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With US$8.3 billion worth of used, idle goods floating around India, there’s a chance that the future might look like a post-apocalyptic junkyard of things we don’t want anymore. If everyone always wants something new, what do we do with the old?

“Sell it off,” says the president of Cardekho, Umang Kumar. Cardekho is a classifieds site for new and used cars. For Umang, those who buy used cars are a demographic of their own that need to be uniquely targeted. “If you actually look at the used car market, it’s growing at a rate of 25 percent,” he says.

Cardekho also hosts an active forum, sells car accessories, and provides access to the latest automobile news. It was launched by GirnarSoft which is also the parent company of price comparison site PriceDekho. GirnarSoft raised a total of US$65 million in two rounds from investors like Sequoia Capital and Chinese investment fund Hillhouse Capital. After its latest round of funding, Cardekho is now reported to be valued at a massive US$300 million.

Before this, Umang founded Gaadi, an auto classifieds site that was first sold to Naspers and then acquired by Cardekho last September. “The original idea started when I was working in the media industry,” he reminisces. “At that time, I noticed that digitization was severely disrupting the advertisement space. Within this, the biggest things getting disrupted were real estate, education, and automobiles. I decided to tackle the automobile market.”

What’s the big difference?

So, let’s say you want to sell your car. Which classifieds site do you choose? Naspers’ OLX is a classifieds marketplace with its presence in over 106 countries. In India, it’s considered one of the country’s largest used goods classifieds sites and has a category specifically for automobiles.

Cartrade, another used automobile classifieds site, is backed by investors like Warburg Pincus and Tiger Global Management who have pumped in US$30.2 million of funding in a single round.

It recently acquired its rival Carwale. Recent entrant Droom is a mobile-first automobile marketplace that’s backed by Lightbox Ventures and Japanese internet firm Beenos. It promises to make buying cars as easy as possible and includes features like a refundable commitment fee of 2 percent so sellers aren’t affected if someone backs out of a deal.

As with all sites that depend on their community, however – Facebook’s original mad rush of users and ensuing success being an important example – the size and enduring loyalty of its original users can mean the difference between success and failure.

In order to gain this loyalty, Umang explains Cardekho has used a very specific strategy. “We’ve done a lot to capture our customers,” explains Umang. “We like to break it down to three aspects: trust, convenience, and price.” The past few years have seen Cardekho use these aspects to pivot from an advertising revenue model to indulging in everything from ecommerce to warranties.

Cardekho’s acquisition trail is long and strategically planned to help achieve this trifecta. It acquired auto portal Zigwheels in September and “intelligent shopping site” BuyingIq – essentially, a vamped up price comparison site that also aggregates reviews and recommendations – in April.

Along with its acquisitions, Cardekho has launched several features to help achieve its goals. The Cardekho “Trustmark” is a stamp of verification for cars that the company has inspected. With the use of a thorough 120-point checklist – including checkups of engines, steering systems, and transmission – cars are either rejected or certified. While the verification process only works in 14 cities across India, those that pass are listed as “Cardekho verified.”

Although Cardekho is not the only one to use a verification process on its sellers, the site has a strong focus on quality. As of December 2015, the site has inspected 28,703 cars, but only certified 6,759. “Used car dealers have gotten away with a lot,” says Umang.

“There’s this thing called ‘bait and switch’ where a dealer will put up a photo of a good quality car that he sold six months ago. When the buyer travels to buy the car, he’s then met with a low-quality fake. Verified cars also come with a warranty that guarantees long term sustainability. We’re really trying to build an ecosystem here,” explains Umang. “Building trust is the first step to getting people interested in a trend.”

Photo credit: TexasEagle Used cars salesmen have a bad reputation.

Once a seller lists her car on Cardekho, she is given a few price suggestions. While the suggestions are taken from similar listings, ultimately, sellers can determine the price at which they want to sell. Customers can also use Cardekho’s ecommerce platform in order to purchase accessories for their cars. “We’re really the first of our kind to provide a dedicated platform there,” explains Umang. “Ideally, we want to cater to customers throughout the lifecycle of owning their vehicle. This also gives the opportunity to buy a lot of other startups, which is really exciting.”

