India’s RedBus honks further into Southeast Asia to drive international expansion

While in its backyard, the domestic market is still promising though competitive.

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India’s RedBus honks further into Southeast Asia to drive international expansion

Indian bus ticketing service RedBus is reportedly mulling over a further dive into Southeast Asia among other countries, as the company, now part of the MakeMyTrip Group, is looking at international markets for future growth.

“The next lever of growth is going to come from our international business,” Prakash Sangam, the company’s CEO, said as quoted by local media LiveMint.

The company, which claims to be the largest of its kind in India, expects revenue from international markets to account for more than 35% of its total revenue in the next 3 to 4 years, a big step forward from last quarter’s 7%.

Founded in 2006, RedBus already has a presence in a number of Southeast Asian countries, including Singapore, Malaysia, and Indonesia. It’s now assessing opportunities in Vietnam, Thailand, in addition to Turkey.

RedBus is one of the latest examples of Indian startups entering foreign territories to drive growth, from hospitality chain behemoth Oyo to cab-hailing major Ola. Oyo started with Malaysia in 2016 and subsequently spread to China, Nepal, Indonesia, and the UAE. Ola got into Australia, New Zealand, and the UK.

When it comes to overseas expansion strategy, Sangam explains that RedBus is looking at a two-pronged solution, either enters a market inorganically by partnering up with a local player, or go solo by launching its own operation. It evaluates a potential market by using filters such as bus transport market size, the fragmentation of the supply base, as well as the relevant e-commerce infrastructure, including internet penetration, and smartphone usage.

In addition to online intercity bus ticketing, the Bangalore-based startup also provides vehicle tracking technologies that enable operators to provide automated and scientific pricing, as well as other readily-made features that can be deployed in markets around the world.

While the company is aggressively looking outwardly, its home turf is still a promising yet competitive market.

Market researcher Forrester claims that while Indians book bus tickets online ferociously, compared to offline, the online pie is still small, translating to a big home market opportunity. In 2018, Indians bought about USD3.5 billion in bus tickets, mostly offline.

According to Sangam, last year nearly 61.5 million passengers booked their tickets on the RedBus platform. It claims a 20 million monthly active users base with an average order value of USD15 for intercity travels. Till date the 13-year-old startup has sold more than 180 million bus tickets.

Eyeing domestic potential in the public transport sector, local mobility startups include Ola, Uber, and car rental platform Zoomcar are also getting into the space to challenge RedBus.

In June 2013, ibibo Group, backed by both South Africa’s Naspers and Chinese Internet company Tencent, acquired a controlling stake in RedBus. The company was folded into MakeMyTrip after the local travel giant acquired ibibo in 2016.