Note: The article was updated on July 11th due to a factual inaccuracy.
If you are an automotive enthusiast in India, you must have heard of Gaadi.com. Umang Kumar, co-founder and current CEO of the venture says the site is among the Top 3 sites on auto in India after Google. The site receives 3.5 million visitors
daily monthly on an average.
Started in 2008, Gaadi.com was acquired by MIH India (Ibibo Group) in February 2011. Before acquisition, Gaadi & Umang were part of the Accentium Group that are also responsible for launching SecondShaadi.com – site for people looking for a second marriage; StudyNation.com – an education website, aimed as an information portal for students looking at colleges, courses, professions, test etc; Taaza.com – a horizontal content platform with content across multiple domains. Predominantly focusing on job search; SitaGita.com – a portal targeting Indian woman and AdLift.com – a vertical that offers SEO and SMO services.
Once the MIH acquisition happened, the deal was structured in such a way that Umang had to let go of his involvement in all the other ventures and focus on Gaadi.com
Talking about the opportunity for the site, Umang says that the auto classifieds market is one of the biggest classifieds market in the world. In India, he pegs the space to be worth Rs 120-crore. “When I was in Ananda Bazaar Patrika(ABP) group, we had done a project alongwith McKenzie about the classified space in India. During the course of that I realized that India had lacunae,” explains Umang. Back in 2007 when the survey was undertaken, the online job classifieds had started taking shape with Naukri, marriage classifieds was happening with Shaadi and Bharat Matrimony had happened. Real estate classifieds was just about a year old, 99acres had happened and Makaan was just a few months old, recollects Umang. He realized that the potential this space had was huge and there was lot of work still to be done. “Auto classified are huge worldwide, and is also one of the largest segment of advertising for newspapers. I was clear it would move online and was thinking about it. My stint with ABP really opened up my mind, how things will shift and flow online and it was obvious that there is an opportunity. Then it was about coming together, raising a capital and so on,” explains Umang.
Until about a year back Gaadi.com had information about car dealers from 8 metros in the country. But today it has onboard information from 22 cities in the country and of over 500 dealers. Umang says about 80% of the traffic coming on site is from people seeking information about new cars and the remaining look for used car information.
The site started off as an auto content site and six months down the line got classifieds introduced into it. Even today many visitors come to the site researching for car information. And while that continues to be a sizeable portion of their business, Umang says investors look for more scalable things and classifieds comes in handy there.
The Gaadi team includes a team of 10 who’s sole responsibility is to churn out content about auto. This team regularly test drives cars, attends auto events and talks to industry experts to bring useable relevant content for visitors who come to the site. “So our content is not similar to a BS Motoring or Zigwheels, but it is geared more towards the ordinary user, who wants to check out information before making a purchase,” explains Umang.
Advertising from new car manufacturers continues to be the core revenue stream for Gaadi.com, they also earn from dealers whom they work with. For these dealers, the excitement of working with Gaadi lies in the fact that they get access to many more customers than those who would otherwise walkin to their outlet. Umang says all the inventory that is shown on the site is validated inventory and therefore customers can be sure of it. “We have an offline team in every city who actually goes and photographs vehicles in all cities. So there is a far better user experience, because you can see photograph inventory from dealers and need not goto the spot physically to check it out,” explains Umang. The site has also built tools around used car valuation, which helps customers find the right price to buy and sell their vehicles.
Gaadi.com has a team of 200 people, of whom the majority staff is involved in the call centre for the venture. There is one team of six people, who are completely focused on updating on-road prices of cars in the country, which is a tough thing to do, says Umang. Another 40 people are involved in the service side of the business and are also the liaison between car dealers and the website.
Gaadi.com also works with car manufacturers like Chevrolet, Audi, Tata, Ford, etc to facilitate a car sale. This is done by helping setup test drive for the customer, telling them about offers that these manufacturers may have on various models and eventually enable a car purchase.
While the business continues to grow, Umang says one pain point they face is internet advertising, which is still a fraction compared to the West – and also an important revenue generator for the Gaadi business. “India is just a $0.4 billion dollar internet advertising market vis-à-vis US which is $40bn dollars. So there is a huge gulf as far as size of market is concerned,” rues Umang. On the other hand, the auto sector in India has degrown over the last one year owing to the slowdown in Indian economy and the auto sector is more hit than other sectors. As the core sector itself is not growing, Umang says it impacts the prospects of long term scalability as well.
Through the MIH acquisition, Umang says the concern of raising capital is now not that high as they have ready access to it. But they are looking at avenues to broad base their revenue model. Beyond their core revenue source of car manufacturers, they are now focusing a lot on used cars. “Be it from dealers or individuals, we are looking at options beyond advertising for revenues. Introduction of paid services to dealers is also on cards,” says Umang.