Waiting for a homogenous market

Photo credit: Lingaraj GJ

While Cardekho already has its presence in 25 countries, Umang is focusing closely on Southeast Asia next. “We see that entire area as a huge opportunity for us,” he explains. Last July, it launched CarBay in Malaysia and Thailand.

Still, the success of classifieds sites in India is determined by the government’s willingness to cooperate with independent sellers. Currently, cars that are bought in one state require rigorous documentation to be sold to buyers in another state. Within cities, changing registration details is a nightmare. “I believe that the future will see india having a homogenous used car market,” says Umang.

“At that point I’d love to tie up with logistics providers to help with shipping. We also want to release a financing arm that will help used car buyers figure out their payments. Eventually, a buyer will be able to get the entire license of the car registered to them just by using our platform – but we’re not there yet.”

This post Why is a classifieds site for cars in India valued at $300m? appeared first on Tech in Asia.

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When Mumbai resident Anindita Roy decided to try a new grocery delivery app, she wanted quick service. But when her order – promised within 90 minutes – never showed, she balked.

“It was a prepaid order. I’d waited for long and there was no intimation from the company till I called up. They then said they could not deliver that day,” she said.

Anindita is not an outlier. Across cities in India, customers are reporting growing exasperation due to the blow-hot-blow-cold customer service Indian startups are dishing out.

Tech in Asia spoke to 25 online shoppers in Mumbai, Delhi, Hyderabad, and Bangalore who had complaints about patchy service from a host of companies across the board, including Grofers, Pepperfry, Housejoy, UrbanClap, PepperTap, and others.

Shoppers in Bangalore complained about massive delays in furniture shipments from Pepperfry, made worse by a tough time scheduling handymen to put the furniture together after delivery.

The Pepperfry media team did not respond to emails seeking comment.

Between January and September, investors put in US$7.3 billion across Indian startups. A bunch of these startups are in the customer services sector, meaning that they run businesses that promise people respite from their daily chores.

The trouble is, not only do they compete with other startups, but also with the local unorganized sector, where homekeepers have asked their local grocers to deliver stuff at no extra charge, local beauticians have taken care of patrons’ needs, and the neighborhood laundry guy has picked up customers’ dirty clothes for years.

Photo credit: Wikipedia

“This is a Catch-22 for everyone. Out of ten companies that do the same thing, only two to three will survive. So they are under intense pressure to grow,” said a leading investor, who did not wish to be named because his company funds some of the companies mentioned, or their rivals.

“They are running at a 100 miles an hour and at a 100 miles an hour you can only do so much… any value proposition that says faster, cheaper, better would be under stress. At best you can focus on only two.”

Blow-hot-blow-cold

Sure enough, customers complained about unpredictability, saying experiences on apps that started off promising hassle-free services could turn utterly sour over lost orders, refunds, or untraceability of shipments. Leading app-based companies in India cater to thousands of people in many cities. Grofers, for example, said it takes in over 50,000 orders a day.

While customers acknowledged no company had messed up orders or services for them at all times, most claimed to be facing a rise in such incidents.

For Anindita, Grofers rescheduled the delivery for another day after some irate phone calls from her, but others have experiences on a variety of apps that range from complete no-shows to never-refunded money.

“[Being] late is, to be honest, many a times a function of things totally out of our control,” Dhruv Arora, head of Grofers’ customer experience, told Tech in Asia in an email.

Dhruv said the team is investing in technology to map better routes and minimize delays, as well as hiring more people to cover more customers.

Unlike in developed economies, cheap labor in India has made many startups lean heavily on manpower, where companies maintain squads of delivery boys, drivers, and errand runners to serve customers.

And that’s with good reason. India’s peculiar problems, ranging from ever-present traffic snarls in metro cities, to patchy network connection, to a broken last-mile delivery structure, means technology cannot solve all ecommerce issues.

Photo credit: Wikipedia

But training hundreds or thousands of employees to ensure a consistent level of service is a tough ask. And yet, since that’s what the companies promise, that’s what customers expect.

When companies own their fleet of delivery personnel and workers, they have more control over quality. But that’s a pricey proposition, and startups often mix it up with third party workers.

Glitches come from a variety of reasons, from untrained delivery boys to unstocked merchants to part-timers simply not showing up.

