There is scarcity of proper mass transit in major cities of Pakistan. Also, the people who have to travel to commercial centers for jobs in city on daily basis from residential areas have to face difficulties due to poor public transport system. This situation, apparently being problematic, gives a feasible business opportunity to the private pick and drop service providers. A primary research was carried out to investigate the different aspects of the business. It was found that the biggest consumers for the service are students and the working class people, especially women who go to offices on daily basis. With increasing urbanization, the pressure on the public transport is increasing.
A vast majority of people do not have personal transport. Public transport is either unavailable on their route or is too inconvenient. Thus a lot of people, especially women, prefer pick and drop service instead of using public transport. Therefore, a number of people have adopted this business for its sure returns with relatively small investment. Besides the main revenue from regular customers, the vehicles are used on weekends and at night, for picnics and different events to generate additional revenues.
A route is fixed with stops to pick people from each place at specific times. The flow will be from one area to other area depending upon the number of customers from each area. A plan for the route to be followed and time could be made depending upon the customers.
The service is suitable for populations not residing in top posh areas in cities, as most of such people use their own vehicles. Whereas, relatively middle income population residing in cities like Karachi, Lahore, Rawalpindi-Islamabad, Peshawar and Faisalabad is an ideal target market for this business and thus aforementioned locations are suitable locations to start this business.
The business with two vans will have the capacity to serve around 37 passengers on a typical workday at the start. The office van will give service to 7 passengers and the school van will take two shifts of school kids in the morning and a shift for tuition in the evening. Assuming 10 kids in van in each shift. As the business will grow, with the addition of one more van into the fleet from fifth year each year onward, the operational capacity will be increased.
Success Factors for Pick & Drop Service in Pakistan
The main critical success factors that contribute towards the successful execution of business are following:
- Good marketing to be known among people who are seeking such service. For example, marketing through pamphlets, word of mouth, magazine ads, social media, display of contact number on vehicles etc.
- To be punctual and to build a relationship of trust with the customers is important.
- Drivers with smooth driving skills and professional and courteous attitude.
- Listening to customer’s feedback to improve the service further.
- In cases of some unforeseen vehicle breakdown, there must be some prior arrangement deal with someone with a van to provide the service un-disrupted.
- Proper maintenance of vehicles to avoid failures and breakdowns.
The target market for this service would be divided into following categories:
Students: The first category is the college/school-going students. Many students have to take public transport, which is not convenient and may require the students to walk for a certain distance to get to their destinations. Thus, especially the female students prefer to avail a pick and drop service. Some female students even hire a rickshaw. Therefore, if they can get a proper pick and drop service with a sufficient number of students inside it, a sense of security is raised as well.
Office Employees: The second segment is the office-going people. They are also potential target customers, where demand for pick and drop services is generally high. The office-going people are generally charged at higher rate and thus serve as premium customers in the business.
Other Activities: Additionally, in the free time, at night and during weekends, vehicles could be used for providing services to people who want pick and drop services for wedding events, picnics, etc.
Investment Required for Pick & Drop Service in Pakistan
The project has a healthy revenue stream and hence has a high IRR of 45%. Payback period is calculated to be 3.40 years and NPV is estimated at Rs. 2,429,817. Details of these financial can be studied in the pick & drop service business plan in Pakistan by SMEDA.