According
to a report released in June from the United Nations, World Population Prospects 2019, India will surpass China as
the world’s most populous country by 2027 and then continue to widen that gap
in the years that follow.
The population of India stands at 1.37 billion people today and is expected to
grow by another 273 million by 2050.
And the majority of its citizens are young.
As of the country’s last census in 2011, India had more than 50% of its
population below the age of 25 and more than 80% below the age of 50.
That’s helping to spur a strong economy - a January report from London-based
financial services company Standard Chartered predicts India will become the world’s
second-largest economy by 2030 with a GDP of more than $46 trillion, behind
only China and surpassing the United States (which loses the top spot beginning
next year).
These factors - a massive and growing population of young people and a strong
economy - combine to fuel a very active travel market in India.
According to Phocuswright’s India Online Travel Overview,
“Indians, particularly the middle class, are traveling more than ever. The
average Indian online traveler took three leisure and four business
trips in 2017.” Phocuswright projects gross travel bookings will exceed
$34 billion this year and reach nearly $44 billion by the end of 2022.
For
domestic travel, trains are the most-used mode of transportation. The
state-owned Indian Railways is the sole operator, managing a system of more
than 68,000 kilometers of track that accommodates more than 20,000 passenger trains
daily on long-distance and suburban routes from 7,318 stations.
Online
bookings now account for more than half of all rail ticketing, and Phocuswright
estimates Indian Railways processes 98% of those online sales.
“Indian
Railways' online dominance over online intermediaries stems from its
unattractively low margins, high annual content access charges and mandatory
user account linking to prevent fraudulent bookings,” Phocuswright says.
But that dominance hasn’t deterred some online travel agencies
from offering rail content and ticketing.
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One of those is Ixigo.
“Our thesis is that the dominant OTA in this market will be
built around trains, and that’s why we’ve been spending so much time and energy
around it,” says Aloke Bajpai, Ixigo co-founder and CEO.
For the third piece in our series on India, we talk to Bajpai
and Ixigo co-founder and CTO Rajnish Kumar to understand more about their rail
strategy and how they are using content to drive user adoption.
The opportunity
Bajpai and Kumar founded Ixigo in 2007 as a flight metasearch
platform for the India market, allowing users to find deals and then book on
the airline’s site. The first app, for flights and mainly luxury hotels,
launched in 2011.
The site’s early users were primarily from India’s large metros - the tier-one cities that were the first to come online with internet service
and where higher income levels enabled more travel.
But around 2013, as the number of mobile subscribers across India
was skyrocketing, Ixigo began to boost its effort in rail by creating a second
app focused on trains, which - unlike planes - are used by people in every corner of the country.
“We discovered there was this entire market coming online who
wanted train information ... and the market was actually underserved, because a
lot of the OTAs in India were only focused on flights and hotels,” Bajpai says.
“Twenty-five million Indians travel every day by train, whereas on
flights it’s about 400,000. There is a massive difference in the scale of the
opportunity.”
Solving problems
Ixigo’s strategy was based on solving problems for train
travelers, starting with providing basic information about a train’s status and
arrival time and platform.
To do this, Ixigo built a system that crowdsourced information
from app users that opted in to sharing their location data, since Kumar says
even the official data coming from Indian Railways was often behind by 30
minutes or more. Ixigo also invited users to manually input data, for example
to correct platform information.
“We built something like Waze that uses location data from the
user’s devices ... to locate the train,” he says.
“We also use predictive analytics and past data ... to predict
delays in trains and arrival times. These are now the biggest use cases on why
the trains app has grown really fast.”
Our thesis is that the dominant OTA in this market will be built around trains and that’s why we’ve been spending so much time and energy around it.
Aloke Bajpai - Ixigo
Kumar says about 20 to 30% of users enable location tracking while
they are traveling. With three million daily active users across both of
Ixigo’s apps, that gives the system enough scale to weed out outliers and
provide highly accurate information.
Along with the need to build a trains app with robust, real-time
information, it also had to be small enough to be usable by travelers that may
have limited space on their devices.
And, since October 2018, Ixigo has enabled the Android version of
the app to work offline since internet service - while improving - is still
spotty on some routes.
