Hamish Nuttall, the chief executive and founder of Nakedbus.com, says he knows enough about IT “to be dangerous”.
It’s meant to be a self-deprecating comment, but given Nakedbus’s progress to own a claimed 30% of the New Zealand market after seven years in business, it has an edge to it.
It’s a danger Nakedbus’s main incumbent competitor is feeling, and reacting to, as the lean online challenger disrupts the long distance bus transport market in New Zealand.
This week that incumbent, Intercity Coachlines, took Nakedbus to court for using the term “inter city” in a Google Adwords campaign. Intercity is claiming breach of trademark. Naked bus argues, in part, the term is a generic part of the English language – as in “international”.
It isn’t the first time the two companies have come to legal blows, but in the end such stoushes are a sideshow to what is, in essence, a battle of rival business models.
Before founding Nakedbus, and after a long career in bus transport in the UK and in New Zealand, Nuttall says, he consulted on “the soft end” on areas such as user testing.
“I have the ability to talk in business and IT industry terms,” he says.
That was one personal asset he brought to what is his second transport startup (the first, a municipal service, failed and he went away to “lick his wounds”).
The overall aim, Nuttall said of Nakedbus, was to be able to deliver services profitably at an average seat price half that charged by competitors.
To do that, traditional costs such as call centres and agency sales had to be kept low or eliminated. That even went as far as, until very recently, not owning any buses.
Error rates had to be reduced too and utilisation increased.
“It was important the whole process from buying a ticket to getting on the bus was automated,” Nuttall says.
A booking engine was developed based on Nakedbus’s unique pricing rules. Early bookers can get a seat for as low as $1 with the price offered then rising according to a formula.
Initially, automated emails confirmed customer bookings and included a map of available bus stops - and even, in the early days, a picture of the bus. Waybills were also sent to drivers automatically.
Now, mobile apps can serve both the customer and the driver and store trip and booking information when there is no mobile coverage. The apps also allows drivers to sell cash fares effectively, using the same system and pricing algorithm used by passengers online.
The apps also provide a lot of other data, allowing constant testing of pricing and new ways to improve conversion rates.
Nuttall jokes he once thought that when the system was up and running he’d be able to go away and sip lattes, but that was never going to happen. There is still plenty of room for further development.
Software was developed and managed externally to Nakedbus’s specifications by local providers Idiom and Fronde, Nuttall says. The company spends between half a million and a million dollars a year on IT, a big capital spend for what is still a small company.
Open source software was specified from the get-go.
Nuttall said the LAMP stack (Linux, Apache, MySQL and PHP, Perl or Python) and “a lot of Java” are used for both the front and back ends of the system with a lot of code reusable between the two and for mobile development.
“I believe open source is the future and it gives us more control,” he says. “Java makes it simple to make booking forms smart.”
As to the website, that’s based on WordPress.
“It’s working fine,” Nuttall says, conceding it is being pushed to the limits.
A new mobile site was scheduled for launch in December before a planned merger of the two sites so any changes apply to both.
Nuttall says Nakedbus is profitable and still growing 20% a year. Much of that growth is new rather than coming from competitors, he says, because Nakedbus is so cheap people who would otherwise drive are now hopping a bus instead.