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“Intercity One Way Cabs for Hire” Business Case HippoCabs – The Transportation Catalyst*

CASE STUDY, ENTREPRENEURSHIP & STARTUPS
ET Cases - FLAME, 10 Pages
AUTHOR(S) : Dr. Kavaldeep Dixit, Professor - ISIM Jaipur, Dr. Tanjul Saxena, Associate Professor - IIHMR Jaipur, Dr Bharti Sharma, Associate Professor - ISIM Jaipur

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“Intercity One Way Cabs for Hire” Business Case HippoCabs – The Transportation Catalyst

 

“Innovation is taking two things that already exist and putting them together in a new way.”

Tom Freston

This statement was held true in case of Sahil Agrawal (Sahil), CEO and Co-founder of HippoCabs, as the genesis of the business idea laid in a simple everyday incident when 21-year-old Sahil on returning from Germany landed at Delhi airport to board a connecting flight to Mumbai to meet his friends but decided to take a deviation and pay his parents a visit in Jaipur instead. Since the next flight to Jaipur was after eight hours he thought of other options. He initially thought of taking a taxi but on checking he found that it was turning out to be expensive as they were charging double fare, including return fare, for the one-way trip. Thinking a Volvo bus would be the best option, Sahil planned his jaunt accordingly. However, after waiting for a total of ninety minutes for the traffic to clear up and the bus to arrive, he got frustrated and contemplated he would had just booked a cab if he was expected to pay only one-way fare. After the entire ordeal of waiting for luxury bus, and then the bouncy ride which took him nearly eight hours to reach his destination, he thought of addressing the problem more closely. After discussing with several commuters, Sahil sensed that his dilemma was a common one, as people were diffident to opt for a cab because of the cost. People were opting for buses, which were affordable, but time-consuming with usually bumpy and monotonous rides and cab rides were ridiculously expensive..................

The Team

Sahil hailed from a business family where almost everyone was involved in family-run businesses including his father who was a textile merchant, thus risk-taking was ingrained in his personality. After his initial schooling in Jaipur, he proceeded to Karlsruhe Institute of technology (KIT), USA to pursue Bachelor of Science, Mechanical Engineering. But, soon after his first year in engineering he joined Purdue University, Germany as a transfer student. He had studied Entrepreneurship and Marketing at KIT before heading to Germany and had worked on various ventures of his own in US and Germany and gained diverse experience. Later, Sahil took off from Purdue University to work full time on his current venture – HippoCabs.............

Car Rental Industry and HippoCabs

In India, road travel was five times bigger13 than railways and business was segregated among bus and taxi service providers. As per report by Ken Research, a global aggregator & publisher of Market intelligence research reports, “Car rental market’s revenue in India was anticipated to grow at a Compound Annual Growth Rate (CAGR) of 35 per cent. Furthermore, this sector was projected to be worth more than INR 800 billion by 2019.” The market for car rentals in India witnessed unprecedented growth. The traction was primarily driven by the rise of the on-demand economy, technological advancements and rising tourists arrivals in the country. Indian car rental market was broadly segmented into organized and unorganized sectors..............

Growth and Initial Challenges

HippoCabs was committed to transforming the lives of those who offered rides and those who needed them. After launch of its services, within an year, they gained huge popularity among their customers so much so that 50% of their customer base constituted of repeat customers. This was possible due to high demand of one-way cabs and quality services which they were offering to their customers by leveraging technology. In next couple of months, the company expanded to major cities like Agra, Ahmedabad, Vadodara, Surat, Nasik, Shirdi, Chandigarh, Bikaner, Jaisalmer and also launched outstation cabs for their direct customers and for their B2B clients. The startup received warm response and in the early eighteen days of its inauguration, around 1,000 users20 were connected and were pleased with the company’s services.............

Business Model

Flourishing companies operate according to a business model. The elements of a successful business model (Exhibit I) highlighted four elements:........

Customer Value Proposition

It included target customer identification, analysis of the benefits customers seek, designing and delivering of the desired offerings. HippoCabs value proposition stressed on offering low-cost transportation to its customers that was easy to access and safe to use. HippoCabs target customers were outstation people belonging to tier I and tier II cities. They were usually professionals who had to attend a meeting or catch a flight..........

Profit Formula

This essentially dealt with the revenue model, the cost structure, the margins and the inventory turnover. The revenue model covered the market potential for the business which in the present case was not a challenge. HippoCabs structure was simpler, thus generating lower costs as there was no inventory, no paying of fees as they were not taxi operators but cab aggregators or network orchestrators matching drivers and passengers. Their drivers were partners not employees so they were prepared to accept lower revenue than normal taxi drivers...........

