A Smashing Business Model, 30000% Growth… What’s Next?

Sandeep Aggarwal, founder Droom, has put his chips on this online automobile marketplace model; 4Ps B&M queries him on the current and future growth plans

Droom is India’s first marketplace for automobiles. How did the idea of Droom come about?

One of the most initial thoughts was to bring transparency for a marketplace which is niche for automobiles. In India buying and selling used automobiles is completely broken and full of pitfalls. Thereafter, I came up with 52 ideas at Silicon Valley, each one of them I thought would make a billion-dollar company in India. Then I compared those ideas on around about three dozen parameters. After comparing and filtering them, I was left with just two ideas and eventually Droom made it to the final decision.

From an aircraft worth about Rs. 64 lakhs to a bike worth Rs. 3,500, everything is available on Droom. How does Droom manage such a wide business horizon?

Droom aims to benefit its consumers through great experiences. We also believe that this is a time for the evolution of the automobile sector in India as it is getting more organized. Also, we want to bring forth the idea that automobile should not be limited to just wheeled vehicles.

For example, there are two aircraft that are available for sale on Droom: a Legacy 600 for INR 64.52 crore and Hawker 900 XP for INR 45.99 crore. At the other end of the spectrum, it also markets two-wheelers: the cheapest, a Hercules Sparx 24-inches bicycle, costs INR 3,900.

With this widening business horizon, end-to-end facilitator Droom is all set to raise another up funding in the near future to fund its expansion plans in six South-East Asian countries and Europe in the next two years. Founded in April 2014 in Silicon Valley, Droom came to Gurgaon in India in 2015, funded by some leading global venture investors, raising INR 130 crore so far. In the last 16 months, we have roped in 41,000 automobile dealers with 1.5 lakh listing of vehicles, having a total value of INR 2,500 crore.

How comfortable are Indians with online automobile transactions? What about aircraft transactions?

Automobile freaks are heavily relying on online marketplaces for purchasing vehicles. The trends are very visible and super strong. We sold vehicles worth INR 5 Lacs in January 2015, our first month of revenue and we reached INR 15 crores in automobile transactional revenue in July 2015.

We have grown 300 times (not 300%) in seven months. And this is as strong a trend as it can get in support of evaluating the traction for Droom as India’s first marketplace for automobiles. We have sold vehicles worth INR 50 crores in the last seven months. At present, we are witnessing a low number of aircraft transactions but with the changing lifestyles of the country’s urban population, the aircraft transactions are expected to catch up fast.

Today, Droom has the largest geographical footprint, with its presence in 145 cities across India. How did you achieve so much so soon considering you started the Indian operations in 2015?

We have grown 300 times in 7 months and the reason for this growth is that unlike other offerings online that spend way too much money on marketing, we are solving pain points for buyers and sellers. The used automobile business suffers from trust and pricing issues for buyers and we are solving those problems with the use of technology and data sciences in a way that has not been done before. We are solving them fundamentally and that is the reason we are being rewarded by the overwhelming response of our offering by both buyers and sellers.

A good marketing and advertising strategy is one of the key pillars of a brand’s success. Droom came out with a very interesting campaign “Save our Vehicles” on April Fool’s Day. What was the idea behind this? What was the response? Which have been your most successful campaigns?

Vehicle abuse is an ugly truth today. Every day we see cars crashing and burning in the most ridiculous way, while in real life we come across people not paying heed to such mishaps. It is to counter these instances of vehicular abuse that we came up with “Save our Vehicles” campaign to educate policymakers and public about this highly sensitive issue and generate awareness among the vehicle owners about the needs and requirement of the vehicles. The idea received good visibility over the print and social media and was much appreciated within the fraternity.

Our campaign involving chopper rides with Uber on Christmas Day was a very successful campaign, which hit the right chord among the consumers. Droom entered into a strategic alliance with Uber for the festive period to bring on-demand chopper rides. The move was facilitated by the aerial vehicle category on Droom’s platform, which allows Droom users to rent and purchase aerial vehicles to fulfill all of their private aviation requirements. Under the partnership, Droom will enable reservations for half-hour chopper rides through the Uber app on Christmas Day.