Saran Chatterjee, CEO of Housejoy, said:

The [services] market is highly unorganized. Their training is not standardized. While we have an onboarding process, we do see some problems,

Housejoy lets users book everything from plumbing services to beauticians on its app. Housejoy competes with UrbanClap.

Dude, where’s my cab?

In the taxi segment, one of the most booming app-based industries in the country, Ola has taken on drivers who are not conversant with city routes, or get lost on the way to pick-ups, many customers said.

Breakneck growth has taken a toll on its employee satisfaction as well, according to some drivers. In Bangalore, for example, three drivers Tech in Asia interviewed refused to ply on Ola Money, accepting only cash. They blamed a delay in processing by the company. The drivers did not want to be named because they are currently enrolled on Ola.

Ola did not respond to questions about this, but sent a statement saying it hires verified professional drivers, trains them, and has a “constant feedback mechanism.”

Ola hires more than 7,000 people in the country to serve 102 cities. Its Silicon Valley-based rival Uber employs about 200 people to serve around 22 Indian cities, and isn’t glitch free either.

“A lot of our driver-partners may not be from the city they work in; they come to the city from different parts of the country to look for jobs,” an Uber India spokeswoman said.

Both Ola and Uber said they have trained drivers, many of whom are first time smartphone users, to use GPS for easy navigation. But India’s congested telecom lines often mean phones lose connectivity, and both driver and customer are stuck.

Patience pays

“The only way to build an execution business is to be patient,” said Sharad Sharma, co-founder of iSPIRT, a think tank and policy advocacy group for startups. “Hedge fund money is not patient money.”

Three investors in the sector Tech in Asia spoke with agreed that aggressive investors looking for exits could push fledgling startups to a stretch, but said eventually, it was up to founders to take a call on how much they wanted to chase growth, and at what expense. The investors did not want to be named because they have backed some of the companies named in the article, or their rivals.

Photo credit:Flickr

Founders at various companies too said that the rush to grow did mean customer satisfaction would take some hit, but added that the age of chasing mindless growth over returns was slowly shifting in India.

“We are not expanding in the short term; and are focusing on getting the customer experience right before we start expanding again,” said Navneet Singh, co-founder and CEO of grocery delivery app PepperTap.

“Actually, our investors are are quite supportive of our measures of consolidation rather than mindless expansion.”

The price of not doing that, of course, is that in the mad chase for growth, companies lose their core customer base. In the app-sea of sameness, user stickiness is hard to come by, even for established players.

“I don’t care if my groceries are done by Grofers or PepperTap or someone else,” Mumbai’s Anindita said. “I care that it is delivered on time.”

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Natali Ardianto, co-founder and CTO of Tiket, sits facing me in a small meeting room next to a koi pond, flanked by Tiket’s PR team. Launched in 2011, the travel booking site is a dinosaur in Indonesia’s young startup scene. It lets you book flights, hotels, train tickets, and event tickets. What makes it stand out among its Indonesian startup peers is that, so far, Tiket has never touched venture capital.

It’s built entirely on an initial angel investment of “under US$1 million,” according to Natali. In 2012, it won US$25,000 in a startup competition. Everything else comes from carefully balancing revenues and expenditures. And focusing on core things like good tech, solid financial planning, proper legal documents. “For us, it’s about the fundamentals,” he explains.

“We designed Tiket to be very corporate,” Natali adds. “It may not be the Silicon Valley way, but we want to show that our way can work in Indonesia.”

Marathon runner

Tech in Asia last visited Tiket mid-2014. Back then, Natali spoke of expansion plans into the region as the next milestone. He also said Tiket might look into raising capital in 2015. But now, one-and-a-half years later – an eternity in startup terms – not much has changed at the company. The team grew from 150 to 230 people, and revenues continue to “grow at a multiple,” but overseas expansion is off the table. He’s not currently seeking external investment. “Of course we regularly talk with VCs,” Natali says.

Tiket is simply not in a rush. “For us, it’s a marathon, not a sprint,” says Natali. The company realized there were many more opportunities in Indonesia it hasn’t yet explored. And its profitability isn’t yet as stable as he’d like it to be.

“Since early 2013, our net revenues surpass our operational costs,” Natali says. “But to be honest with you, it’s an up and down until now.”

