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Could Rapido’s subscriptions pivot be a silver bullet to all its problems?

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Pranav Balakrishnan

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Pranav Balakrishnan

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After launching its cab business on the back of a zero-commission model, Rapido has shifted its entire auto business to the same model as well. While Rapido is effectively disrupting itself, the shift should help shore up its financials and keep it onside of regulations.

February 27, 2024

10 MINS READ

Key Takeaways

  • Despite being a late-stage startup, Rapido has taken the radical decision to overhaul the business model that got it this far
  • Instead of the typical commission-based ride-hailing model, it has opted to switch to a zero-commission, subscription offering for both its cab and auto business
  • The zero-commission model, Rapido believes, will help it do three critical things—solve for driver distrust, onboard more drivers, and stay on the right side of the law
  • Crucially, Rapido can make this shift while keeping the impact on its financials minimal

When ride-hailing company Rapido announced its entry into the four-wheeler cab business in December, it surprised many. Already the leader in the two-wheeler taxi space, the Bengaluru-based company had spent the last few years scrapping for market share with giants Ola and Uber in India’s auto-hailing space. Now, even as it was dealing with the rapid rise of Namma Yatri in the auto-hailing battle, it would be taking on the deep-pocketed duo of Ola and Uber in a space they had controlled for the past decade.

Rapido, though, believed it could disrupt the country’s cab market by doing away with the commissions that its larger rivals charged driver partners. Instead, it launched its cab business on the back of a software-as-a-service subscription model, which saw drivers pay a fixed fee to join its platform, pocketing the entirety of the fares they earned rather than paying a cut to Rapido on each ride.

Earlier this month, Rapido went from disrupting the taxi cab incumbents to disrupting itself in the auto-hailing business. It announced that its auto business, its biggest revenue driver, would also shift to the zero-commission subscription model as well. This, the company tells The CapTable, was done after piloting a number of models over the past year.

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