Have you ever faced a situation when the silencer muffler of your car or the clutch kit of your luxury sedan was tough to find at the local garage? If such situations are commonplace for you, then this story will surely give you the much needed option.
Tapas Gupta formerly with Mercedes Benz, Diptanu Bhadra, an ex-Honda employee, and Arijit Chakraborty formerly with Tata Motors, launched SpareHub.com in December 2013 with an aim to fix the problem of spares for vehicles.
Today, the website offers more than 10,000 parts, has completed 100+ transactions and has signed up 20+ garages in Pune as B2B customers. The trio started by bootstrapping and was accelerated by 91Springboard, Delhi. Varun Chawla and Pranay Gupta continue to act as advisors to the site.
YourStory caught up with Tapas to discuss the idea and more.
Tapas had said goodbye to Mercedes and was testing multiple ideas to startup. That is when his cousin from Amravati, Maharashtra, called him to send suspension parts for his Skoda Octavia from Pune since he could not find it locally in Amravati. “He also complained that he searched online and there was not a single website selling car parts of all brands pan-India and maybe I should look into it. Being from the small city of Akola, I knew there were many Skoda, Volkswagen, Toyotas and even Mercedes, BMW in Akola but not a single authorised service center within 200 km radius. The problem was evident. I did my initial research and found that SparesHub.com could be the answer to many problems in India’s spare parts industry,” says Tapas, about the trigger to start.
Tapas is an electronics engineer and an MBA in finance, Diptanu is an automobile engineer, and Arijit is a computer engineer and an MBA in marketing. While Tapas had experienced the problem first hand, when the three engineers got together to do the math, they realized they were onto something promising.
Indian passenger car spare parts market is $1.02 billion market with multiple levels of intermediation. There are more than 14.5 million cars in India out of which about 9 million cars are in Tier-II and smaller cities in India. “About 1% of this total market is online currently which should grow to 5% by 2018. So the market we are targeting is about $50-$60 million in size by 2018. Apart from that, the 2-wheeler spare parts market is $2.05 billion and commercial vehicles spare parts market is $0.95 billion in size,” shares Tapas.
He is bullish not just on the market opportunity, but also the fact that numerous vertically focused e-commerce companies are capturing a large chunk of online market share in India. He cities Pepperfry, Zivame, Lenskart, Firstcry and Bluestone. At present, the site is focusing only on the passenger car market.
SparesHub is selling to direct car owners all over India. Two months ago, they started their B2B foray by selling offline over telephone to garage owners in Pune city. Over 20 garages have liked their idea and have agreed to partner with them. “We are reaching out to garage owners using our field sales team one city at a time. After Pune, we plan to start selling to garage owners in Nagpur, Aurangabad, and Nashik etc. We are also building a network of ‘SparesHub.com Certified Garages’ throughout India starting with Pune. Car owners would be able to discover good garages in every city through our platform and book services for their cars through this initiative,” says Tapas.
While B2B service is offered only in Pune, their B2C customers are spread out across metros like Delhi and Mumbai to small towns in Northeast and some orders have also come in from the South. With over 100 transactions under their belt, Tapas says customers come to them as they value the ease of buying car parts online and the delight of finding spares that they could not get in their local market.
Spokes of the wheel
Order fulfillment takes between three and four days, and in cases where parts are not available with SparesHub, time taken for sourcing and fulfilling the order ranges between six and seven days. Products sold on site range from Rs 350 to Rs 30,000, and the cost goes up substantially if the parts ordered belong to premium brands like Skoda, Toyota, Mercedes, and BMW etc.
SparesHub procures products from company spare part distributors in Pune and Mumbai. They have also entered into contracts with spare parts manufacturers to help get them at best prices. “Many MNC manufacturers of spare parts, who have had success with online spare parts retail in other countries like the US and Europe, are interested in replicating the success in India and have signed contracts with us,” claims Tapas.
Some of the early believers in SparesHub are companies like Tenneco and Tata Auto components, who have signed supplier agreements with them.
Partnerships done are not with car manufacturers but with spare parts manufacturers, and therefore SparesHub is able to offer spare parts of certain categories for all brands. For example, they have Monroe suspension parts for all car brands, and clutch parts from Valeo for all car brands. “We are aggressively adding more products on our website to cover the entire product range for all the brands. With 23+ brands and 110+ car models in India with multiple variants in each model, that is indeed a big challenge for us,” rues Tapas.
Manufacturers are happy to join hands with SparesHub as the website helps them increase the market reach for their products direct to customers, as well as direct access to the garage network. It also assists them fight counterfeit products in the market, which Tapas says is as high as 33%. At present, SparesHub does not stock inventory and follows the drop ship model. This is possible because of the good supply base of spares in Pune and Mumbai cities, which are good automotive hubs.
While there is a big opportunity beyond the car market, SparesHub wants to first consolidate its position in the car parts market and then replicate the model for 2 wheelers/commercial vehicles spare parts. “We already get customer queries for commercial vehicles, cranes and earth-movers spare parts. Another market that we plan to enter in the near future is the export market, because Indian cars are exported to the world in substantial numbers and the need for their spare parts is also substantial,” says Tapas.
Supplementing its online presence, the SparesHub team also fulfills offline orders from garages which are not yet comfortable ordering online. Offline option is only available for B2B customers. The startup has its office and warehouse in Pune, but does not have any physical retail store.
SparesHub relies on digital marketing to advertise. Tapas says they have plans to create a knowledge repository project so that SparesHub.com becomes a one-stop destination for all the knowledge and technical details about automobile spare parts, complete with how-to videos and articles.
Besides the three co-founders, the SparesHub team has three management interns from IIM Indore. Tapas says they will mostly hire automotive engineers to be part of their team.
Tapas says their immediate goal is to hit Rs 1 crore in revenues and offer more than 1 lakh parts on their website. Long term plans include plans to setup a seamless car repair experience for car owners in India – comprising garage discovery, service booking, purchasing genuine parts from SparesHub.com, delivery to garages and finally getting the car fixed.
The challenges that the startup is grappling with includes sheer number of spare parts in the market and complexity of the supply side logistics. Second part of the challenge is to educate customers and garage owners about online availability of car parts. As a result, Tapas says, they have decided to shift SparesHub.com to marketplace model as that would enable them to offer a larger variety of spare parts, which is much more capital efficient than the present inventory based model. The marketplace version of SparesHub should roll out in a month’s time.