Startup Stories: How Shuttl Wants To Change The Way People Commute
Urban sprawl and congestion have significantly increased commute distances and travel time, and the available mobility solutions are either overcrowded or overpriced.
Public transport, though extremely affordable, does not assure the necessary comfort in a daily commute. Standing for long distances can add significant physical stress and robs us of time that could have been used productively.
Cabs, on the other hand, offer great comfort by giving an assured seat, but they are extremely expensive for the daily office commute, as one ends up taking three (empty) extra seats along in the journey, adding to congestion and pollution.
This staring gap between commuter need and available alternatives seemed a great opportunity for us to fix and build a reliable brand with a mission of ‘taking pain away from daily commute’.
The Business Model
After studying various options, a bus was the obvious choice for Shuttl due to the following factors:
- It is the most efficient way of commuting
- It is economical
- It is low on carbon footprint
With buses, it was possible to offer a service at around one-eighth the price of a cab.
We targeted connecting transportation hubs to office clusters through short routes, with fixed schedules aligned with office hours, and received an overwhelming response. Our ridership grew from nine on the first day to 10,000 daily rides in a span of six months. We were also doing good on the supply side, where our partners started treating us as a serious player, with a transparent and disciplined payment process.
However, a few months later, we realised that we are just a first or last mile option for commuters, and do not fulfill their entire mobility need - something that also reflected in poor retention numbers.
This led us to understanding the commuter’s mobility needs more deeply and evolve into a home-to-office mobility option. We worked on crowd-sourcing demand, routes and schedules.
Here’s how our business model works: we pay Rs 2 per kilometre for the buses, and take Rs 3 per kilometre from the passenger. If we hit 70 percent occupancy, we break even and anything over that is our margin.
We have over 2,000 buses with over 500 vendor partners who are small-time operators. The cost price differs across cities.
In a short distance commute, alternatives are readily available and commuters are less inclined to wait and more likely to stick to available solutions. They tend to take the first available option, inspite of low comfort and high cost, as the distance is short. People don’t wait 10 minutes for a 20 minute long ride.
However, when the commute distances are longer, say from Noida to Gurugram - a 30 kilometre one-way trip, the pain is considerably higher. First-mile, last-mile and the core-mile changeovers, associated wait time and friction are time consuming. In such a scenario the value of Shuttl’s offering of a single stitched journey, advance reservation, assured seat, real-time tracking and navigation becomes uniquely relevant and helps improve retention.
We are an office commute solution that serves organised work places. Hence it was easy to identify which hubs to concentrate on. We are in six metros and seven other cities. We based our strategy on distance. We operate over longer routes of over 10 kilometres.
Our core competence is to identify, design, build and operate routes for high-quality consumer experiences. A subscription-based model allows people to buy passes, which is usually what they prefer, since they are regular travellers. There is also an option of paying per ride.
Eventually, we phased out all the short routes and started focusing on end-to-end mobility solutions, as the commuting pain is less in short distance trips or when trips involve just first and last mile travel, while there are very limited and expensive end-to-end mobility options.
Learnings
Businesses have to solve a relevant problem or fulfill a genuine need to sustain and grow. A deep and recursive consumer understanding is needed to devise consumer offerings, decide product priorities and set direction for business. While operating short routes and clocking good number of rides we thought we understood consumers well. However, a closer look at consumer behaviour revealed that our offering was short, and we must evolve to solve the greater pain and become more valuable for the consumer in the process.
Our focus has been to build a high quality, analytically strong team to solve real world problems, in the mobility sector, that affect commuters twice a day. However, over time, we realised that passion, relatability to the problem, and work ethics are even more important attributes of a team that is solving problems of scale and accordingly we added a hiring filter for the same.
A one-size-fits-all approach doesn’t work. In the urban mobility space, commuters of different economic segments seek different offerings at different price points.
Cognizance of this fact helped us in a big way while segmenting our customers and designing outreach communications.
Ultimately, we would like to get to a stage where there is a bus stop for every five minute walk. This way, there will be less reliance on Uber, public transport, since they can’t match our pricing, and less incentive to drive, as well as environmentally sustainable as well.
Amit Singh is a co-founder of Shuttl.
The views expressed here are those of the author, and do not necessarily represent the views of BloombergQuint or its editorial team.