Exclusive: OLX turns bullish on C2B model in used car segment, opening 30 stores in 6 cities

On the lines of other e-commerce segments, the used car also has been going through a churn. The recent string of actions including Sequoia choosing to invest in Cars24 over CarDekho; CarTrade picking up a majority stake in Shriram Automall, and decent growth of newbie such as Spinny hint a change of wind in the used car segment.

Sensing a prevailing opportunity in buying cars from users on behalf of dealers, Naspers-owned OLX is beefing up its offline presence via a solid action plan. After opening up maiden offline store - Cash My Car- in Gurugram, the company is opening up 30 new stores across the top 6 cities in India, said two sources aware of the plan.

“The company already has hired about 200 employees for the new business vertical. The new stores will be live by mid-September. OLX had experimented franchise model with its first few stores. But, now it realised merit in working by itself,” reveal sources on the condition of anonymity.

With this new vertical, OLX is directly competing with Cars24. For uninitiated, Cars24 follows a C2B model where it buys cars on behalf of used car dealers. Post-transaction, it allows dealers to make bids on cars. The highest bidder gets the car which it ultimately sells to a customer.

“The larger plan is to open 50 offline Cash My Car stores across top 12 cities by the end of this year. The company has allocated a $10-15 million fund for developing the new vertical,” point out sources.

Amit Kumar who joined the classifieds firm last year from Snapdeal has been heading the new vertical for OLX. Entrackr has attempted to reach Kumar over phone, however, he didn't talk on these plans.

According to sources, Avinash Dargude who had served at senior functions at Flipkart and Amazon has also joined the Gurugram headquartered company last month. He’s currently a key part of Cash My Car.

OLX’s lofty aspiration in C2B (consumer to business) model makes a lot of sense for the company. Over the years, it has built significant clout with both - car buyers as well as dealers. “Given the deep penetration and trust of OLX in dealers community, it appears to be in better position than Cars24 to offer more money for car sellers,” adds one of the above sources.

To support the new vertical, OLX has plans to hire over 500 employees for Cash My Car by the year-end. “Presently, OLX is buying about 150 cars on behalf of dealers on a monthly basis. And, it has set a target to reach 400-500 monthly transaction volume by end of this FY,” add sources.

Currently, Cars24 dominates the segment with about 3,000 to 3,500 transactions every month. It also has the largest number of dealers (about 1,500) who participate in the bidding. In contrast, OLX has about 500 dealers that participate in the bidding. It’s worth noting that OLX only operates C2B model in NCR while Cars24 has pan India operations.

OLX auctions will compete directly with Cars24 and OLX might be able to capitalise its upper hand because most of the sellers already know about OLX and generally they go to it to list their cars.

So while OLX auctions and Cars24 compete with each other for the same set of sellers, OLX will definitely have much lower customer acquisition cost for the same. Also, in terms of dealer onboarding on the auctions side, OLX should have lower cost as most of the dealers already have working relationships with it through its B2C listing business.

Players like CarDekho and Droom may suffer a bit because it will become more difficult for them to attract individual sellers to list on their website because they will start getting immediate offers from OLX and Cars 24 through auctions when they list their car on their platform.

The emergence of more and more such kind of players should help retailing platforms like Spinny and Truebil as they can source more and more cars from these platforms and focus more on creating demand-side differentiated experiences.