Buying online second-hand or used car is not a simple process as it appears from outside. Among the several reasons, trust and lack of clarity on pricing are most striking.
Currently, there are plenty of platforms ranging from transaction-based listing models (Droom) to classifieds (Cartrade, CarDekho), auction marketplace for sellers (Cars24) and inventory led play (Spinny).
“Following my promotion, I explored chances of buying a second-hand car. I started online research across various makes and models on different online platforms. However, in spite of getting the clarity I got stuck with multiple quotes given by online platforms,” says Umang Rawat (23) a professional working in a Gurugram-based grocery startup.
There are many, like Umang, who face trouble in making decisions for buying used cars. Amongst various concerns, issue of trust is dominating one as offline dealers and online platforms aim to facilitate a transaction or sell lead without thinking much of consumer interest.
Making used car buying simple and transparent: Spinny USP
To make a second-hand car buying simple and trustworthy, Gurugram-base Spinny pivoted last year to become full stack retailer. Unlike classifieds and other marketplace models, it buys cars and fixes glitches before pushing them to buyers through its digital channels.
“Used car has a significantly high ticket size and the market is highly fragmented. Also, more than 65 per cent of used car buyers are first time buyers and are below the age of 35 years. Hence, the new age buyers are fueling the growth of the market but they are highly unsatisfied with the existing buying processes prevalent in the market,” says Niraj Singh, CEO, and Co-founder of Spinny.
Brands which can offer quality cars with a thorough analysis are rare. “We are taking the problems of mistrust and experience control head on,” adds Niraj.
While the problem of discovery is being fulfilled through classified models (CarTrade, CarDekho and OLX), trustworthy fulfilment and post-sales servicing become a headache for buyers. “We also work with leading classified platforms to reach out to their captive buyer network. However, to be honest, our work starts from the point where a classified’s role ends,” explains Niraj.
Owning every piece: Reason for Spinny pivot from marketplace to retail
Spinny started as a C2C managed marketplace model where it did only certified listings and was hand holding sellers and buyers through the entire transaction process. But while operating with the model the company realized that car purchase even in the case of used cars, is of high aspiration and very sensitive decision.
“It was not possible to address their concerns without having exclusive control over the inventory and owning the entire value chain. So we did a limited pilot with an inventory-led approach and then pivoted to full stack retailing model in December 2016,” says Niraj.
Spinny by numbers: Selling 3,000 cars in 30 months and more
For Spinny, last year was about building the fundamental blocks of the business and piecing them together. “Entire second half of 2017 witnessed on an average more than 35 per cent monthly sales happening through a reference of previous buyers,” adds Niraj.
The consistent monthly growth in references outlines that the company has proven product-market fit with differentiation. With all fundamental blocks, processes, and products aligned with the full stack retailing model, Spinny is gunning for faster growth in upcoming years.
The company claims to have growth of 3.5X in current fiscal over FY16. “We managed to do sales of more than Rs 4 crore in December 2017 alone,” says Niraj.
Since its inception in June 2015 Spinny claims to have sold over 3,000 cars including both from initial C2C managed marketplace and current retailing models.
With a team of 40, the company is confident of registering 4X growth in 2018. Importantly, it’s not planning to enter any new geography (Spinny is only operational in NCR) for next 6 months.
Funding, market size, competition and future roadmap
Last year, Spinny also raised $1 million funding round led by Blume Ventures and angels including Freecharge co-founders – Sandeep Tandon and Kunal Shah. It deployed the round towards product development and figuring out product-market fit.
Used car segment has an enormous opportunity and can accommodate multiple players as over 80 percent of the overall market is unorganised. Besides sizeable opportunity, the market is growing rapidly (more than 25 per cent on yearly basis), so there is enough room for many players like Spinny.
“Hence, our current focus is on outperforming ourselves rather than worrying about,” concludes Niraj. The company directly competes with Cars24 (supply) and omnichannel majors such as Mahindra’s FirstChoice, Maruti True Value among a few others.
Spinny doesn’t see horizontal and vertical classifieds as competition, rather it complements each other. By end of 2022, Indian used car market would have a size of about $60 billion the company eyes to have 5 per cent of it.