Boodomo is on a mission to bring the Indian spare market online. They say that through their new initiative they can successfully regulate a market that is filled with spurious sub-par spares. Protecting the camWe speak to Oleksandr Danylenko Director of Operations and Finance, co-founder at boodmo on how he intends to capitalize on this market. He has been associated with Boodmo.com since January 2015. Before boodmo, he worked in different managing roles for 6 years in the biggest auto components distributor in Eastern Europe – intercars.eu. After that, he took a path of entrepreneurship and participated in several projects in spare parts sector. Being the certified Chartered Accountant he has an expertise in Business planning, Automotive aftermarket and Finance analysis.
Q1.How did you realise an opportunity for a spare part marketplace to be established in India?
Oleksandr Danylenko: The auto component sector is largely unorganized with about 10,000 players operating in the market. The demand from the replacement market is low, owing to a high cost of genuine component parts. Unorganized players dominate in the replacement market. To transform this unorganized market into an organized sector, boodmo thought of taking a lead by digitization and entering into the e-commerce business which facilitates anyone ordering the genuine parts from anywhere from a wide range of options.
Digitization is the core business proposition of the auto spare parts marketplace and connectivity facilitates new business opportunities. As the e-commerce automotive ecosystem is opening to powerful non-traditional players, digitisation is truly a disruptive trend right from procurement, payments to the entire supply and delivery chain. Digitization is a stepping stone to promote transparency and curb counterfeit in the business. The Indian auto-components industry is expected to register a turnover of over Rs 6.73 lakh Crore ( USD 100 billion) by 2020. The industry accounts for almost seven per cent of India’s Gross Domestic Product (GDP) and employs as many as 190 lakh people.
Q2.What were the challenges faced by you in adapting to the Indian Market?
Oleksandr Danylenko: The initial challenge was preparing the online catalogue for spare parts and listing the genuine suppliers, which was meticulous and thereby time-consuming. To execute the business smoothly, we also spent a lot of time in training and teaching the workforce. The journey so far has been challenging and interesting. After the launch, we were able to pick up on the market trends and as of now, we are doing well.
One of the main challenges has been to fight the problems of counterfeit products. Counterfeit parts not only pose a threat to vehicle performance but more importantly jeopardize the vehicle’s safety, endangering lives. It is commonly known that they are about 20%-30% cheaper than genuine parts, and find easy access to the market. Now, the challenge will be to create awareness about how to choose a genuine spare parts to keep the car healthy and consumers happy.
Q3. How are start-ups like boodmo striving to revolutionise the spare part market in India?
Oleksandr Danylenko: Boodmo is a unique platform that offers its users what is usually unavailable in the market to the point of being scarce. It is a one-stop window for all automobile parts that need replacement. We have created our catalogues to facilitate a wide range of options.
Customers get an opportunity to buy car parts online, which are branded and original. Our continuously updated catalogues are filled with replacement parts of highly reputed brands. Digitized platform provides auto parts suppliers with the ability to offer their products, communicate with clients, and increase sales along with their market share. Platforms like boodmo use Vehicle Identification Number (VIN) so that the spare part matches the vehicle exactly. Boodmo also offers assured returns of the spare part if a customers’ requests so. The return process is very smooth and simple. Plus all the transactions are online promoting the transparency in the entire ecosystem.
Q4. What is the status of genuine spare parts market in India?
Oleksandr Danylenko: As I have said earlier, the Indian auto-components industry is expected to register a turnover of USD 100 billion by 2020. India is expected to become the fourth largest automobiles producer globally by 2020 after China, US & Japan. The auto components industry is also expected to become the third largest in the world by 2025. Thus, with the growth of automobile industry, the spare parts market is automatically poised to boom as the demand for the auto parts will rise too.
Q5. What is the scope for foreign businessmen to start a venture in India?
Oleksandr Danylenko : There is a huge potential in India to start a business for foreign entrepreneurs. The ecosystem supports business growth and the market is open and offers equal level playing field for all start-up businesses. Also, there is a slew of reforms being undertaken by the government to promote ease of doing business. It is doable with the help of local legal support, but not easy.
Q6. Choosing a car should factor in the availability of spare parts as well. What is your thought on it?
Oleksandr Danylenko: Often people are seen missing the vital link while purchasing a car, that is, the availability of spare parts and aftermarket sales. Negligence on an understanding of the market for spare parts and components for motor vehicles, leads to great trouble in later stages and at times, the vehicle remains stranded and many times abandoned, due to unavailability of parts. There is definitely lack of knowledge on this front as most of the brands do not sell the spare parts openly and if the particular model is old, imported or niche, the problem can be acute. A careful examination of the availability and price of parts is a must before finalising particular brand and its model.
Also, all the parts are not easily available in all the regions of the country so it’s a huge problem for consumers in remote regions.
Q7. How should one choose the genuine spare parts?
Oleksandr Danylenko : The most important step is matching the model and variant of the car. It’s a meticulous process, first, choose your car brand or make e.g. Maruti Suzuki, Chevrolet, Ford, Hyundai etc. Then choose model and modification e.g. Hyundai i20 1.1. After that, choose category e.g. filters, clutches, etc. and then finally choose spare part e.g. air filter, clutch disk etc.
The modern day internet savvy consumer has access to a broad spare part aftermarket that is replete with a plethora of sellers who make promises of providing genuine and cheap auto parts. However, one should exercise caution while making a random purchase as anything, which is too good to be true, is often fake and/or of inferior quality. Hence, it is of utmost importance that you buy product from not just a user-friendly website that saves your time, but also a reputable company with a tested record. Compare all the prices and weigh all consideration in order get the best deal of the transaction. You must know that a marketplace offers you a greater opportunity to compare prices between same OEM products (as of OEM websites) and OES or aftermarket.
Another thing to keep in mind while purchasing a spare-part is to ask for guarantee/warranty or return period for the spare parts. It works as both, insurance and also guarantees the genuineness of the item.
Q8. What are the challenges for the auto component marketplace in the FY 2018-19?
Oleksandr Danylenko: Today, the industry is at the crossroads with challenges that might hurt the sector in the coming months of FY 2018-19. The government has raised customs duty on specified spare parts/accessories of motor vehicles, motor cars, and motorcycles from 7.5% to 15%. Imported duty on truck and bus radial tyres has been increased from 10% to 15%.
The recent development on the delay in releasing of spare parts from custom office is hitting the timely services and delivery to customers. The release time which was earlier two days is now extended to two weeks which is a huge delay. This might lead to the increased use of counterfeit products, which is a worrying factor for the marketplace. The need of time is to ensure timely release of spare parts.
Due to its deep forward and backward linkages with several key segments of the economy, the spare part marketplace for the automobile will be hit. The reduction in demand on account of inflation of prices will be a reality in coming months. As the industry is having a strong multiplier effect on the growth of jobs, it will also be impacted.
Q9. What all companies and segments are you selling spare parts for right now?
Oleksandr Danylenko: Currently we are working with spare parts for passenger cars only. On our website, you can find catalogues and updated offer for almost all car models running on Indian roads.
Q10. Tell us a bit about the present business size and your vision in the next few years
Oleksandr Danylenko; The number of visitors reached, online, is 5 lakh per month. More than 10,000 customers were served in the previous year. With approximately 40% of returning users and rising conversion rate, we optimistically look forward to growth in the next financial year. We are going to open new hubs in Tier 1 cities to avail 1-2 days delivery to a wider customer base, meanwhile improving our catalogues and offers.