This is a platform to buy and sell second-hand cars with a fresh perspective. Droom, started by Shopclues founder Sandeep Aggarwal, prides itself in being the only platform that doesn’t work as a listing platform, like other websites in this space. “Unlike others, Droom is the only website that enables transactions between buyers and sellers,” Aggarwal tells FE.
Another aspect where it scores is: It promises to refund the registration amount if the deal does not materialise.
Aggarwal says the platform offers sellers three ways to sell their vehicle — fixed price, best offer and auction. The buyer has to pay Rs 2,000 as locking fee, after which the listed vehicle is taken off the site. The buyer gets the right to contact the seller, check the car and close the deal within five days. Also, at the time of final payment, the locking fee gets adjusted and if the deal falls through, it is refunded.
From September, Droom will also offer auto insurance and auto loans, as well as roadside assistance and annual maintenance contract. It also plans to get into selling brand new cars by next month.
“We have a capital light model. We expect to be a fully profitable company by 2016,” Aggarwal says.
The company’s annualised gross revenue is around Rs 120-150 crore and it has 6,000 plus listings by roughly 850 sellers.
Droom has a tie up with Mahindra First Choice for automobile services and AXA for insurance services. Mahindra First Choice conducts inspection of vehicles before they are listed on the website.
“The second-hand car market in India is 1.5 times the virgin car market. At a time when customers are becoming increasingly tech savvy, OEMs are expected to tie with these e-commerce websites to sell used cars, as it is economical. The culture of buying first-hand cars through these websites is not prevalent in India, but with the spread of the internet, customers can check out a car in brick-and-motor dealerships and order from an e-commerce website. In that case, OEMs will have to decide how much discounts they will offer to these websites vis-a-vis their dealers,” says Rajiv Singh, partner, KPMG.
After finishing two rounds of funding and raising Rs 50 crore so far, the company recently received funding worth Rs 100 crore from Lightbox Ventures.
The money will be used for expansion in India, Indonesia, Malaysia, Singapore and Vietnam and subsequently in western Europe and the US. Most of the capital will be used to develop technology for the platform and expanding internationally. Droom will start expansion of its operations after Diwali.
When asked about the kind of discounts it offers, Aggarwal explains: “Discount is one of the marketing strategies, we don’t do any TV commercials. Discounting as a percentage of gross merchandise value (GMV) is less than 5% for us. Marketing spends as percentage of GMV is below 10% in total.”
Since the launch of the application and website in January, it has sold about 500-600 vehicles a month, of which 50% is car sales. On an average, Droom sells eight-10 cars and 10-11 motorcycles per day.
“The second-hand car market in India is very unorganised and is expected to grow substantially in the future. I don’t think it will be easy to make money for these websites as dealers get less than 5% share in a transaction. Most of them make money through other services like repairing. These players need to wait for five-six years before they can develop a sustainable business model. I think it would be tough to generate profits by 2016-17,” feels Abdul Majeed, partner, PricewaterhouseCoopers.