BluSmart | Monetisation

So, I decided to schedule a trip from Indiranagar to Madiwala for a bus pickup and here's how it went.

I opened BluSmart app on my phone & booked a ride in three steps: Opened the app > Selected the pickup and drop location > Selected the time slot for 8.30pm > Confirmed the booking after checking the price.

The driver arrived at 8:10 (20 mins before the pickup time) and didn't call me even once until it was 8:25pm, DELIGHTFUL - Once I reached the car, he opened the door for me and kept my luggage in the trunk. The AC was on and the front seat was kept leaning forward so I got all the leg space I wanted. The cab smelled good, there was hygiene and throughout the trip the speed was average and it was comfortable. Once we reached the location, he helped me with the luggage and I made the payment using UPI.

This is BluSmart, a new player in the already established ride-hailing space. Solving for problems faced by Uber & Ola users by building upon a different business model.

While the product is already monetised and is at early scaling stage, I am still going ahead with Litmus test to understand the approach

Retention Curve

Based on guesstimates and industry data, the retention rate across cab-hailing apps sits around a D-120 | 37% which means out of every 100 users who join on Day 1, only 37 users have completed a ride on BluSmart on Day 120, to put into perspective this is how a graph would look like:

Retention Curve = ✅

Deeper Engagement
The users can broadly be divided into 3:

City Rides: This is where users can pre-book a ride for a time upto 48 hours before and travel within the serviceable location of Bangalore & Delhi

Rentals: This is where users can book a vehicle for longer trips/multiple stops within the serviceable areas of Bangalore & Delhi (Larger than city rides)

Airport Rides: This is designated for airport rides to and from Bangalore/Delhi airports to serviceable location (Most commonly used)

Based on above data, we can say more than half of users are using at-least 2 ride types and have higher than average frequency.

Deeper Engagement = ✅

Willingness to pay

Based on data pointers from interviews with BluSmart founders (source):

• BluSmart has already captured a 10% plus market share in Delhi and maybe 12-13% revenue market share. They believe the founders have a great track record, the team and product have proven themselves, and substantial investor backing has always come in.
• The startup also saw over 100% growth in monthly active users to 245,000 from December 2023 to 120,000 in January
• From AJ "We have 6,000 cars already plying, and as we speak, 700 vehicles are ready to join our fleet in the next 10 odd days. So, we will hit 6,700. Perhaps by March 2024, we should be more or less between 7,500 and 8,000 cars."
• the fare for distances up to 3 kilometres is Rs 199 during rush hours and Rs 149 during relaxed hours. For 12 kms to 15 kms slab, the fares are Rs 329 and Rs 259 during rush hours and relaxed hours, respectively.

Potential User Questions & Segmenting

Segment: ICP 3 (As mentioned above)

Questions:

• How much do you spend on average a month for commuting?
• What are your preferred modes of transport?
• What are the current issues you face with Uber & OLA?
• Would you pay a 10% extra for getting cabs on time without any cancellations?
• Would you pay a subscription fee every month instead of booking a ride everyday?

Use Case
Travel from point A to point B comfortably without the worry of cancellations & carbon emissions.

Competitive Landscape

While Blu entered an already established ride-hailing landscape, it sure have conquered a market share for itself, by solving for issues faced by users of existing cab apps, it has even been able to create a niche for itself.

But, after using all 3 apps to ride from Indiranagar to Madiwala, all 3 apps - Uber, Ola, BluSmart have shown similar pricing of INR 249 for the ride.

Perceived Value of BluSmart

Users are paying for time saved by opting for Blu instead of other modes of transport (TIME), also the hassle of driving a vehicle themselves (Efficiency)

Who to charge

Everyone - Blu is a consumer service that requires users to transact from the first point of use case in itself. Which means for any user to experience the core value proposition of the product. In some similar business models like Uber for their go to market strategy in markets like UAE, Saudi Arabia introduced first ride free but Blu didn't have any free ride options from Day 1.

When to charge

Post Ride Completion - The perceived value of BluSmart is only experienced by the user once they completes the ride, this is when user understands the value of time saved from spending on parking and efforts needed to reach from point A to point B

What to charge

Distance & Time: BluSmart will charge for the distance and time covered, which means there will be a minimum charge for any booking followed by incremental charge for each KM of distance covered and the total time spent in waiting or during the ride.
To better aggregate demand and supply, there is also surge charge during rush hours to incentivise the drivers to accept bookings.

How much to charge?

Before that, let's understand the Core value proposition of BluSmart

1. Travel from point A to point B comfortably without the worry of cancellations & carbon emissions.
2. Rent a car along with a driver to travel between multiple stops.
3. Travel from Airport to home/other locations comfortably with no hidden charges
4. Pre-book slots with zero cancellations
   
   For the core ICP-3 with an income bracket of 12 LPA:

• The average earning per hour = 500/-
• Average time spent on finding a parking, waiting for a confirmed booking = 30 Mins
• Bangalore Traffic = 100
• Value of time per month = 15,000 + 3000 = 18,000/-
• Average Ride Value = 200
• Average rides per week = 5
• Total spent on BluSmart in a month = 5 * 4 * 200 = 4,000/-

How to show pricing

Let's look at industry leader's pricing page for the same ride:

Uber: Uber is using a mix of pricing effects like slash pricing by showing a discounted price for the auto rides & decoy pricing by having multiple tiers of ride types with differential pricing showing the Uber Go to be cheaper relatively

Ola: The interesting part I find about Ola's ride pricing page is it's option to "Book Any", this gives user the belief that there is a sure shot chance to get a ride regardless of the price. Ola also uses supply data in the location to place ride types accordingly which means if there is higher supply of Sedans within my location, Ola will push up Prime Sedan options to get the user to book along with Slash Pricing effect.

BluSmart: BluSmart is taking a conveniently different approach of simplifying user decision by giving the user a single option - this is also because the ride selection happens before location is entered, interestingly Blu still follows one of the evergreen effect of 99 pricing effect which is users perceive prices that end in 99 as being significantly cheaper than prices that are rounded up to the nearest 100 or 1000.

Can we increase the price?

No, the ride-hailing space is highly competitive and regulated, hence the ideal way of pricing would be to be at par with other competitors in the market like Uber, Ola, Rapido etc.

Design System

Considering the AOV is low natural frequency is high and buying decision is reversible it is ideal to follow system design 1 which is low effort, fast and easy

There is no need to differentiate flow between first time & repeat bookings (except for initial onboarding nudges)

People are very much used to a straightforward booking flow like Uber & Ola which are apps in the similar space that our ICPs use and hence sticking to the same flow would be better.