“Ibibo” name has an inspiring story behind it. As per Mr. Ashish Kashyap (Lead Ibibo Group), around 2005 they picked phrase – I Build. During 2005 the power of creating content and applications went into hands of consumers. Post 2005 interconnectivity of consumers on internet was the source for phrase – I Bond.
I-Build and I-Bond led to ibibo and this phrase is the soul of all the work which the group has been doing since its inception.
Started in 2007 as a Social Networking Platform, ibibo group entered into Ecommerce business and then successfully established itself as a Travel aggregator. Ibibo evolved as an incubator which created startup ecosystem by venturing through different business model by simply keeping an eye on market demand. During its journey Ibibo introduced different verticals into its business model by themselves as well as by ibibo acquisition.
Brain behind Ibibo Group – A Gambler
Before starting entrepreneurial journey Ashish Kashyap had set up and launched Google India’s domestic operations as their Country Head, Indian Sales and Operations. Before that he was the General Manager, E-Commerce at Indiatimes, wherein he built and architected a host of innovative applications for the portal ranging from ‘online auctions’, travel & shopping. This experience readied him for future role at ibibo.
Learning from Indiatimes stint – During 2005 there were six million internet users and less than a million buyers. Indiatimes were able to create a $20-30 million business with transactions through its airline auction engine. It was able to change the way consumers booked air tickets. Biggest learning from his Indiatimes stint was –
- Open to trial & errors.
- Being resilient.
- Trick to attract customers – If you deliver something valuable, which is innovative, the consumer actually embraces it.
Learning from Google stint – As per Mr. Kashyap “The biggest learning from Google was how to build a startup within a large organization. So when I started the incubator back in 2007, we followed that concept, it helped us to execute very fast. Even today, when we are a large company with more than 2,000 employees, we are able to innovate fast by creating self-sufficient and stealth-mode units.”
The key things he learnt at Google which helped him in this journey of Ibibo are:
- Robust hiring Process
- De-centralizing / creation of PODs for faster execution.
Ibibo acquisition story is incomplete without a discussion of its failed ventures. Ibibo group has experimented into various business models right from social networking – Losing to Facebook, to Gaming portal – Ahead of time, to Ecommerce portal – Flipkart destroyed them, to Classifieds – Not fitting into core business of Ibibo group. And finally they have settled into travel and hospitality sector which once was a side business for the group. Here are the details of how Ibibo group has walked across different business models.
[A] Social Networking Portal – Ibibo was started in 2007 as social networking portal covering the blogging platform, social networking, gaming etc. The direct competition of this social networking portal was Orkut, Facebook, Hi5 etc. Ibibo shut downed its social networking portal around 2012.
Ibibo had about 4 million users, roughly 3% of the total Indian Internet population. By contrast, Facebook had about 63 million users in India. Ibibo was considered as a supporting platform for reaching the Indian market; Facebook clearly dominated the region.
As per Kashyap, “I’m not scared of creatively destroying. We started off in social media and we built up a good amount of traffic, but social media is about the network effect, and that means that it’s a winner-take-all situation. In that particular scenario, you can’t compete with a global leader.” Ibibo though gained a name in internet users; its social network service had not been able to create any buzz.
[B] Gaming Portal – Loosing the social network battle to Facebook, Ibibo was quick to alter its focus area. With entry of online gaming players like Zapak, Miniclips and Yahoogames etc, Ibibo launched its gaming portal to tap the vast potential of Indian gaming community which was predicted to generate the revenue of 1500 Crore by 2014.
Ibibo was trying to become distributor of online games developed by external game developers. Ibibo had affiliate ad network system which was there to help in fast distribution of games to the masses. Ibibo also had local payment system which was there to support game developers for generating quick revenue.
Initially it seemed to have great potential, but subsequently it also failed to take off. Major reason have been – Indian mindset is different from countries where gaming is famous ( viz. – China, South Korea). Ibibo had build free social games on freemium model. One needed to get game for free and then had to pay for virtual items. In India virtual identity was not a priority. People were more interested in real life problems than a virtual world.
[C] E-commerce – With launch of Tradus, Ibibo entered in e-commerce market in 2009. The direct competition for Tradus was Flipkart, Amazon, Snapdeal, ebay etc.
Tradus changed the business model from a location-based mobile marketplace to fresh food & grocery e-tailer in April’14. It added groceries vertical starting from Delhi. In this service, users can order various groceries from its mobile app. Further Ibibo’s hyper local model was not able to face the competition of market biggies and Tradus was shut downed in Oct’2014.
It is said that given the operational nature of grocery business and importantly, the low-margins, there was very little patience left in Naspers group to continue with the experiments.
[D] Travel Aggregator – Ibibo started its air travelled focused portal Goibibo in 2009 and introduced the other vertical of transportation sector subsequently like hotel booking, bus ticketing, carpooling etc.
Today the entire business model is focused on covering all the sectors of transportation. The direct competitions for Ibibio are aggregators like Makemytrip. Yatra etc and the individual players like BlaBla Car etc.