“Seventy percent of the use cases inside the app are usable
without internet - you can search any train between any two stations, their
fares, their schedule, track location, all of that without needing internet and
all of that is within a 10MB app,” Kumar says.
Creating stickiness
With the utilitarian value of the app established, Ixigo turned
its attention to entertainment and content for train travelers.
Bajpai says
entertainment and travel are a natural fit. Most train trips in India are long
– six to eight hours is common, he says – and data is becoming more accessible
thanks to Google putting free high-speed Wi-Fi in India’s train stations (400
stations as of June 2018) and internet provider Reliance Jio rapidly expanding access
to cheap data throughout the country.
“This aligns to our vision of helping the next billion users
coming online to plan their travel and keep them engaged before, during and
after their trip,” he says.
In January 2017, Ixigo
bought mobile content startup Reach and since then has added partnerships
with digital entertainment platforms ALTBalaji, Shemaroo and Khabri.
Last month Ixigo announced the launch of an original series streaming
via the trains app, Zindagi Express,
with eight four-minute episodes chronicling a family’s “struggles, triumphs and
heartfelt moments” as they plan a vacation.
Along with original content, the app offers free access to music,
games, videos, news, sports and radio.
“We will provide immersive, seamless and a high-quality viewing
experience which appeals to both urban and rural audiences and can be consumed
on-the-go,” Kumar says.
“This is the first step in the launch of our entertainment and
news section, whose objective is to entertain and engage travelers on their
trips with curated and personalized content. With this, Ixigo has become the
first player in the travel space to offer a holistic mobile travel and
entertainment experience in a single app.”
And Bajpai says this type of content will also help them keep
consumers using the app even when not traveling.
“For many of these travelers it’s their first discovery of this
kind of content on the internet,” he says.
“It’s still very early, but we are seeing the users adopting this
section very rapidly.”
Inbound pull
It wasn’t until late 2017 that Ixigo began offering train
ticketing, and a few months after that ticketing for flights and hotels.
Seventy percent of the use cases inside the app are usable without internet...
Rajnish Kumar - Ixigo
“The best part about starting with the informational use cases is
that it creates a very strong pull for the product,” Bajpai says.
“We don’t spend much on marketing and yet we get close to six
million downloads every month. That’s still the primary reason why people come
and discover about us and then when they can discover they can also buy stuff,
it’s very easy to make them go down that funnel and trust us for transacting
with us.”
Kumar says building that trust has been a slow process, aided by
the loyal user base telling others about the app’s usefulness and accuracy –
which gets better as more users contribute to the crowdsourced data system.
Bajpai says they now sell nearly a million train tickets per
month, and both ticket sales and app usage are nearly double where they were a
year ago, with about 90% of the traffic coming organically. The trains app also
now offers booking for flights, buses and hotels.
For the fiscal year that ended March 31, Ixigo’s revenue grew 70%
year-over-year to $17 million. The company’s current gross merchandise value
run rate is $300 million and is projected to grow to $500 million by March 2020.
“There is a clear trendline of reduction of losses from where they
were in FY18,” Bajpai says.
“We have improved our unit level profitability by monetizing our
user base better, and we are likely to turn profitable within the next 12
months.”
Kumar says a big driver of this growth has been the trains app,
which Sensor Tower ranks as the most downloaded OTA app in India and the ninth
most-downloaded travel app in the world (sixth overall for Google Play
downloads).
“The reason behind our fast organic growth is because from day one
we designed our products for that set of target audience (tier two, three and four),” he
says. An example of this - the app now provides localized content in eight
languages.
“We also do a lot of active customer development. Realizing our
customer’s pain points is essential for us and that is why our tech teams
travel and conduct regular research in trains to figure out some of the
hardships train travelers face when they use apps.”
Says Bajpai: “We are sweetly positioned to disrupt the next
billion-user story in travel. With over 60% of our traffic and 50% of
transactions being driven from tier two and three cities, we currently have more
downloads from these towns than any other travel app in India.
"With the help of
localized content and optimized experience, we are on a clear path to
capitalize on growth from these cities by catering to a large category of users
who are still underserved when it comes to travel. We have seen disruptive
levels of penetration in cities like Indore, Lucknow, Patna, Jaipur and Pune
and are also attracting first-time flyers and bus bookers from these cities
through our trains app.”