Varun Dua is one of the few entrepreneurs without IIT and IIM pedigree who dared to dream of establishing the country’s first digital insurance company – Acko General Insurance. His vision had no trouble in finding backers who had probably written the largest seed cheque at that time and even now – $30 million.
Narayana Murthy and Kris Gopalakrishnan (co-founder Infosys), Hemendra Kothari (DSP Blackrock) and VC firms Accel and SAIF gave seed money to Dua. Recently, Acko had brought a couple of high profile investors – Binny Bansal (Flipkart co-founder) and Kabir Mishra (ex SoftBank Managing Partner). They along with others invested $65 million in the Bengaluru-based firm in March 2019.
With this capital infusion, Dua wants to disrupt the car buying experience. He and his team have been working for the past several months on a new product called AckoDrive (holding company of Acko Insurance). Currently, it lets users buy new cars online across Delhi (NCR), Mumbai, and Bengaluru.
According to Entrackr’s sources, AckoDrive has already sold out 500 cars during the four months long pilot that had started in January this year. While Sagar Das who is heading AckoDrive didn’t confirm the number, he said that the company has executed car sales worth Rs 50 crore in the past three months.
The firm has a strong team of about 40 people that is looking after the new product. It looks like Acko has identified this opportunity when it was selling insurance for cars. So far, no one has focused on hand-holding consumers during the entire car purchase process – discovery, test drive, bookings, delivery, and of course insurance.
CarDekho, Carwale, and others also have been dealing in this segment with lead generation model for dealers, they haven’t really been showing a strong appetite in hand-holding customers throughout the purchasing cycle. Presently, AckoDrive (link) keeps partial inventory through pre-booking new models at dealer’s facilities.
“This differentiates us from others. No one keeps inventory, but we do. AckoDrive is a virtual dealer that owns the entire experience right from discovery to delivery,” said Das.
But beyond all these facilities, one thing that makes Acko completely stand out is the promise to offer cars at the lowest price ever, a figure even below ones quoted by dealers.
Sources reveal that AckoDrive presently has arrangements with dealers. However, the long term plan is to strike a chord with OEMs such as Maruti, Mahindra, and Hyundai among others. When we asked Das about this, he declined to comment.
Acquiring customers online is becoming expensive for offline dealers. For instance, if they get 100 leads online (from Google or social media) only 10 ultimately translate into a test drive. Each lead costs at least Rs 500 to 700. “AckoDrive complements dealers with authentic and convertible leads. These leads are in fact buyers with a strong intention (not window shoppers) as they culminate at least to the test drive phase,” said Das.
AckoDrive makes money through pre-defined commissions from dealers, said Das.
Besides inexpensive leads, dealers also get a commission from Acko for selling its insurance plans. This creates a win-win value proposition for all the stakeholders – dealers, Acko, and consumers(lowest price).
Till now, people who aspire to buy a car had to bear the torture of follow-ups by several dealers during the discovery process. AckoDrive can ease customers’ pain by filtering and analysing their actual need and leave space only for relevant conversations.
As we said, the online first-hand car buying experience is broken and hasn’t been appropriately attempted by well-capitalised startups, making it a massive opportunity. Acko’s aspiration with its new product is seemingly high and it would be interesting to see how the firm executes and scales AckoDrive in future.