How Spinny is re-defining the pre-owned car market through its platform
Cars capture the imagination of people. But not many want to own new cars as they think they can instead start off with a pre-owned car before going for a new one. Many young people often don’t have enough capital to buy a new car. While there are several platforms - classifieds, franchises, and auctions that sell used cars, a startup based out of Gurugram, Spinny owns the entire retail operation offering a used car buying experience to people.
Spinny was launched by Niraj Singh, an IIT-Delhi alumnus, a serial entrepreneur, and investor, in 2015. The company was born out of his desire to solve car ownership blues for young Indians. Niraj started the business with $500,000 from his own funds. Today he is funded by several VC firms and has raised close to Rs 418 crore.
Niraj realised that there was a need to create a premium experience for people purchasing second-hand cars and decided to create a simple and straightforward platform for the customer to gather information and buy a car.
“Cars are not just a dream or an excitement anymore. People have realised that they must have a personal source of mobility to attend any on-demand need. More than 70 percent of used cars are being bought by Indians under the age of 40", says Niraj
He adds, "Only four percent of people are satisfied with their experience of buying a used car. We are providing trust, transparency, and simplicity. Our aim is that the buyer should be able to purchase the car with the same confidence that he or she shows while buying a new car.”
Being a full stack retail platform that owns the complete process from car inventory to the retail experience, Spinny enables people to order on its app, get the finance, and get their car delivered home.
There are several business models in the used car industry. There are auction-based and classified companies like Cars24, CarDekho, OLX, and Quikr.
There are also franchises and companies like Mahindra First Choice and True Value. Then there is Droom, an online marketplace to buy and sell used vehicles.
“Auction platforms and classifieds focus on the availability and the number of cars. In a franchise model, it’s difficult to maintain a strict control over quality. And for manufacturers, focus on new cars has to be their priority,” says Niraj.
Spinny claims it is able to ensure top quality cars and curate an end-to end customer experience. This provides the company with the agility to keep evolving the process, based on consumer and market expectations.
“In these uncertain times, we were the first to adapt to a completely contactless car buying and selling experience with our initiative #WithExtraCare, facilitating home test drives and home delivery,” says Niraj.
The first step is to choose from 1,200+ inspected, pre-owned cars (2012 make or newer) listed online. One can opt for a virtual tour to make a more informed choice. Following this, the customer books a home test drive of a fully sanitised car that comes with a safety kit for the customer. The final step involves uploading the required documents and payment details. Once the payment for the Spinny Assured Car is processed, the vehicle is delivered to the doorstep with ‘no questions asked, five-day money back guarantee’.
Spinny raised fresh capital of Rs 315 crore from Nandan Nilekani’s Fundamentum Partnership in March 2020. It had earlier started off with an initial funding from Blume Ventures, Smile Ventures, Accel, SAIF Partners, and Alteria Capital, totalling close to Rs 103 crore.
“We are targeting corporate-level profitability by the end of next year. However, we will continue to raise more funds to diversify into ‘new segments’ related to solving customer problems, which is evident from the fact that the brand does not have the word ‘car’ mentioned in it,” explains Niraj.
Spinny says over the years it has earned the trust of 10,000 plus customers with a 4x growth in the last nine months. With the assurances of a No Haggling Fixed Price Offering, One-Year Warranty and Five-Day No Questions Asked Money-Back Guarantee, the company claims it has been able to gain the trust of the customers. It operates in six cities - Delhi, Gurugram, Noida, Bengaluru, Hyderabad, and Pune, has 10 car hubs, and employs over 500 people.
“Our main focus is on making all transactions seamless and transparent. Our aim is to make the car buying experience for the customer simple and delightful. The tangible benefits are there for all to see,” says Niraj.
The company has a 200-point inspection check to make sure the car details are transparent.
One of the recent challenges for Spinny was to introduce fixed price assurance. Worldwide, the used car market is an industry where negotiation is the norm.
