Droom, an online marketplace for buying and selling used cars and bikes, has managed to expand its presence in 1,091 cities since its inception seven years ago. The company was founded in 2014 and it has since then managed to sell over 3,25,000 vehicles and 1.5 million services. Apart from listing used vehicles, Droom also offers services like car/ bike/ or scooter loan, insurance for vehicles, and necessary certifications as well. It also has started to sell used planes and during the pandemic, a feature called Germ Shield was also introduced to deeply sanitise vehicles and protect them against viruses.
The company’s founder has seen controversy as he was charged with insider trading in the US, but charges were dropped in February 2020, just before the worst of the COVID pandemic hit. Unfortunately for the online marketplace, it then saw its business go completely to zero during the early lockdown months last year, but Droom says it recovered really well soon after and their business reached a new peak that was higher than pre-COVID levels in December 2020. Droom currently does $1.5 billion (roughly Rs. 11,016 crores) in GMV and claims to be growing at the rate of 100 percent year on year.
Expert opinion: TechArc chief analyst Faisal Kawoosa says, “It makes a lot more sense to sell cars online. Target segment of users who buys cars does a lot of research online and after that, they want a test/ experience drive. Thanks to these new online services, bookings can be done online, and the car can come to your doorstep for a drive. After that, it’s just a commercial transaction. Even as a consumer, I would be more comfortable buying cars online than grocery, clothes, and shoes.”
We spoke to CEO and Co-Founder of Droom, Sandeep Aggarwal to know a bit more about the company’s success story, how it survived the pandemic, and its future plans.
1. What was the initial conceptualization process behind Droom? When did you first start talking about beginning this startup?
I thought about Droom in April 2014. The idea behind Droom was that India is the third-largest automobile market in the world but why not to give 21st-century experience to consumers for automobile buying and selling and how we can overcome India’s structural constraints of the high cost of capital and very expensive real estate and yet provide the largest selection, low price, trust and transparency for automobiles online.
2. When was it that you finally decided you wanted to start Droom?
I was at the lowest point in my life when Droom came into being. I was in USA for a year dealing with my legal case, I knew I would be distancing from ShopClues, and I had no certainty on what I am going to do next if any. That time, I realized that I want to be king of my hill again and how Droom occurred was rested on three things – India is the third largest automobile market in the world, buying and selling an automobile is so 19th-century experience with frictions, and why not use my marketplace knowledge and experience to disrupt this industry.
3. Were there any operational challenges (or any other challenges) that you faced when starting Droom? Please offer our readers details on what those 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 one hand, I was one of the five Indians ever to create a unicorn in 2014 but on the other hand, there was high profile legal case against me in USA. So, many investors did not team up due to the legal overhang.
4. Did you have to put in any money to start the business? When did you decide that funding was required? Could you offer broad details on how a startup gets funding in India and how Droom managed its first round?
I spent sizable money for nearly five months before raising first round of capital. Typically, start-ups rely on the founder’s savings, followed by seed money from friends and family, followed by angel investors before getting capital from venture capital firms. In my case, I got two of the investors who had funded me in ShopClues to come in as investors in Droom and shortly after that I had another large pool of angel investors. So, that way, I was very fortunate that I got two rounds of funding in a matter of 5 months.
5. What do you think of the vehicle-consuming audience in India?
Only 4 percent of Indians have cars and 25 percent have two-wheelers. No country has achieved economic progress until it has seen large adoption of automobile ownership. So, India is where US was in 1940 when it comes to automobiles. Next 40 years, Indians will be buying lots 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 percent of the total automobile market is online and by 2025, 6 percent of total automobile market will shift online.
6. Will you be riding the electric mobility wave in the country? What is the future roadmap for Droom if electric mobility does see some considerable runway and growth?
The adoption of EV in India cannot be as rapid as one would hope. As a country, we have some structural constraints and some on-ground reality that makes EV adoption tough. These are main – the high cost of capital, expensive real estate, traffic rules, and India being low trust market and safekeeping of EV infrastructure. In USA, the first hybrid car was launched two decades back and even today less than 25 percent of the total vehicles are EV in spite of 2-3 wars, massive subsidies, and great infrastructure.
7. Is there any particular incident that is monumental in Droom’s journey? Please share that incident with our readers.
After selling 2,90,000 automobiles worth Rs. 19,500 crores by February 2020, our business came to zero in April 2020 to June 2020 due to COVID-19 led lockdown in India. It was very catastrophic for the entire company. But we utilized those adversities into new opportunities and came out of COVID-19 as a much larger and more profitable company. Our 250 people worked very hard, day and night, to achieve many goals that we were going to achieve any way, but we achieved them with more concentration and higher pace. We fundamentally changed how Droom operates and now give an even more delightful experience to our users. So not only we built better scale and higher profitability, but we also innovated more.
8. Could you help give a sense of how far Droom has come? From when it began to where it is now
Droom was started on April 14, 2014 and we are completing seven years. When we started Droom, most did not believe that people will 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 (roughly Rs. 24,232 crores), experienced 1.2 billion traffic life to date, 20,000 auto dealers, 3.5 million listings, presence in 1091 cities, and listed inventory on our platform worth Rs. 1.1 lakh crores (India’s largest selection online).
9. Has there ever been any failure or challenges? Please offer detail about this and how you overcame that.
My life has been a roller coaster ride and has seen more ups and downs in the last decade vs. what people see in their entire lifetime. I came to India to start ShopClues and the month I was convinced that ShopClues will be a billion-dollar company, I was indicted by DOJ and sued by SEC in USA during a family vacation and money-raising trip.
I had to be in USA for 13 months and ran ShopClues from there while dealing with the legal mess. When I came back, I had to step down from ShopClues and had to start all over again and built Droom from scratch. My learning is that never ever let your human spirit die or feel self-pity. Bad days will not last forever and focus on your efforts.
10. What was it like sailing through the COVID-19 crisis? Did you see a fall in business or an unexpected surge? How did you deal with it?
Our business had hit very badly and from April to June, the business was close to zero. However, since July we started seeing steady recovery and by December 2020, we reached a new peak in our business and that was higher than pre-COVID. Now, business is super strong, and this is going to be our bumper year.
11. Any advice for young Indian entrepreneurs out there?
Follow your passion, do not underestimate the need for capital to build world-class companies, take a long-term approach, invest in your people, solve business problems with the use of technology, measure everything and solve problems fundamentally versus throwing money or people at the problem.
12. What are the big plans in the future?
We have been creating India’s most delightful experience in buying and selling automobiles online. Lately, we have been investing in making loans and insurance easier after you buy an automobile at Droom. We are also investing heavily in our last-mile delivery solution for the automobile including test drive or delivery of a car at your doorstep in a flatbed truck. Besides, as COVID-19 will settle down, we will resume our international expansion in South East Asia, Middle East, and Africa. Before COVID-19, we did expand in Thailand and Malaysia and our used vehicle-pricing engine OBV (Orange Book Value) is available in 38 countries.
13. What is the employee strength? Is Droom hiring currently?
We are a technology company that happens to sell automobiles; hence we rely less on a large number of feet on street sales teams or a large number of blue-collar workers. We have currently 300 employees and we will be adding 100 more this year.
Orbital, the Gadgets 360 podcast, has a double bill this week: the OnePlus 9 series, and Justice League Snyder Cut (starting at 25:32). Orbital is available on Apple Podcasts, Google Podcasts, Spotify, and wherever you get your podcasts.