Sandeep Aggarwal doesn't let go of anything that has worked. He announced the launch of Droom on November 21, 2014, the same day he launched e-commerce marketplace ShopClues in 2011, now India's youngest unicorn. Droom started from the same building in Gurgaon's Sector 15 where ShopClues began. Every time Aggarwal went for investor meetings, he wore the same T-shirt - a green-coloured Hugo Boss. "There's an old Wall Street saying: 'It is better to be lucky than smart'," Aggarwal, Founder and CEO of Droom, says, chuckling. You cannot argue that his luck has worked.
He has raised four rounds of capital, totalling nearly $46 million. The last round, its biggest at an estimated $30 million, came in June this year amid the doom and gloom in India's e-commerce industry. Investors, including the likes of Singapore's BEENEXT, Digital Garage from Japan, Beenos and Indian VC firm Lightbox, saw great execution. After ShopClues, Aggarwal was keen on building a second marketplace, one that connects buyers and sellers of used vehicles. But back in 2014, when there were no numbers to validate his business plan, Aggarwal managed to convince some that he can make money organising what is largely an unorganised market.
One of the earliest investors to back Droom was Sid Talwar of Lightbox. He knew Aggarwal well. "There are very few successful marketplaces in the world. Sandeep understood how to build a marketplace," he says. What also convinced him was the fact that marketplaces for transactions in India's online automobile world did not exist in 2014. "People were doing classifieds (OLX and Quikr) and discovery (CarWale and CarDekho). The lacuna was trust and transparency. America had created an efficient market for used cars, but India didn't have that," Talwar explains.
Of course, the market itself is like an eight-lane highway. India is the third largest automobile economy in the world after China and the US, with transactions worth $100 billion each year. According to data from SIAM, domestic sales of two-wheelers grew 3 per cent to 16,455,911 units in 2015/16, while passenger vehicles rose 7 per cent to 2,789,678 units. The used vehicles market is even bigger in terms of volumes. About 1.3 used cars are sold for every new car, and 1.6 used two-wheelers are sold for every new one. Besides vehicle sales, there is the automobile services market worth about $25 billion.
"India now has a sizeable installed base. Plus, people are changing their vehicles more often. But then the experience of buying a used automobile is ancient. This industry could benefit from new innovations," Aggarwal says, animatedly, sitting in his conference room adorned with car models.
Droom's innovations have led to an upward ratchet of impressive numbers. The company, today, has an annualised GMV of $175 million, by mostly aiding two-wheeler transactions (65 per cent), cars (30 per cent) and services such as warranty, repair and maintenance, and roadside assistance (5 per cent). The start-up is targeting $500 million in GMV by 2017. Its website lists everything that has a wheel and a motor - from bicycles and super bikes to luxury cars, planes and yachts. It charges a commission of 1.5 per cent to 2.5 per cent from the seller for transactions, a 12 per cent commission for services, and a premium subscription from professional sellers. The firm has 47,000 dealers listed. These numbers, which wowed even the jury of Business Today's Coolest Start-ups edition, were garnered because Droom was able to solve the lacuna that Talwar of Lightbox mentioned, that of trust and transparency.
"Unlike the US, Western Europe or Japan, India is a low-trust market. We saw this as an opportunity," Aggarwal states. He along with his team devised five pillars to answer typical questions that concern buyers and sellers. The company launched Eco, a way of inspecting a vehicle. Both the seller and buyer may want to buy an Eco report of a vehicle before transacting - the seller to improve his chances of selling and the buyer to avoid unpleasant surprises. Once the demand for a report is generated, an independent auto mechanic is tasked by Droom to inspect.
Along with Eco, Droom also built the 'Full Circle Trust Score' that uses data science to rate a listing. The score, between 1 and 10, is arrived at by considering different metrics - the pictures uploaded, the quality of pictures, whether the seller is verified, if he is offering auto inspection and warranty, and also the pricing. Like most online auto portals, Droom, too, has a pricing engine. Its third pillar, the Orange Book Value, is an algorithmic pricing engine.The last two pillars are about self declaration from the seller about any known problems.
While consumer-to-consumer sales happen, the presence of dealers adds impetus. Business Today spoke to Shyam Trehan, whose family owns Rahul Motors, a bike dealer, in Delhi's Karol Bagh. He has been listing on Droom for over a year. "We were previously dependent on walk-in customers. However, Karol Bagh is congested. Walk-in customers dropped over time," he says. Online listing is now generating additional business for him. "We sold around 80 vehicles per month. Now, after listing on Droom, our sales have doubled."
Droom is not alone on the race track; there is growing competition. Apart from the older classified sites and the likes of CarTrade (which acquired CarWale), newer start-ups, too, are offering used auto transactions. There is Spinny promising "200-point, fully inspected used cars", GoZoomo that claims to have "the largest cluster of verified listings", Truebil which is into simplified car trading, Cars24 that assures you can "sell your car in 30 minutes" and CredR that only deals in used bikes.
Aggarwal believes Droom is ahead on the track. The company's innovations around trust, transparency, its focus on engineering and use of data science as well as analytics to measure everything are making it a winner. "We are five years ahead of the market," he asserts.
Someone knocks on the glass door of his conference room. It is time for his next meeting. He must speed off.