[E] Payment Gateway –Ibibo launched its payment portal PayU in 2010 which was sold to Naspers in 2014 and Ibibo became a stakeholder in Naspers Global Payment Unit.
Ibibo Group – Acquisitions
Here are the details of ibibo acquisition of other business model to enhances its reach –
[A] Gaadi [2011, Target – to Capture the Business Vertical of Used Cars Buying and Selling, Deal Value –$2 million]
In 2011 Ibibo group acquired Gaadi to develop its business vertical in Used and New Car Auto portal. Gaadi was sold to Cardekho in 2014 with deal amount of 11 Million USD.
Ibibo Group CEO Ashish Kashyap stated for this deal that the acquisition would enable to focus on their online travel portfolio that includes online travel agent Goibibo, bus booking site Redbus, B2B travel portal Travel Boutique Online and the bus tracking site YourBus.
However after selling Gaadi to Cardekho Kashyap added,” We were looking at opportunities in the classifieds space. Later, we realized that it was not fitting into our core business. It turned out to be a drain on our management bandwidth so we got out of it.”
[B] Travel Boutique Online [2012, Target – to Enhance Travel Vertical of ibibo, 51% stake]
Travel Boutique Online offered a gamut of travel services such as airline, train and hotel reservation and holiday package deals. It also provided charter and choppers and helped with car rental, bus bookings and travel insurance. Its revenues stood at 90-110 Crore.
ibibo acquisition signaled a rapid evolution of the country’s travel industry which was poised for strong growth as well as consolidation. In a market that was largely fragmented with almost 85% dominated by small, unorganized or regional players, travel companies are using an inorganic growth strategy to grab a bigger market share and expand faster.
[C] Redbus [2013, Target – to Enhance the Travel Vertical of Goibibo with Bus Booking, Deal Value – $138 Million]
While the group was struggling to carve out a space in e-commerce, and had started off dealing in air tickets under the Goibibo brand, it had made some smart acquisitions redBus.in was one among them.
The idea of getting into these businesses was driven by removing pain points for end consumers. Ibibo focussed on providing better facilities as per as faster transaction speed and refund of payments in case of cancellation.
Phanindra Sama first visualized the idea of a bus ticketing service when during the Diwali season in 2005, he failed to get a bus ticket from Bangalore, where he was working for Texas Instruments, to his hometown Hyderabad. He thought some agent somewhere might have had a ticket and that ticket might have remained unsold, and all involved – him, the travel agent, and the bus operator – had lost an opportunity. At the time of sale, Redbus aggregated 228,000 seats per day, sold more than a million tickets a month and had over 600 employees.
As per Ibibo Group, the acquisition of Redbus would help it to expand and diversify its existing travel assets such as Goibibo.com (online travel aggregators) and Travel Boutique Online (a business-to-business online travel platform for agents). The combined volumes of redBus and Ibibo Group’s existing travel assets would make the group one of the biggest online travel companies in India.
[D] YourBus [2014, Target – to Enhance Redbus Operations]
In 2014, Ibibo group acquired YourBus in a fresh deal for sector consolidation.
Founded in 2011, YourBus was a GPS-based tracking platform, which solved problems for both bus travelers and bus operators. Bus travelers could access real time information regarding the location of a bus on their mobiles as well as online. Furthermore, important information such as bus delays and time of departure was pushed to passengers via both SMS and web notifications.
Ashish Kashyap, CEO of Ibibo Group stated that from technology point of view YourBus sits on the top of Redbus. With this acquisition Ibibo would be able to integrate the technologies and analytics of both the portals into one.
He further added “Our key motivation to acquire YourBus is to enhance passenger experience at redBus and Goibibo, whilst at the same time providing additional technologies and analytics to the Bus operators so as to increase their efficiency in the marketplace.”
[E] Djubo [2015, Target – to enhance Ibibo Accommodation Vertical]
In 2015, Ibibo group acquired a stake in Djubo. Its main services include helping customers in domestic and international flight bookings, hotel and holiday bookings and bus bookings. Djubo was a cloud based 360 Hotels Sales Platform and managed functions such as booking confirmations, room hold requests, room queries, online channel partners, booking engine, payment follow up and much more through a single interface Djubo group had an invisible online channel manager integrated system with a cloud based CRS (centralized reservations system) that represents the latest advancement in technologies that helped the hotel to maximize its revenues.
With this Ibibo group started a venture of providing a single solutions to the business travelers & tourists by helping them in planning their journey in a better way. Right from flight booking to bus booking to hotel booking, everything was available on Ibibo group offerings.
FS Outlook –Ibibo Acquisition: Future Potential
Since Ibibo is focusing only of transportation sector (already exited from e-commerce and social network), FS believes the future potential of ibibo acquisition is as follow –
- Travel Guide Portals.
- Cost effective alternates to accommodation.
- Map integrators and developers.
- On journey food service providers
- On demand car/luxury car service providers.
Stay tuned with FS Labs for more updates.