Flipkart and Adobe executives join hands with an angel to float platform for used cars, Spinny
For a long time, buyers shied away from the used car domain in India, while in western economies, three used cars are being sold for every new car. The major roadblock in this direction has been the asymmetry of information present in the process of used car transactions.
The used car market is highly unstructured with independent dealers and curbsiders comprising a large chunk of the market. The information asymmetry involved in the process leads to the problem of moral hazard. Independents charge anywhere between 10 and 30 per cent on cars. Now, for a layman, choosing from a pool of mint and lemon-coloured cars entails a good probability of adverse selection.
Genesis of Spinny and the team behind it
To weed out the nexus of independent consultants, Niraj Singh, Ramanshu Mahaur, Ganesh Pawar and Mohit Gupta floated Spinny. It is all about bringing transparency and convenience to the used-car buying and selling experience. It covers the entire value chain, right from the inspection of the cars to providing test drives to taking care of the registration transfers to providing warranty on cars to buyers.
Niraj and Ramanshu are IIT, Delhi alumni, while Mohit is from IMT, Ghaziabad and Ganesh studied at IIM, Ahmedabad. Niraj is one of the partners of investment firm OutBox Venture and sits on the boards of companies like Tripoto, Shaadisaga and JustRide. Ramanshu has close to five years experience with Adobe. Till recently, Mohit served at e-commerce major Flipkart as an associate director. Ganesh has also worked with Flipkart.
Tech and control on entire value-chain are Spinny’s USPs
Being a tech-driven company, Spinny aims to become, by default, the destination for used cars and bring an end to information asymmetry while taking care of all the touch-points and keeping customer convenience at the centre of every experience.
Speaking about exponential growth of used car searches on the internet, Niraj says,
The searches for used cars have doubled from last year. In June alone, 1,37,790 searches for used cars were made (from all over india) which is 58.3 per cent higher than the searches made last year in the same month.
Globally, 8,01,100 monthly searches for used cars are being made, US being the biggest contributor with 56.8 per cent of the searches. It is followed by UK and India with 16.2 per cent and 10.9 per cent of the searches respectively (based on Adwords Keyword Analysis). Niraj adds,
With increased internet penetration and growing dissemination of information, people are seeing pre-owned cars as an economical alternative to new cars.
Traction and strong emphasis on vehicle inspection
As of now, the company has processed more than 150 car transactions and is currently doing six to seven transactions a day. Niraj adds,
Maruti Suzuki and Hyundai are the preferred brands among people looking to buy used cars. Most of buyers are able to make a decision on their first test drive itself. On an average, we inspect four cars against every car we list.
Spinny’s quality control begins with its inspection process. The cars are assessed based on detailed 200-point inspection checklist that allows the company’s inspectors to evaluate every aspect of the car.
The company has an in-house inspection team of qualified experts with many years of experience. Their experience is key to ensuring the cars Spinny hosts are the best pre-owned cars in the market. The inspection is conducted by using a standardised workflow followed by all the inspectors, to ensure greater efficiency.
What led an angel to become a part of startup?
We hardly see angels turning entrepreneurs (generally, it's otherwise). Explaining this transformation, Niraj says,
I wanted to become part of the learning process of these startups so I decided to put my money on this rather than investing in real estate.
Spinny also has an in-house training programme to ensure enough supply of quality automobile inspectors as it looks to rapidly expand and establish presence pan india and add a lot of cars on its platform. Niraj adds,
Very soon, we would be adding at least 100 certified cars every day on our platform and we would be able to make a car live on our platform within 90 minutes from receiving the listing request. Once the car is live, it would be mapped with potential buyers instantaneously.
The company plans to expand to other cities within the next three months and in long term it aims to reach the top 20 cities by mid 2016.
With 3.5 million used cars sold in the last financial year, the used car market is valued at about USD 15 billion (GMV). The market is growing at 20-22 per cent CAGR. A recent CRISIL study forecasted the sales of used cars to reach around 8 million units by 2020. This will value the market size at around USD 45 billion by 2020.
At present, there is a slew of companies notably, Carwale, Cartrade, Cardekho, Droom, Zoomo, 19miles, Truebil and CredR, operating in the used car space. The company competes with these startups as well as the horizontal classifieds platforms like Olx and Quikr Cars.
Unlike verticals like jobs and real estate, automobile classifieds is not disrupted so far and with debut of players like Droom, Truebil and Spinny, the space looks very interesting. Recently, horizontal classifieds major Quikr also announced separate automobile vertical Quikr Cars and OLX also slated to launch automobile-focused separate vertical.