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    After establishing radio taxi business, Meru Cabs to offer exclusive services to its custormers

    Synopsis

    After establishing a solid base in the radio taxi business, Meru Cabs is seeking to up the tempo by offering exclusive services. It won't be an easy ride.

    From zero to 5,600 radio taxis in under five years, with a presence in four metros to boot, has helped Meru Cabs become the largest such service in the country. With Rs 300 crore in revenue, Meru has raced ahead of competitors like Easy Cabs and Mega Cabs, with the company even claiming that it is the third largest radio taxi operator in the world. The sauce of this success is no rocket science, at least on paper: a clean car, a knowledge driver, non-negotiable fares and a tamperproof meter.

    “You provide these things to the customer and he will be happy,” says Gavin D’abreo, who heads marketing & sales for Meru. This, of course, is just the beginning, and as Rajesh Puri, CEO, points out: “This industry is still at a nascent stage and there is a lot of upfront investment that needs to be done. Technology has been a major investment for us to improve our service offerings.”

    So what next for Meru, now that it has established a sound base in Mumbai, Delhi, Hyderabad and Bengaluru? Well for starters, turning profitable is the priority, with Puri expecting to see black ink in three out of four cities at the end of the quarter ending March. Beyond that, identifying new revenue streams by offering specialized services is the way to scale up operations.

    Meru, which has partnered with the airports in the cities it operates in, is now testing out a service called Meru Select in Hyderabad. This is aimed at giving its regular users a guarantee of up to 80% of getting a Meru cab when they book for one. The trigger for Meru Select: only 5% of its customer base gives Meru about 60% of its revenues.

    “Because of limited inventory, customers have complained to us about the non-availability of cabs when they order for one. We work on first come, first serve basis, but our loyal customers get an additional assurance of getting a cab with Meru Select,” explains D’abreo. Meru Corporate is another service being tested. This is aimed at corporate customers who want more than a service from point A to point B, which is what Meru offers currently. Meru Corporate is targeted at executives who have to travel from one meeting to another across the city in a day.

    A preloaded plastic card will be given to the eligible executive, which will be swiped by the Meru driver at the end of day’s travel. Some 21 companies have so far expressed interest in this service and Meru is in the process of giving the finishing touches. Other services being planned are transporting kids in absence of their parents as well as a service for medical emergencies.

    Also on cards are expansions into Chennai, Kolkata, Ahmedabad and Vizag. However, such growth won’t come easy. One reason for that are restrictions – fares, distances and licences are regulated by the government. Another hindrance in growth, says Puri is finding drivers. And then there’s competition. Mega Cabs, the oldest brand in the radio taxi business, is present in seven cities. Then there’s Easy Cabs —present in four cities — which are available at malls, hotels and even hospitals. Niche services like For She, an exclusive ladies taxi service driven by lady chauffeurs in three cities, are also available.

    Yet, there are brands – like Gold Cabs and Star Taxi — that have not been able to survive the tough regulatory environment and the investments that need to be pumped into not just vehicles but the technology back end. Meru estimates the size of the radio taxi business in India at 9,500 cabs across Mumbai, Delhi, Bengaluru & Hyderabad, which is growing at 50-60% per annum. Nabankur Gupta, founder, Nobby Brand Architects, a brand consultancy, reckons the radio taxi space has tremendous scope for brand building.

    “What exists today is commodity service with a name; a brand can be built only if customers come back to a brand for the experience they get. Security and assurance of good service will help build stronger brands in this space,” says Gupta. Gupta suggests having two levels of service offerings — one level is a limousine kind of service, which is about exclusivity and pampering; the second level is the existing sedans that can cater to the mass market. Puri of Meru agrees there is a demand for superpremium service in India, but the constraints he says are not just restricted to acquisition of vehicles.

    “To have differentiated cabs, there has to be a differentiated pricing system and a backend IT infrastructure to support it. Technology is the most important aspect of our business.” He adds that evidence of Meru’s tech edge is that its drives can do “six duties a day compared to 2-3 duties of others. Our backend alerts them about the next job nearest to where they are positioned,” explains Puri. Gupta says in countries like Singapore and Hong Kong radio taxis have made a big difference and have also replaced the public taxi fleet. “Black & yellow taxi drivers should be spoken to and, if they can be taken over, we will have a much better taxi service in our cities,” he suggests.
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    13 Comments on this Story

    patel3207 days ago
    I am a satisfied Meru cab customer. Have been using their services for over 2 years. It's a great travel option, especially when my car has gone for servicing.I also call for Meru Cabs when my parents need to travel, it is a very comfortable option for old people.
    desi3212 days ago
    We need to do away with autos. They pollute, are noisy, obstruct the flow of traffic, as they are slower than cars, and in hot summers and winters autos are uncomfortable. Instead govt should phase away autos and have a fleet of cng nanos.
    Papa Kilo Mike3212 days ago
    I think the reason why only a handful of players are running this segment is because of the high barrier to entry.
    As was mentioned earlier, Meru is expecting to break-even now given the high investments required in procuring the fleet, setting up the IT infrastructure and finding/retaining qualified drivers.
    Already a few players have gone kaput and the ones that have gone niche (women-only service) have already cut themselves out of the bigger pie, hence mainstream players like Meru, Easy Cabs and Mega Cabs get more muscle.
    Absence of a regulator is a major reason why they have been able to get away with whatever service levels they have been offering so far and at what price point! Telecom sector also has TRAI which has to play a proactive role in managing the market players.
    One segment that has not been fully explored in this service area is a no-frills cab service like the low-cost airlines. Sure, some services did take off initially but did not really scale up. The key USP will be a lower price point.
    Another segment here is to setup a collective or cooperative service comprising of the existing neighborhood taxi service folks on a profit sharing basis. Worth exploring is someone is keen on breaking through in this market. A well-though out business plan with a clear focus on execution and profit realization will definitely get the investors interested. Don't expect the governement to directly intervene, it'll only lead to more bureaucracy and babu-dom!
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