After founding ShopClues, Sandeep Aggarwal was keen on building a second marketplace, one that connects the buyers and sellers of used vehicles. He founded Droom in 2014, a company that today has an annual GMV (Gross Merchandise Value) of $175 million. He recently spoke to Business Today on the idea behind Droom.
Q. As part of your evolution from ShopClues, why did you start thinking of an used automobile marketplace?
A. I considered 52 different ideas - each one can create a billion-dollar company. These are areas where the problems of buyer and seller were very pronounced. And all the 52 ideas were in consumer and mobile internet. I did not want to be in the fulfilment and delivery business. I also wanted to pick a business that had 95 per cent plus gross margins; where I could apply my marketplace discipline, where the need of capital was less, and where technology was the centre of everything. These were the things I considered as part of my evolution from ShopClues. Ultimately, Droom and a mobile wallet became the top two choices. Droom was more compelling from a market timing perspective. There were classifieds and discovery companies. But there were no transactions platform in automobiles.
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Was the initial idea just to be a marketplace for used bikes and cars? Now, we see even planes listed…
A. We want to be the market place for anything that has a wheel or motor and transports human beings. So we have choppers, planes, luxury cars. Yachts you can rent, but not buy. Then we said why should we limit ourselves to only automobiles? We also became a marketplace for automobile services like auto loans, insurance, warranty, road-side assistance.
Investors talk about the frugal nature of ShopClues. How cost efficient is Droom?
A. We spent 4.5 per cent on marketing, 1.4 per cent on all other expenses. Indian e-commerce companies, by comparison, make 6-7 per cent in gross income and spend 8-9 per cent in direct costs, 11-18 per cent in marketing and spend 3 per cent on all other indirect expenses. This means that more they sell, the more money they lose. We are obsessive about data. We measure everything. I track 8,500 metrics to run Droom. If you cannot measure, you cannot control.
Analytics help you to measure. For every marketing campaign, we say what would be the cost of acquiring the customer and what would be the cost of an order? Everything is calculated on the unit cost.
Q. Will services become a larger part of the transactions, going ahead?
A. Yes, we expect services to become a bigger percentage. Right now, 65 per cent of the transactions are two-wheelers and 30 per cent are cars. Only 5 per cent are services.