redBus along with its
strengths has its weaknesses too. The service of redBus is not available in rural
areas and Cash on delivery service is not available in all places

Opportunities
redBus has a lot of opportunities to grab. There are about 5 lakh (500,000) tickets
to be sold every day and sales are only 5,000. And the the Industry is of Rs. 15000
crores and redBus is only a small dot. redBus has a long way to go.

Threats
Many other companies have also started in this line of business like
ticketwala.com. People prefer railway and airline over buses.

5.1 PRESENT STATUS:

It has been a journey of a lifetime for three software engineers Phanindra Sama,
Charan Padmaraju, and Sudhakar Pasupunuri who wanted to computerise online bus
ticketing and today it is one of the hottest startup stories. Today redBus sells 5000
tickets per day and sells more than a million tickets a month and has over 600
employees. The gross value of transactions of redBus last year was about Rs 600
crore, up from Rs 350 crore in 2011-12. redBus has been Phanindra Sama and Charan
Padmaraju have sold their stake in the venture to the ibibo Group, a subsidiary of
South Africa's Naspers and Chinas Tancent. redBus will remain an independent entity
and Sama and Padmaraju will continue in their roles, Sama as CEO and Padmaraju as
the person responsible for developing new products.

5.2 WHY SELL?

Phanindra Sama at reaching the peak of his success decided to sell redBus to ibibo
group. What phanindra Sama found attractive about the deal is the group itself. They
have various companies even within India like Gaadi, Goibibo etc. and all that and all
those companies continue to run independent by their own founding teams and that is
one thing that impressed us. Moreover redBus will remain an independent entity and

Sama and Padmaraju will continue in their roles, Sama as CEO and Padmaraju as the
person responsible for developing new products. ASHISH KASHYAP, CEO of the
indian branch of ibibo choose to buy rebus given that ibibo Group already is building
out its various other travel businesses like the Goibibo business, which is one of the
leading online travel aggregators (OTAs) and also Travel Boutique Online, which is
another B2B aggregators, we realise that by combining the volumes of these
businesses we would become one of the biggest online travel businesses in the
country.

6.1 ACHIEVEMENTS:

Won the Star Youth Achiever Award at the 3rd Global Youth Marketing Forum
2011
redBus is a case study at Amazon Web Services
Ranked no. 1, amongst the fastest growing companies in India by All World
Network
Chosen as a Global Shaper 2011 of the World Economic Forum
Amongst the Forbes list of top 5 start-ups to watch out for in 2010

7.1 CONCLUSION:

It is well said that A satisfied customer is the best business strategy of all. Through this
case study we saw that how a person with no formal business knowledge and family legacy
has been able to establish such an effective business. We came to know that business is not
only about strategies but also about the innovativeness of the idea and the passion to bring
change in the society. As said Necessity is the mother of all invention, redBus proves it all.

8.1 QUESTIONS:

1. Do you think that formal education of business is necessary to become successful

in the business world?
2. Phanindra Sama and his friends were the alumni of which college?
3. What is the name of the company which recently acquired redBus.in ?

9.1 BIBLIOGRAPHY

Phanindra Sama; founding redBus by Surajit Ghosh Dastidar ISSN; 2045 0621
The journey of redBus from Asian Journal of Management Cases September 2011
vol. 8 no.2 171-188 by R. Gupta
Timesofindia
Rediff.com
Thehindubusinessline.com
Redbus.in
Yourstory.in
Techcrunch.in
Moneycontrol.com