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Impressive Business Model of RedBus (2021) – A Case Study

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RedBus is an online bus ticketing platform developed in India, headquartered in Bangalore but connects bus travellers with a network of over 2500 bus operators. With a massive audience of more than 18 Million, they have expanded their roots across India, Malaysia, Indonesia, Singapore, Peru and Colombia.

In this case study, We’ll cover the business model of redBus including its operations, key services, target audience, ticket-booking offer and revenue model.

So, let’s start and analyse about RedBus as an Online ticketing platform.

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About RedBus

RedRedBus Brand Logo-Business Model of RedBus

In the year 2006, a very innovative and problem-solving Idea came to the mind of Phanindra Sharma when he was struggling to find a bus for his way back home.

Leaders say that ‘Necessity is the mother of invention’. Phanindra Sama, Charan Padmaraju, and Sudhakar Pasupunuri from BITS Pilani believed in the same and came up with an idea to tackle this problem, RedBus.

For better performance, they joined the TiE Entrepreneurship acceleration program to upskill their network and learn more about their presentation skills. They got the guidance of great mentors. No doubt, redBus came out radiantly. but today it sells more than 5000 tickets per day.

Today, RedBus is India’s first organized bus ticket booking service. It is also the biggest aggregator of bus tickets in the country. RedBus’ business proposal is simple—the company can book your bus tickets online. Once you log onto the website, you can choose tickets in 15+ states, across  80, 000 routes, through a network of 2500 bus operators, in one click. The service allows passengers to choose their seats as well as book return tickets.

Working on the system of booking, RedBus blocks 10-15 seats in all buses and partners such as MakeMyTrip, the travel portal, until an hour before departure time.

The company makes its money from the commission it earns on each ticket. Expanding its reach, RedBus also sells tickets at post offices.

Now, that we have a little knowledge about redBus, Let’s move to their Business Model.

 

Business Model of RedBus

RedBus Illustration - Business Model of RedBus

RedBus started with just INR 500000 rupees which was the saving of their 3 co-founders. They had to face several challenges, in the beginning, like, payment gateway issues and propagate the ideal culture, working environment and value system.

To meet these challenges and overcome them, they designed this amazing business model that helped them to reach a 70% share in the Indian online bus ticketing segment.

  • Operations of redBus

Redbus is developing a software called BOSS “Bus Operators Software System” used by most travel agents and operators.

The way it works is that the bus operators who use this software use it to manage the seats of their buses in their fleet. They pay an annual premium for the software. All data is stored on AWS on a custom SQL database.

Travel agents have access to an online agent portal or to the software itself.

To provide great benefits and offers for their valuable customers, they are dedicated to providing great customer service. In this way, the company offers the most superior advantage to its customers and that too at a very reasonable.

Now, let’s move to the key services provided to the customers by redBus. 

  • Key Services Provided by RedBus

RedBus is the leading bus ticket company that gives an incredible fraction of offerings to its clients, offerings which you can not deny however pick RedBus. And to this result, RedBus has millions of glad and loyal clients throughout the globe.

  • SAFETY+

With Safety+ they have brought in a set of measures like Sanitized buses, mandatory masks etc. to ensure that their customers travel safely.

  • SUPERIOR CUSTOMER SERVICE

They put their experience and relationships to good use and are available to solve their travel issues.

  • LOWEST PRICES

They always try to give their customers the lowest price with the best partner offers.

  • UNMATCHED BENEFITS

They take care of travel beyond ticketing by providing you with innovative and unique benefits.

redBus has a very classified target audience, to know about them better. Let’s move to the next aspect.

  • Target Audience of RedBus

RedBus in particular targets the literate middle-magnificence people throughout the country, who’re really dependable on net services and get to tour a lot.

However, in the beginning, RedBus’s important goal becomes to get as many bus operators as possible. But their concept was rejected by the bus operators due to the fact that they were well in their comfort zone of traditional methods. Then, the founders went for the customer’s pool to drive greater travellers’ site visitors towards their website. This become a tremendous achievement and the organization skilled a large boom graph.

It’s the uniqueness only which drives the venture to extreme success. This unique quality in the business model of redBus highlighted them amongst the top players.

  • The Uniqueness of redBus Business Model

RedBus Advertisement- Business Model of RedBus

The quality which separates RedBus from others is that it provides an opportunity to the customers to select their favourable route for their destination. Not only this, RedBus provides its customers with tons of different offers to its customers to get better customer engagements.

Their social media strategies are designed so well that it always finds great proposals for its audiences. Its approach to social media is quite different from others.

In the very next segment, we have the money-making process of redBus. Let’s quickly move to that.

  • Money-Making process of redBus

RedBus Advertisement- Business Model of RedBus

RedBus makes its money from the most effective way of work. It costs a few charges as the fee from the bus operators on every booked ticket on RedBus. The fee comes as 10-20% of the whole ticket value.

The founders commenced the organisation with a quantity of Rs. 500,000 from their savings. When the organisation was built, it did not make any income withinside the first 12 months however in 2009, it acquired a brilliant deal of fulfilment with a turnover really well worth INR 5 crore. Then in 2005, RedBus income grew by 6 times its last.

And now, RedBus has over 18 million users from 24 states, 30,000+ outlets along 80,000 routes, and 2500 bus operators. And known as the largest online bus ticket company.

redBus offers a variety of ticket booking offers. Let’s go through them one by one.

 

Redbus Ticket Booking Offers

RedBus definitely makes it more convenient and comfortable for its customers by providing multiple travel Bookings offers such as

  • Thousands of routes across multiple travel options.
  • Efficient customer service
  • Low fare of tickets
  • Pilgrimage tours
  • Discounts, deals and festival offers, etc
  • Mobile ticketing App
  • Bus hirings

Their revenue model contains a very interesting fact about them. Let’s go through that to find it out.

 

RedBus Revenue Structure

As we know that their primary revenue model is very simple. redBus charges commission from the bus operator on every ticket booked through their platform. The commission is around 10-20% of the value of the ticket being sold.

But, what we don’t know is that they have another source of income too.

redBus also sells its ticket booking software to bus operators. This software is easy to comprehend and operators can book tickets, manage to book and optimise.

So, even if you buy tickets directly from the operators offline, they will most probably use the software provided by redBus.

Not their business model but also their implementation, has made them one of the biggest acquisitions in the Indian startup scene.

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Conclusion

RedBus has had enormous success since its launch in 2006. There are tons of bus services available 24×7 and meets all the needs of the traveller. Its business model is quite simple and strong but most importantly, RedBus is wildly famous and welcomed among the common people.

As it eases its major issue with finding a fine bus for any destination. It’s one step closer to fulfilling every need of a traveller along with its destination requirements. RedBus was one of its kind and it’s a true inspiration for developing services for the betterment of common people.

So, we also now know that Online Marketing skills are gaining importance in today’s corporate world. As in the case of redBus, digital presence only helped them to come up with a solution and establish a great venture out of that. You can learn these digital marketing skills too, with our Short term certification courses in Digital Marketing.

If you’re interested in learning more about digital marketing, you can check out our Free Digital Marketing Basics Masterclass by Karan Shah, IIDE’s Founder and CEO.

Thank you for reading this case study! We hope you find it interesting, would love it if you can spare some time sharing your view on it. If you would like to know more about us drop your email in the comment section and we will revert to you.

Lead Trainer & Head of Learning & Development at IIDE

Leads the Learning & Development segment at IIDE. He is a Content Marketing Expert and has trained 6000+ students and working professionals on various topics of Digital Marketing. He has been a guest speaker at prominent colleges in India including IIMs......[Read full bio]

Aditya Shastri

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