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Catching the neighbourhood shuttle

A couple of early stage startups are trying to address the problem of neighbourhood shuttle or micro-mobility. This is beyond bike-taxi startups, or bike rentals. The idea here is that these startups will move a group of people together for 3-5 km...

Nov 17, 2019, 10.46 AM IST
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On Monday mornings, you may not get a cab to work or the nearest metro station soon enough by firing the app. This commuting annoyance will most likely reoccur in the evening as you head home or to a supermarket to pick up essentials.

Affordability is another concern. Cab fares are rising while Uber and Ola try to solve the demand-supply gap.

Now, a couple of early stage startups are trying to address the problem of neighbourhood shuttle or micro-mobility. This is beyond bike-taxi startups, or bike rentals. The idea here is that these startups will move a group of people together for 3-5 km at a cheaper rate than a cab or scooter.

New Delhi-based Oye Rickshaw has a fleet of over 1,000 electric rickshaws, while Bengaluru-based Loca has various vehicles on its platform, which is often used by Ola and Uber, to take users to their destination within a neighbourhood. It also uses six-seater vans. While these startups offer services in pockets of a city, metro stations are the first locations they are targeting because of the high frequency of use.

“It could be anywhere — a mall, restaurant or temple. But for now, we are restricting the use-case to metro stations and back,” said Loca co-founder Gautam Patil. “If you break up the volume of trips across different distance ranges, in Indian context, 0-1.5 km is walkable or can be covered on a cycle. But beyond that, about 65% of all work-related commute in urban India happens in sub-5-km range.”

For these startups, 50% of the rides are generally for first or last mile connections; the rest could be anywhere in the neighbourhood. This is where cost becomes a significant differentiator as cab fares will be high for even such short distances.

Mohit Sharma of Oye said app-based cabs charge upwards of Rs 20 per km, while bike taxis Rs 13-15. The fare is Rs 5-8 on bike-sharing platforms. Sharma’s fleet of e-rickshaw offers a rate of Rs 3-5 per km. Loca charges Rs 15-25 for each ride, for a maximum distance of 5 km. Loca did not disclose ride volumes, but Oye said it had clocked up 2 million rides in the past 10 months. If five people take one e-rickshaw to a location, Oye counts the journey as five rides.

Investors are placing bets based on the early traction these firms are getting. Loca has the backing of Stellaris Venture Partners and Fosun, whereas Oye counts Matrix Partners and Snapdeal founders Kunal Bahl and Rohit Bansal among its investors.

While affordability and quick availability are key factors for customers, the algorithm used by the startups to take people to their destination is also critical. Cab users often complain that pool rides take long detours to accommodate maximum number of riders.

“This is the biggest concern for customers; they are not sure how long it will take. Once you give the assurance that your journey time is prefixed, controlled by an algorithm, which will drop you about 50 metres from your final destination, trust is created that this is the platform you need,” Sharma said.
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