When it comes to the used car market, a blended model appears to be working - a mash of an online marketplace, an inventory-led model, and auctions.
Start-up Truebil, which started in 2015, reported encouraging numbers recently. By March 2018, the company reported Rs 100 crore in annual revenue run rate and Rs 180 crore in July. This is a revenue number and not GMV, which could be double this number.
Co-founder Shubh Bansal told Business Today there is a significant data science play that is making the blended model work for Truebil. Here's what he said:
1. Very early, the company identified both the seller-side and buyer-side problems in the online used car space. Buyers find it difficult to verify the information on an online platform. Typically, the condition of the car is quite different compared to what people post online. A second issue is pricing where buyers ended up negotiating a lot. Sellers, on the other hand, traded between price and convenience. If they wanted better price, they listed on a classified website. If they chose convenience, they went to a dealer.
2. Truebil's blended model gives the seller three options now. If the quality of the car isn't good, or it's old, there is the option to auction. If the quality is good and the seller wants to maximise the price, he can list on a curated marketplace. The start-up's direct category is the best of both worlds. The company's gives a quote and buys the car. This is the inventory-led part of Truebil's business. This model works because India is a supply-constrained market. There is more demand than good used cars in the market and the right inventory helps in maximising margins.
3. Data plays a large role here. The company's marketplace business generates data about demand and prices real time. That helps in deciding the right price of a car Truebil acquires in the direct category. It is an automated system. A proprietary algorithm gives the seller the price of a car depending on different parameters - its condition, locality, the market, the launch of a new facelift model, etc. The system is geared towards picking cars that the company can potentially sell in the lowest period of time. The average holding time of Truebil is 25 days, much lower than the industry average, the co-founder said.