Five Years of Shifting Transportation Paradigm

  8 min 20 sec to read
Five Years of Shifting Transportation Paradigm

Tamish Giri

Shashank Shumsher Thapa was brimming with enthusiasm when he introduced Pathao to motorcycle riders in Durbar Marg back in October, 2018. As he passionately explained the app's potential, one rider responded with scepticism and even ridiculed the app. 

Fast forward to 2023, as Pathao celebrates its fifth year of success, Shashank still has vivid memories of that defining moment.

Similarly, Asheem Man Singh Basnyat, the Managing Director of Pathao, has his own unforgettable encounter etched in his memory. One day, while trying to promote Pathao, one of his early employees approached a random motorcycle rider in Bhrikuti Mandap to explain the app's benefits. However, in a tragic turn of events, the rider, perhaps misunderstanding his intentions, decided to take a bite out of his arm.

Despite this unexpected setback and the painful memories it left behind, Basnyat and his team did not allow it to deter their determination. "Instead, we channelled our resolve to ensure that Pathao would become a household name in Kathmandu, offering a safer and more convenient mode of transportation while providing significant employment opportunities for all," shareds Basnyat.

Basnyat and his team persevered through hardship, including literal bites, to bring their vision to life. Five years later, Pathao has become an integral part of life in Kathmandu, to the extent that parents now request the directors to remove their children from the list of suspended riders - a testament to their resilience and determination.

The story of Pathao began with Basnyat's dream of establishing a ridesharing company to simplify and enhance the lives of Nepali citizens. However, Basnyat's journey in the ridesharing app industry did not start with Pathao but rather with Uber. He had been working for a renowned Nepali business house that tasked him with creating a feasibility plan for introducing Uber to Nepal. 

Fortunately for Basnyat, and unfortunately for the business house, the Uber project did not go as planned. It was during this time that Basnyat ventured out on his own and found his pillars: Yeshu Thakali, Shashank Shumsher Thapa, Suraksha Hamal, and Jenish Ranjit, who helped him bring Pathao to life in Nepal.

Initially, their dream was to achieve 10,000 rides a day and then expand the service across the country to reach 22,000 rides.

"This was the shared dream I shared with my core team," Basnyat shared with a joyful expression on his face.

However, the reality surpassed their expectations as Pathao achieved the 10,000-ride milestone within just three months. At its peak, in the post-Covid pandemic era when people were wary of using public transportation, Pathao was completing 80,000-85,000 rides a day. While the numbers have decreased slightly now, they still far exceed their initial targets.

Today, Pathao not only offers ridesharing but also provides food delivery, shopping, and parcel services.

Five years ago, when Pathao first launched in Nepal, the general public had limited awareness of ride-sharing businesses. Another ride-sharing company had already been operating in the market for two years. 

"However, Pathao brought a completely different standard of service to the public, effectively expanding ride-sharing to the mass market despite numerous challenges," shareds Shashank Shumsher Thapa, director and head of legal and human resources at Pathao.

Pathao faced legal obstacles due to provisions within the Motor Vehicles and Transport Management Act, 19922049 that prohibited the use of private vehicles for transport services.

During that period, Pathao played a significant role in educating people about ride-sharing and digitisation. They committed to conducting a digital awareness program to train individuals on how to use the app, and over time, people began to understand the concept.

Eventually, the Department of Transport Management regulated ride-sharing services as a mobility business for commuting goods and people by introducing a new law under the Vehicles and Transport Management Act, 2018. "Pathao now operates its services based on the same act, creating a substantial number of jobs and enhancing convenience in people's lives," Thapa explained.

Pathao started with seed funding of Rs 20 million, received as FDI from US-based Pathao Inc. Today, the company's expenses and income, in terms of overall transactions, exceed Rs 20-25 million every month. Additionally, the company has received OCR investments from various global companies.

While companies like Uber, Ola, and Pathao Bangladesh struggled to turn a profit for a long time, Pathao in Nepal reached the breakeven point by the end of its first year.

Pathao operates on a volume-based business model, with the majority of its user base belonging to the 20-30 age group. The company is currently known for offering the fastest food delivery service in Nepal.