So Tiket’s focus will remain on doing the things it’s doing now, with ever-increasing efficiency, inching forward to higher profits.

The key to getting there lies in optimization and automation, Natali believes. His obsession with the topic has won the site a conversion rate of 6 percent, which is better than the average ecommerce site manages.

With similar principles, Tiket was able to decrease spending on Google Adsense campaigns by 30 percent this year, simply because the team figured out what worked and what didn’t and cut out the inefficiencies.

Flights of fancy

So how big is Tiket’s business these days?

Unsurprisingly, Natali can’t share the company’s net revenue in hard terms. But the PR team nods yes to Natali’s question if he can share other figures.

The site averages about 10,000 daily transactions. The most popular category is flights, making up more than 50 percent of booking volume and revenue. Of the flights, 90 percent are domestic, another reason why launching overseas isn’t a priority. Tiket’s margin on flight tickets is at 4 to 5 percent.

Train tickets are the next highest in demand. But the margin Tiket gets from trains is so small that this category falls behind hotels in terms of revenue.

Hotels are an interesting category because margins have been increasing over the years. “It was 15 to 17 percent when we started, now it’s up to 25 percent or even more,” Natali explains.

One problem Tiket might encounter is that travel is seasonal, with spikes around holidays and lulls in off-season. Before the Islamic holiday at the end of the fasting month, for example, train ticket sales shot up to 17,000, Natali explained.

To be able to deal with such sudden surges in demand, Tiket spends on technology. It splurges on investments that will ensure stability and resilience in the long run. “90 days before the Lebaran holiday, train tickets become available and booking starts. We were the only site still up that day,” Natali says. “I can show you screenshots.”

In the same vein, Tiket subscribes to three different internet providers. Natali made sure that each of those providers operates separate fiber optics cables. “If one fails, we’ll automatically default to another.”

Gunning for loyalty

Tiket is not Indonesia’s leader in terms of traffic volume in the online travel category. Traveloka, which is probably Tiket’s strongest local competitor, surpasses it significantly.

This fact leaves Natali unfazed.

“We don’t subsidize our tickets, that’s why we don’t compete in terms of price. Rather than attract a million customers that only transact once, our customers come back four times per year,” Natali states. “We are the best brand for the middle class, who don’t worry so much about pricing. That Indonesian customers have no loyalty and are very price sensitive, that’s not what we see here.”

Natali prefers traditional marketing channels like email, rather than spending heavily on commercials. “We did a TV commercial once, but we decided it was not effective for us,” Natali explains.

Its arch-rival disagrees. Traveloka – which runs on an investment of undisclosed amount from the Rocket-Internet affiliated Global Founders Capital – was the top ecommerce advertising spender in Indonesia this year.

Traveloka also takes a different stance on overseas expansion. It has launched in Thailand and is currently running commercials on Thai TV.

The corporate startup

“The number of online travel startups saw a lot of growth this year. Everybody wants to join,” says Natali. “It’s a bit like in 2010, 2011, with the daily deals sites, when Groupon started acquiring. There were 64 Groupon clones at that time! After two years there were only 12.”

Natali clearly wants Tiket to stay away from the uncertainties of a boom and bust cycle, even if it means slower growth and less brand visibility. In the startup community, he’s known as a voice of reason who continues to warn hungry startup founders not to burn money too quickly. He’s one of the initiators of a meetup group called Startup Lokal, which has been running for close to six years. “I like to share,” he says of his involvement in the group.

You may have been wondering why Natali, in his role as CTO, is speaking for the company instead of the CEO.

Natali explains that was another decision Tiket made which might make it seem more corporate than most startups. “Our CEO is 60 years old, he really knows how to run a business,” Natali says. “Think of it like how Google hired Eric Schmidt.”

But even if Tiket prefers long-term planning over spontaneous decisions, and sustained growth over a hockey-stick curve, it’s not all rigid corporate structure.

“We still do scrum, we have our daily stand-up meetings,” Natali laughs. “It’s just that we believe it’s long-term planning that lets us innovate, because that way we are a step ahead of others.”

This post Running on less than $1m in funding, Tiket is Indonesia’s bootstrap rockstar appeared first on Tech in Asia.

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