For a similar successful campaign, Droom and Uber had previously collaborated for a ‘Supercar on Demand’ initiative, allowing consumers a chance to rent premier vehicles such as Audi R8 and Hummer.

How does one retain one’s best people?

For me, the mantra is ‘Get your employees to fall in love with your organization’. Finding and keeping talent is one of the key problems organizations face today. It is highly important to communicate your vision in a compelling way. Show everyone the role they have to contribute to this vision. We create opportunities for our associates to connect with each other for support and to improve communication in work teams.

Droom seems to have a very happy and friendly environment, with things like ‘cake throwing competitions’ happening in the organization. Tell us a bit more about your organization culture?

Culture is what makes an organization. Droom aims to make it enjoyable for associates to come to work every day. We focus on helping each other to bring out their true potential. We give no room to politics in our environment.

As an innovative organisation, we believe in adaptations, prototyping and fast iterations and encourage people to do experiments. Not everyone gets the same thing right the first time, but with the power of iterations, our associates are empowered and they create a great value proposition for the user. We know that the current millennial generation is very technologically savvy and we need to give them the right opportunities for them to blossom appropriately.

The new buzz word is ‘m-commerce’-mobile commerce. What are your opinions on this as far as India is concerned?

The landscape of m-commerce in India is undergoing an exciting transition. India is witnessing an impressive rise in everyday commerce conducted via mobile phones. With the population becoming more and more tech savvy, the e-commerce companies are racing to embrace mobile, with some ditching their web platforms completely. In the near future, m-commerce will be the way for the companies.

You have an app named ‘Eco Ninja’. How will this app help in increasing the branding and visibility of Droom?

Available on the app stores, the Eco app enables sellers to schedule comprehensive automobile inspections from highly trained and certified professionals called Ninjas. The inspection conducted using Droom’s proprietary methodology covers an exhaustive list and generates a comprehensive auto inspection report. This digital report will help the sellers and buyers the most informed decisions. Droom has partnered with Carnation to reach out to empower the technicians in 36 cities and allow Eco users access to Carnation’s extensive network of workshops and skilled technicians. Eco Ninja is becoming the most trusted app with a significant number of downloads.

Everybody wants to be an entrepreneur. What is the toughest and most difficult part of this journey?

An innovative bent of mind and the tenacity to overcome challenges are required qualifications for any founder looking to attract investments. I believe that technology plays an extremely crucial role in creating winning ventures, and supports founders who believe in frugality and economic effort as a means to achieve success.

Some details on Droom’s funding…

Automobile-focused marketplace Droom has raised $16 million (INR 100 crore) funding in Series A led by Lightbox. The company has utilized the funds to add 20 automobile and 12 service categories hosting over 50,000 sellers and 200k listings in 18-24 months. Droom also plans to expand into South East Asia by early 2016. The first round of funding for Droom was led by Beenos. Droom is on its way to double its headcount over the next few months by hiring talent from leading institutes for functions like technology, marketing and customer support.

A leader you admire.

Steve Jobs, Bill Gates, Mark Zuckerberg, Jack Welch.

You are also a serial entrepreneur and an early-stage investor. What do you look for while investing? Which are your most promising investments?

I have always believed that any business idea, no matter how novel, is only as strong as the people driving it. I have invested in Wydr, a performance based wholesale marketplace. It fits in perfectly into my vision of game-changing ventures and has the potential to aggregate the wholesale market at an unprecedented scale.

What are your future plans?

From a revenue of nearly INR 900 crore from 3,400 transactions in 2015-16, Droom is targeting INR 3,000 crore worth of gross revenues by March 2017 and INR 15,000 crore by the end of 2018. With a 12% annual growth, India’s automobile sector is expected to expand from USD 125 billion now to USD 250 billion by 2020.