Key Processes

The systems and processes of the organization put in place for its day-to-day operations was highlighted in this dimension of the business model. A process driven organization was better equipped and more stable in handling situations. HippoCabs had made the best utilization of technology in sync with increased number of Smartphone users and rise in data usage. The whole process of booking a cab was automated and followed the steps detailed in Figure I.........

Key Resources

Resources played the most important role in delivering the desired customer value proposition. Resources included people, technology, products, partnerships and the brand. Starting from 2 employees HippoCabs had grown to employee strength of 22..........

Competition

Besides local unorganized Taxi operators and travel agencies HippoCabs faced stiff competition from a clutch of startups that had sprung up in various parts of the country to address the issue of taxi service providers charging double the fare for one-way travel. Ahmedabad-based Yatayat, Noida-based AHA Taxis, Delhi-based Scoot, Wiwigo.com, etc. were intercity taxi aggregators that pose threat to HippoCabs..........

Key Challenges

HippoCabs like most cab aggregators faced following challenges:

• Security and winning trust of customers was a challenge during usage of the service.
• Computation of profitable pricing for all routes was a problem.
• During rush hours waiting time for customers caused inconvenience.
• Heavily regulated norms of transportation industry had to be adhered to.
• ..............

Assignment Questions

I. What have been the key reasons for success of HippoCabs?
II. Analyze the business model of HippoCabs.
III. Suggest, with justification, the initiatives HippoCabs could take to sustain and grow.
IV. .............

Exhibits

Exhibit I: Elements of a Business Model

Exhibit II: Value Proposition and Service Offerings by Hippo Cabs

Teaching Note Preview

“Intercity One Way Cabs for Hire” Business Case HippoCabs – The Transportation Catalyst

 

Synopsis

HippoCabs, an intercity shared cab service that offered convenience, comfort and luxury of a cab at the price of a bus was launched in July 2015 on the Delhi-Jaipur route with pocket-friendly fares starting from INR1,899. Today it boasts of presence in 100 cities and on 650 plus routes covering complete Rajasthan, NCR, Punjab, J&K, Himachal Pradesh and some parts of Maharashtra, Gujarat and UP.

With a quick and smooth signup process, it facilitated smooth ride booking for its customers. It also allowed its customers to reserve each seat separately instead of booking the whole cab. HippoCabs was committed to transforming the lives of those who offered rides and those who needed them. The company followed aggregator model wherein it did not own any cabs, it only paid the driver a fixed amount on per-trip basis and charged customers for their seat.

This teaching note attempts to analyze the business model of HippoCabs and its pro’s and con’s. It also covers the challenges the business faced and the future plans of its founders.

Case Positioning

The rationale for the study involves analyzing challenges and opportunities in entrepreneurship, studying the feasibility of a business idea, assessing customer needs, designing product-service offering and being unique. The case relates to transportation industry and the organization considered is HippoCabs an intercity cab aggregator. The case focuses on the differing innovative strategies adopted by the entrepreneurs to address its strategic growth needs in an intensely competitive marketplace.

Learning Objectives

• To analyze feasibility of business idea as well as challenges and opportunities in entrepreneurship;
• To apply the concept of Services differentiation in real-life business situation;
• To understand Business Model for intercity shared cab service.

Assignment Questions

I. What have been the key reasons for success of HippoCabs?
II. Analyze the business model of HippoCabs.
III....................

.........................

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Abstract

This case highlights the Business Model of HippoCabs – an intercity shared cab service that offers convenience, comfort and luxury of a cab at the price of a bus. HippoCabs positioned with the tagline – “Your Travel Mascot”, is a cab aggregator started by three young Jaipur-based like-minded entrepreneurs Sahil Agarwal, Sagar Agarwal and Ashish Kumar. It was launched in July 2015 on the Delhi-Jaipur route with pocket-friendly fares starting from INR1,899.

The company does not own any cabs, it only pays the driver a fixed amount on a per-trip basis and charges customers for their seat. HippoCabs, with its customer-friendly outlook and effective service was assisting drivers earn a consistent livelihood with integrity. Satisfactory Customer experience was their prime concern and keeping it consistent and improving it further was very important for them.



Pedagogical Objectives

  • To analyse the business models for a new vertical in car rental industry
  • To think and propose sustainability and growth strategies for a new startup in given environmental constraint
  • To investigate the pros and cons of business model adopted by the company in case
  • To investigate the scalability of business model of the car rental industry

Case Positioning and Setting

This caselet can be used in the MBA/MDP for analyzing challenges and opportunities in entrepreneurship, studying the feasibility of a business idea, assessing customer needs, designing product-service offering and being unique. The case focuses on the differing innovative strategies adopted by the entrepreneurs to address its strategic growth needs in an intensely competitive marketplace.

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- Case Study
- Teaching Note (**ONLY for Academicians)
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