Droom, an online marketplace for buying and selling used cars and bicycles, has successfully expanded its presence in 1,091 cities since its inception seven years ago. The company was founded in 2014 and has since successfully sold over 3.25,000 vehicles and 1.5 million services. Besides the list of used vehicles, Droom also offers services such as car / bike / or scooter loan, insurance for vehicles and the necessary certifications. It also started selling used planes and during the pandemic a feature called Germ Shield was also introduced to deeply disinfect vehicles and protect them from viruses.
The company founder was the subject of controversy while accused of insider trading in the United States, but the charges were dropped in February 2020, just before the worst of the COVID pandemic struck. Unfortunately for the online market, he then saw his business drop completely to zero during the first months of lockdown last year, but Droom says he recovered very well shortly thereafter and his business hit a new high that was higher than pre-COVID levels in December 2020. Droom currently makes $ 1.5 billion (roughly Rs 11,016 crore) in GMV and claims to grow at the rate of 100 percent year on year in year.
Expert opinion: TechArc Chief Analyst Faisal Kawoosa says, “It makes a lot more sense to sell cars online. The target segment of users who buy cars do a lot of research online and after that they want a test drive / driving experience. With these new online services, reservations can be made online and the car can come to your door for a drive. After that, it’s just a business transaction. Even as a consumer, I would be more comfortable buying cars online than groceries, clothes, and shoes. ”
We talked to CEO and Founder of Droom, Sandeep Aggarwal to learn more about the company’s success, how it survived the pandemic and its future plans.
1. What was the initial conceptualization process for Droom? When did you start talking about the launch of this startup?
I thought of Droom in April 2014. The idea behind Droom was that India is the third largest automotive market in the world, but why not give consumers the 21st century experience for buying and selling? of automobiles and how we can overcome structural constraints in India. the high cost of capital and very expensive real estate and yet provide the widest choice, low price, trust and transparency for automobiles online.
2. When did you finally decide to create Droom?
I was at the lowest point of my life when Droom was born. I was in the US for a year handling my legal case, knew I would distance myself from ShopClues, and had no certainty about what to do next, if anything. This time I realized that I wanted to be the king of my hill again and how Droom came about was based on three things: India is the third largest car market in the world, buying and selling an automobile is so 19th century experience with friction, and why not use my knowledge and market experience to disrupt this industry.
3. Were there any operational challenges (or other challenges) you encountered when starting Droom? Please provide our readers with details on what these challenges were and how you overcame them.
Building a startup has always been full of challenges. In my case, the biggest challenge was attracting investors and capital for Droom. On the one hand, I was one of five Indians who created a unicorn in 2014, but on the other hand, there were some high profile lawsuits against me in the United States. Thus, many investors did not associate due to legal overhang.
4. Did you have to invest any money to start the business? When did you decide the funding was needed? Could you give general details on how a startup gets funding in India and how Droom handled their first round?
I spent a lot of money for almost five months before raising the first round of capital. Typically, start-ups depend on the founder’s savings, followed by seed money from friends and family, then angel investors before obtaining capital from venture capital firms. In my case, I brought in two of the investors who had funded me in ShopClues as investors in Droom and soon after I had another large pool of angel investors. So, in this way, I was very lucky to have secured two rounds of funding in the space of 5 months.
5. What do you think of the vehicle consuming public in India?
Only 4 percent of Indians own cars and 25 percent own two-wheelers. No country has made economic progress until it has seen widespread adoption of auto ownership. So India is where the United States was in 1940 when it comes to automobiles. Over the next 40 years, Indians will buy a lot of cars and two-wheelers. Currently, for every new car, 1.65 used cars are sold, and we think Indians will buy 2.5 used cars for every new car by 2025. Another thing, only 0.7% of the market Total automobile is online and by 2025, 6% of the total automobile market will move online.
6. Will you be riding the wave of electric mobility in the country? What is the future roadmap for Droom if electric mobility has a considerable track and growth?
The adoption of EVs in India may not be as fast as one might hope. As a country, we have structural constraints and a certain reality on the ground that make the adoption of EVs difficult. These are the main ones – the high cost of capital, expensive real estate, traffic rules and India being a low trust market and custodian of electric vehicle infrastructure. In the United States, the first hybrid car was launched two decades ago and even today less than 25% of total vehicles are electric vehicles despite 2-3 wars, massive subsidies and excellent infrastructure.
7. Is there a particular incident that is monumental in Droom’s journey? Please share this incident with our readers.
After selling 2.90,000 automobiles worth Rs. 19,500 crore by February 2020, our business fell to zero between April 2020 and June 2020 due to the lockdown led by COVID-19 in India. It was very catastrophic for the whole company. But we used those adversities to create new opportunities and came out of COVID-19 as a much bigger, more profitable business. Our 250 people worked really hard, day and night, to achieve a lot of goals that we were going to achieve anyway, but we achieved them with more focus and a faster pace. We have fundamentally changed the way Droom works and now provide an even more enjoyable experience for our users. So, not only did we build better scale and higher profitability, but we also innovated more.
8. Could you give us an idea of how far Droom has come? From when he started to where he is now
Droom was launched on April 14, 2014 and we are completing seven years. When we started Droom, most didn’t believe people would buy cars and motorcycles online. However, since we started, we have sold 3.32,000 vehicles and 1.35 million services worth $ 3.3 billion (around 24,232 crore rupees), experienced 1.2 billion in traffic at this day, 20,000 car dealers, 3.5 million listings, presence in 1091 cities and inventory listed on our platform worth Rs. 1.1 lakh crores (India’s largest online selection ).
9. Have there ever been any failures or challenges? Please provide details about it and how you overcame it.
My life has been a roller coaster ride and I have seen more ups and downs over the past decade compared to what people see in their entire lives. I came to India to create ShopClues and the month I was convinced ShopClues would be a billion dollar business, I was indicted by the DOJ and sued by the SEC in the United States while on vacation in family and a fundraising trip.
I was supposed to be in the US for 13 months and ran ShopClues from there while dealing with the legal mess. When I came back I had to quit ShopClues and had to start all over and build Droom from scratch. My teaching is that never let your human spirit die or feel self-pity. Bad days won’t last forever and focus on your efforts.
10. What was it like going through the COVID-19 crisis? Did you see a drop in activity or an unexpected surge? How did you handle this?
Our activity had hit very badly and from April to June, the activity was close to zero. However, since July we have started to see a steady recovery and in December 2020 we hit a new high in our business, higher than before COVID. Now, business is very strong and it will be our exceptional year.
11. Any advice for young Indian entrepreneurs?
Follow your passion, don’t underestimate the need for capital to build world-class businesses, take a long-term approach, invest in your people, solve business problems with the use of technology, measure everything and solve them problems fundamentally rather than throwing money or people at the problem.
12. What are the major upcoming projects?
We have created India’s most enjoyable auto buying and selling experience online. Recently, we have invested in making loans and insurance easier after buying a car from Droom. We’re also investing heavily in our automotive last mile delivery solution, including a test drive or delivering a car to your door in a flatbed truck. Additionally, as COVID-19 takes hold, we will resume our international expansion in Southeast Asia, the Middle East and Africa. Prior to COVID-19, we grew in Thailand and Malaysia, and our OBV (Orange Book Value) used vehicle pricing engine is available in 38 countries.
13. How strong is the employee? Is Droom currently hiring?
We are a technology company that sells automobiles; therefore, we rely less on a large number of feet on the street sales teams or on a large number of blue collar workers. We currently have 300 employees and will add another 100 this year.
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