Online transaction in this sector is also expected to increase from 0.25% now to 8% by 2020. We are targeting 50-60% of this business, worth about USD 300 million. Droom is looking to further expand its operations to add 20 automobile and 12 service categories hosting over 50,000 sellers and 2,00,000 listings in the next 18-24 months. Droom will expand categories as well as geographies in the coming time.

Your views on the new bill on FDI in e-commerce.

I have welcomed the government’s move on bringing further clarity on FDI in marketplaces. However, marketplaces were never out of compliance of India’s FDI. As marketplaces truly work, they are no different than Infosys and Wipro for they provide technology and ecommerce services against buying and selling items. A well run marketplace is a technology, platform and services company vs retail or ecommerce company. Marketplaces are empowering 20 million SMEs to sell online and participate in the retail revolution of India versus sitting in the sideline because they do not have capital or technological know-how comparable to large corporations. I welcome wholeheartedly the further clarification that the government is providing.

A management lesson your learnt while in college which has worked for you in real life too?

Of the many lessons that I have learnt, is that founders need to be strongly motivated by a cause, as opposed to those driven by quick money, have the vision to identify an addressable opportunity and the clarity of purpose for optimum thematic leverage.

What are your best innovations so far?

Some of our best innovations comprise the following:

Orange Book Value: Droom’s Orange Book Value is a technically advanced engine that does comprehensive algorithmic calculation to give you a fair market value for the vehicle you are willing to buy. Orange Book Value (OBV) is India’s first algorithmic pricing engine to calculate the fair market value of any used vehicle. Right valuation of a pre-owned vehicle has always been a strenuous task for both buyers and sellers and OBV has been especially designed keeping this in mind. The long term vision of developing OBV has been to determine the valuation of every vehicle on Droom – from bicycles to planes.

Full Circle Trust Score: Droom’s Full Circle Trust Score is based on Droom’s proprietary technologies and algorithms that take into account trust factors that are important while buying used automobiles, such as auto inspection, warranty, verified seller, attractiveness of pricing for buyer, and level of disclosures by the sellers.

Droom’s Full Circle Trust Score will allow buyers to develop more objective assessment and comfort around the vehicles they are considering buying. Our Full Circle Trust Score is equally attractive for sellers who want to adopt best practices and offer nothing but the best to the buyer community. Seller listings with higher trust score will automatically emerge as winners on Droom’s marketplace.

Eco App: Eco is India’s most advanced, independent, objective and unbiased auto inspection and verification service provider. Inspection is performed using Eco’s proprietary methodology by professionals. The inspection checklist is mutually exclusive and collectively exhaustive covering all the important points needed in verifying or inspecting a vehicle.

Once inspection/ verification is ordered by a customer, the service will be delivered at their doorstep at a convenient time as specified by the customer. Post the completion of inspection/ verification, a digital report is delivered to the customer that contains all details.

How does your business model work?

Here’s the math – token amount is between 2-3% (depending upon the category) of the final selling price that is paid as advance money by the buyer on Droom’s online platform. Rest 98-97% of the final selling price is paid directly to the seller (100% final selling price = 2% token amount + 98% final value payment). It is fully refundable, no questions asked, under our buyer protection support.

Once the buyer pays the token amount, the listing gets deactivated and the buyer can meet the seller to test drive and inspect the vehicle before closing the transaction. In case of order cancellations, the token amount is processed within five business days of the cancellation. Droom is a completely performance based marketplace where you pay only when you sell. As a seller, you can have as many listings as you want and there is no need to pay any listing fee. The bare minimum requirement to list an item at Droom is possession of the item with valid ownership documents. You just need to tell us the “Make-Model-Year-Trim” of the vehicle and we will auto-create the listing for you in less than 10 seconds. We highly encourage sellers to upload latest and high quality pictures of the vehicle.

Droom provides three kinds of pricing formats “Fixed Price”, “Best Offer”, and “Auctions”. “Fixed Price” allows you to buy at a fixed price while “Best Offer” allows room for negotiation. “Auctions” allows buyers to bid on vehicles, which are subsequently sold to the highest bidder.