TAKING PRIDE IN PRE-OWNED VEHICLES
Droom, an online marketplace to buy and sell used cars, bikes, yachts and even private jets is today a Rs 1,200 crore company. Sandeep Aggarwal, Founder & CEO, Droom, talks about the strategies that went into achieving this By Samarpita Banerjee Q] Droom is planning to invest Rs 100 crore on its promotional campaign this year. Tell us more about your plans. Q] You recently announced that Droom would also sell new cars. What advantage will Droom have over e-commerce players who are already in the field? Q] Since trust is a crucial factor, how are you convincing consumers to buy products from Droom? Q] Droom offers products ranging from cycles to even yachts and private jets. What kind of reception has it got? Q] After Shopclues, how did Droom come about? Q] What are the challenges for the category? Q] Did a lot of learning from creating Shopclues go into creating Droom? Q] What will your marketing strategy be for the next few years? @ FEEDBACK
We have already started spending a part of the Rs 100 crore. We will spend around Rs 40 crore on our TVC, Rs 20 crore in various ATL-BTL activities and another Rs 40 crore on Digital, out of which two-thirds will be invested in Social Media and videos. We recently completed shooting our campaign for TV, Outdoor and Radio which will run for around 45 days. From November 1, we will launch our next set of ads for TV, Outdoor, Print and Radio. The third set of ads will be launched sometime in March. Through our campaigns, we aim to instill and increase the joy of owning pre-owned vehicles.
Most e-commerce players in the market today sell all kinds of products because their gross merchandise value (GMV) has dried up and they aren’t seeing growth. For example, an average order size of Shopclues is roughly Rs 1,900. For Flipkart and Snapdeal, my guess is that their average order size will be around Rs 3,500. So now, when you suddenly sell a motorcycle or car, your average selling price becomes Rs 75,000 or Rs 3 lakh. At a time when the GMV growth of these companies is dissipating, many start selling tyres, gold or even vehicles. However, we did not want to get into offering new vehicles initially, because we thought we wanted to go there when we could add some value. Currently, the value we are adding is – a 50% loan guarantee and a promotional campaign where there is 0% interest rate, a test drive at your doorstep and tie-ups with companies to give away freebies. We are also working on several innovations which we will soon announce. The moment of truth in buying and selling vehicles is trust, transparency and pricing, and that’s what we are communicating through our marketing messages.
We have built a lot of things which were not there in the Indian eco-system. For example, we created Orange Book Value, India’s first and only algorithmic pricing engine. Before this, valuing used vehicles was like pulling a number out of a hat. We spent 13 months and millions of dollars and have created an extremely advanced algorithmic pricing engine. Based on the make, model, year, kilometers done and condition of the vehicle, I can tell you the value of the vehicle. In the last eight months alone, we have seen 85 million pricing queries through the tool. We created another app called Eco. Any mechanic can download Eco, take an online exam and become an Eco-certified technician, following which he will start receiving orders from Droom. We have also launched a program called Full Circle Trust Score that uses data sciences to build trust.
We offer vehicles like jets, yachts and even premium cars like a 1937 Austin. We have 1970s Lambretta scooters too, along with vintage and superbikes. Droom has been commercially available since January 2015. Today, we are actually doing Rs 1200 crore in analysed GMV. In my view, there is no other consumer Internet company in any category that has gone from 0 to Rs 1200 crore in gross revenue in 12 months. Secondly, our GDP is growing at the rate of 7%, new vehicles are growing at the rate of 9%, used vehicles are growing at the rate of 15%, e-commerce is growing at the rate of 30%-35%. And Droom, even at Rs 1200 crore, is growing at the rate of 700% year-on-year. So, we are growing 100 times better than the national average, and almost 50 times faster than the used vehicles market growth. Till September, we were only available in New Delhi but now we are present in 167 different cities. We have across 70,000 auto dealers who have used our platform and almost five million monthly visitors are coming to us through various apps.
I would not have started Droom if India did not have Quikr, OLX, CarDekho, Carwale and CarTrade. Our country needed online classifieds as well as discovery platforms which are more of media play. We are the only transaction platform. In the US, first came the retail stores, followed by organized retail stores, catalogue and then e-commerce. It was a natural evolution. In India, there was no organized retail, no catalogue. To some extent, e-commerce is leapfrogging it. Almost 100% of the automobile business is unorganized. Online classifieds are present in over 150 categories, offering free listings. Discovery platforms are offering some content and lead generation. But the moment of truth in buying and selling used automobiles is again, trust and transparency in pricing. With Shopclues, I was a late entrant, being the 35th e-commerce company. In the first six months, we became the fourth largest. Here, we are No. 1. India is the third largest automobile market in the world, a $125 billion annual industry, and 0.3% of that is currently online. We own half of that. We almost created this category. The remaining half is enabled by the classifieds and discovery platforms. This industry will go from $125 billion to $250 billion by McKenzie estimates. Our estimate is that this 0.3% will become 8%. We are trying our best to own 50% if not 100% of that. Right now, we have no competition, and 3-4 years ahead of anyone in terms of technology and use of data science.
A lot of classifieds had advertised heavily and made a lot of misleading promises back in 2013-14. They had made promises which they were not capable of fulfilling. So we had to work hard when we started, but people started understanding our value proposition. Also, we need a lot of good talent which is not always easy to find. Thirdly, since we have grown very fast, we don’t have a lot of systems and processes in place and are always looking out for people who require little hand-holding and can start contributing from day one. We also want to build data which has been missing till now in the Indian eco-system. Currently, we are working on Droom History which will give you the history of any vehicle. The problem is that currently all the data exists, but with different sources, and it is difficult to bring all of that under one roof. The government has a lot of data at its disposal. Had such data been available to us, it would be so much simpler to help buyers because they could have the complete history of the vehicle.
It’s almost like Darwin’s Theory of Evolution. When I started Shopclues, I hadn’t lived in the country for more than 15 years. Then, a lot of firsts happened to me - living in India after 15 years, becoming an entrepreneur, un-learning Silicon Valley and learning India’s ways. During Droom, I did not have to go through any of these. I already have a big network. When I started Shopclues, I gave Rs 5 lakh in cash to someone who ran away with the money without building my office. Hopefully, I will not make such mistakes again. When I created Shopclues, it was three years ahead of its time. When I started Droom, it was five years ahead of its time, and I could do that because I created Shopclues before. There is a higher use of data sciences and technology now. At Rs 1200 crore, we only have 176 people. When Shopclues was worth Rs 1200 crore, it had 900 people.
Our biggest marketing strategy is to increase the sense of pride and joy of owning a pre-owned vehicle because people are uncomfortable about using such vehicles. There is an anxiety about the vehicle’s condition too. Secondly, we have built Full Circle Test score and Eco and we will also be working on two other products that will be launched later in the year. Our marketing strategy is to increase awareness about these tools available both on and off Droom.
samarpita.banerjee@exchange4media.com
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