“We chose to disrupt with a non-negotiable price that’s listed on spinny.com. This meant exercising strict protocols for a competitive price without compromising on the quality of the car. This way, every customer gets the best price for the car without the need to negotiate. The consumer has welcomed this effort from us of offering a fair price in one go which reduces the number of interactions,” says Niraj.
The company says it has achieved $50 million ARR (Annual Run Rate) till March 2020.
Spinny says it is witnessing a growing interest from customers due to efficiency in contactless transactions and is back on track with its June numbers in the existing cities after a couple of months of lull in the industry.
“Young India is gearing up against the odds to fuel the economy. During these uncertain times, owning a car is considered as the safest way of personal mobility. The liquidity crunch is shifting the demand towards pre-owned cars. We are working through this opportunity,” says Niraj.
Home test drives are on the rise. Despite the COVID-19 pandemic and its devastating effect on the economy, within two weeks of resuming operations in June, Bengaluru is already at 70-80 percent of pre-COVID-19 volumes while Delhi and Gurgaon are at 50 percent.
Expansion to new cities has been put off for now to focus on the initiatives that are required to deliver a safe experience. From Bengaluru, Gurugram, Hyderabad, and Delhi, they have managed to sell 600 plus cars since Lockdown 4.0, Niraj explains.
The Spinny team says the demand for pre-owned cars is more or less similar to the pre-COVID-19 days with maximum consumer interest coming in for the Rs 3-4 lakh and Rs 4-6 lakh price brackets. Its core focus is on the mass market cars and demand for cars costing Rs 8 lakh has vanished.
The next 18 months and COVID-19
“Our priority is to ensure the safety of the customers as well as our employees. We will be concentrating on home test drives and home deliveries. This pandemic is going to change consumer behaviour for good. We will keep the operations and execution lean - to cater to any new developments that are desired by the market,” Niraj says.
He adds, “The sole effort will be to keep raising standards in safety, hygiene, and contactless buying experiences while offering the expected ‘Spinny delight’ to our customers. As the situation of the country returns to normal, we will evaluate venturing into new cities as per the existing plans. However, our retail experience could see developments depending on the customer response on home test drives and deliveries”.
The difficulties for Niraj have been plenty. In the used car category, neither input nor output is standard. Their sourcing in the local market needed strict quality requirements in terms of documentation, mechanical condition of the vehicle, and its safety aspects. The difficulty was in challenging the norms at every level.
“In the next 18 months we don’t want to be another player in the category but instead want to be the catalyst to change the perception of used car transactions. We are not building another listing platform but a seamless buying experience that is synonymous with transparency, quality, accountability, and trust,” says Niraj.
“For a full stack platform, we needed to develop capabilities from ground up for every aspect - supply of cars, catering to customer demand, retail operations and experience - and the tricky part is to have a perfect sync with each other. The range of talent and skill set that is required is huge,” adds Niraj.
Behind the scenes the challenges were in managing data science feeds, on-ground operations, and procuring quality cars and models that the customers expect. The advantage for Spinny is that it owns all the processes, from enabling customer experience from the inventory of cars, online ordering, home test drives, to home deliveries.
Spinny makes the entire car history available on its website supported with HD images that cover every angle of a car. Taking it a step forward, it is now offering real-time video interactions between customers and Spinny executives.
According to ReportLinker, the Indian auto-industry has entered the BS-VI era from April 2020 which means the value proposition of a used car can grow stronger as new cars are expected to become expensive due to additional technology costs. Companies are gradually focussing on reducing the production of diesel cars. For instance, Maruti Suzuki’s decision to exit the diesel car segment is also expected to increase the demand for compact diesel cars in the used car market, unless there is a backlash against diesel cars.
Spinny is going after this market to emerge as a valuable tech company as the total number of pre-owned cars bought in the market is more than four million units.
Edited by Javed Gaihlot