Yeshu Thakali, Vice President and Finance Head of Pathao, explains that generating revenue and sustaining the company was initially a challenge. However, the company achieved breakeven by the end of the first year and started making a profit. The company reinvested the profit to expand its market.

Thakali said that the company needs to expand its customer base to include those aged 20-40 to reach a larger customer base. But we need to make significant marketing investments to achieve this, he added.

He dispelled the misconception that ride-sharing companies only generate income without spending money.

"In the USA and Europe, four-wheeler ridesharing services have a 25% profit margin. However, even though we charge a 20% commission here, when we consider government taxes, discounts for off-peak hours, and expenses for servers and Google Maps, our actual profit shrinks to just 2%. This doesn't include our marketing costs," Thakali added.

Pathao often provides promo codes to boost demand during lean hours when user traffic is low. These promos are funded by the company.

Basnyat pointed out that Pathao is not just a ridesharing company but an app with a broader range of services. "Pathao is an app which has ridesharing as one of its services. It is an app today, and tomorrow, I hope, it will be a super app," he said.

He also believes that Pathao in Nepal owes much of its success to a stroke of luck and several controversies.

"It all started with the transport minister threatening to shut down our business, which was followed by the media highlighting us in line with our competitors. Luckily, we had distributed some of our branding materials to our riders, and helmet which made public easier to identify and recall us," Basnyat said. "Then the news about taxi drivers vandalising our office circulated like wildfire in all the media outlets. These all worked in favour of us in marketing."

It wasn't just controversies that contributed to Pathao's success. The company executed several highly effective marketing campaigns that significantly bolstered its promotional efforts.

Suraksha Hamal, the Head of Marketing at Pathao, and her team have been running creative and non-traditional marketing campaigns for Pathao, such as Pathao Kawach, Covid Safety Awareness Campaign, Euta Gadi Kaam, Pathao Food Fest and Respect Everyone. According to Hamal, Pathao promotes itself as a young, fast, and vibrant brand, eschewing traditional marketing methods. "Pathao's core values revolve around safety, simplifying people's lives, promoting digitisation, and creating employment opportunities, making it synonymous with ridesharing in Nepal. The success of Pathao is rooted in the genuine impact it has on people, a connection that transcends the capabilities of any marketing campaign," she added. 

Safety is a top priority for Pathao. The company recruits riders with genuine documents and mandates them to attend online training sessions.

Jenish Ranjit, the Head of Customer Experience, and his team meticulously monitor all rides through online tracking, focusing on rider speeds and customer reviews and ratings. They temporarily suspend riders who need improvement and may even issue permanent suspensions. The team also monitors the reviews and ratings provided by riders to customers and suspends customers when necessary.

"In our operational structure, we have established both a Quick Response Team (QRT) and a Complaint Resolution Team (CRT) dedicated to managing inquiries and addressing complaints. The CRT is particularly adept at swift and prioritised complaint resolution," Ranjit shareds.

Likewise, the QRT team diligently tracks the feedback provided by new daily customers, drawing from a pool of new three hundred service users. This vigilance ensures that the company consistently delivers top-notch service to the customers, Ranjit added.

To enhance safety measures, Pathao has implemented an insurance policy that covers all riders and service users (up to Rs 1,000,000 for death and up to Rs 100,000 for medical), and parcels (up to Rs 2,000). Pathao offers 24-hour call support to customers via a toll-free number.

"We also motivate diligent riders by organising appreciation events on May Day and the anniversary. Likewise, under the Dashain Campaign we giveaway bikes and scooters to top-achieving riders. This motivates the riders to help us keep the customers safe, Hamal said. 

As part of its Corporate Social Responsibility program, Pathao has been providing job opportunities to three-wheeler drivers with special abilities.

Collaboration within the team has been the cornerstone of Pathao Nepal's success and Basnyat shares that all the team members have flaws more than they have strengths.

"So we cover the flaws and amplify the strengths. Five fingers are not strong enough but together the fist can break the biggest hurdles," he added.

As Pathao enters its sixth year in Nepal, it aims to evolve into a super app, starting with the introduction of a digital wallet to further connect and enhance the lives of Nepali citizens. 

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