To cash on the high internet penetration in some of the developed markets overseas, home-grown online platform Droom, which deals in the sale and purchase of second-hand cars, will set up base in countries like Singapore, Indonesia, Malaysia, Philippines, Vietnam and Thailand by mid-2016.
The online platform started in January 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 but actually enables transaction. It competes with pre-owned car sellers like Mahindra’s First Choice and Maruti Suzuki’s True Value, which sell both offline and online.
Explaining the rationale for foraying into the overseas market, Aggarwal told FE, “There is not a single large online used car buying platform which is global in nature. The six countries put together is one-fifth of India’s used car market, but the internet penetration in them is much higher.” Analysts said that the conversion rate on high-value purchase items are lesser in India but is expected to be much higher in international markets.
India has an internet penetration of 12%, while Singapore has 98%, Thailand 78% and Malaysia 66%.
Due to high purchase value with lower volumes, Droom takes an upfront fee of 2% from interested buyers. However, if the buyer doesn’t like the used car after seeing it for real, the money is refunded within 72 hours.
To enter these high-potential markets, Aggarwal has put together a team of 12 people in areas of technology, product management, marketing and business development. A large part of the $20 million Droom raised a few months ago will go into the expansion in these markets.
The company will not have big teams in these countries — just four or five people will be based there — as everything from technology to back-end support will be handled from India. “We will create an Airbnb -and an Uber-like lean model. The launch team will be small and that is how we will expand,” said Aggarwal.
It’s not that the ride will be smooth for Droom in these markets as in each market there’s local competition. For instance, Malaysia has 11 car marketplaces, Indonesia has 7, Thailand 13, Singapore 4, Philippines 9 and Vietnam a whopping 22.
The company doesn’t see international business overtaking its India business anytime soon. By the end of 2016, revenue from international operations will be 15% of its overall revenue.
Currently, at Rs 20 crore a month and 1,000 transactions a month, Droom’s gross merchandise value (GMV) on an annualised basis is Rs 240 crore. Droom makes 1.5% to 2% of the GMV.