Start-up Droom brings 2nd-hand auto market online; from Maruti Suzuki Alto to Rolls Royce, deals vroom
Droom, an online marketplace for buying and selling used automobiles including cars, scooters and bikes, sold its first vehicle in January 2015. In less than four years of operations, it has managed to generate three lakh transactions worth Rs 4,500 crore. Though, the firm started with selling of used vehicles, it has now moved to new vehicles as well with the latest addition being electric vehicles
From selling a used Maruti Alto worth Rs 54,000 to a Rolls Royce worth Rs 3.4 crore, the second-hand automobile market has been brought online like never before by a start-up firm Droom. Droom, an online marketplace for buying and selling used automobiles including cars, scooters and bikes, sold its first vehicle in January 2015. In less than four years of operations, it has managed to generate three lakh transactions worth Rs 4,500 crore. "India is a low trust market, inherently people don't trust here, unlike in the West. Bringing a used vehicles category online in India was not an easy task. We are neither online classified nor we are discovery platform, we enable end to end transactions," Droom founder Sandeep Aggarwal told DNA Money. Since the start, it has raised in total about Rs 421 crore in five rounds of funding. "We plan to raise another Rs 200-300 crore this year. Though, we have not utilised funds from our last funding yet," he said.
We have incorporated tools and technology in our portal to bring in trust and transparency for the buyers of such vehicles, he said. Though, the firm started with selling of used vehicles, it has now moved to new vehicles as well with the latest addition being electric vehicles.
According to our estimates, 65% of online transactions in the automobile space goes through our platform, while the rest 35% is enabled through indirect competition which is not even online, Aggarwal said. India is the third largest auto market after the US and China. The total market size of the automobile industry is around $180 billion, out of which only $1 billion is online.
Droom also has luxury items listed on its portal such as Lamborghini, yacht and plane. Though, not many buyers come for this, there is request for rentals for all these products. Aggarwal said for every new car sold in India, 1.5 used cars are sold and similarly, for every new two-wheeler, 1.8 used two-wheelers are sold in India. In Germany, for every new car, 2.6 used cars are sold and in the US, for every new car, 2.6 used cars are sold. However, in China, a new car only 0.4 used cars are sold. About 96% of the company's business comes through used vehicles and rest 4% through new ones. It expects the new vehicles business will go up 10-12% in the next two years. "The aspirational value of the people is increasing. People who own two wheelers want to shift to cars, while those who have hatchback want to own sedan or an SUV," Aggarwal said.
He expects by 2020, in India two used cars will be sold with every new car and this ratio will increase to 2.5 by 2022. This is the second venture of Aggarwal, who has been earlier credited with the launch of another online portal ShopClues.
The company which started with Delhi market has now expanded to 500 cities. "We get 20,000 visitors monthly on ours site, about 65% of our traffic comes through mobile and at any given point of time, we have Rs 15,000 crore inventory listed on our platform," he said.
The future is also looking bright, he said, adding the company will end 2018 with Rs 8,000 crore in annual gross revenues, Rs 250 crore in net revenues, and expects to break even in next 12 months. It generates the maximum traffic generated from Delhi, Bengaluru and Mumbai, while in terms of business, the order is Delhi, Mumbai, Pune. Droom also seeing good traffic from emerging cities including Ludhiana, Jalandhar, Patiala in Punjab, Surat, Jaipur, Kochi, Bhopal, Indore, Kanpur and Allahabad.
In mid last year, the company started selling new cars as well including electric two-wheelers. We plan to start selling even new electric cars, and insurance, auto loan and RC registration services along with it. People will get to test drive at their doorsteps," he said. This week it also started selling and buying pre-owned taxis on its portal and aims to tie up with Ola, Uber and other taxi companies in the future.