Startup Bubble Hasn’t Burst, It’s Cementing Itself Into Something Concrete: Sandeep Aggarwal Of Droom

Sandeep Aggarwal is an active angel investor, philanthropist and Internet visionary. His impeccable business acumen, strong domain knowledge and an undying passion to never give up has helped him grow from being an associate with Kotak Securities to becoming the founder of Shopclues and Droom. He is currently the founder and CEO of Droom – a marketplace for automobiles. He founded ShopClues in 2011 and stepped down as its CEO in October 2013.

In an exclusive candid conversation with Inc42, Sandeep shares the learnings and experiences of his journey and discusses the future of ecommerce in India.

Here are the edited excerpts:

Inc42: How has your entrepreneurial journey panned out till now?

Sandeep: Having started our commercial operations in January 2015, the response to Droom has been overwhelming from all key stakeholders – buyers, sellers and investors. We have been heavily funded by some of the leading global venture investors, and have raised a capital funding of around $20 Mn so far. It is a mark of our success that Droom today is one of the fastest growing consumer internet companies in India. The company has grown by over 501 times since its commercial launch and consistently generates $60 Mn in annualised GMV. Given its growth trajectory and momentum, we feel that 3 years from now, Droom will aim at driving INR 10,000 crore in gross revenue and operating in 18-20 countries and 3 continents.

Inc42: What all learnings and experiences have you gained during your journey with Shopclues?

Sandeep: ShopClues was incepted as an online managed marketplace when all the other ecommerce companies in India were still following the inventory-led models. Having pioneered the approach in the Indian market, there were many learning experiences to glean from the venture. First was the impact of SME merchants and non-standard categories could have on the business; nearly 95 percent of offline retailers today belong to the SME segment, and as such provide a potentially huge market to tap into. Another insight that I gained during my association with ShopClues was the role a disruptive market approach and advanced technology-driven business solutions could have on a startup business. I also learnt the value of a unique brand proposition that appeals to both buyers and sellers during my time with ShopClues.

Another insight that I gained during my association with ShopClues was the role a disruptive market approach and advanced technology-driven business solutions could have on a startup business.

Inc42: How have these helped you in creating and developing Droom?

Sandeep: The experience with ShopClues was pivotal in Droom’s creation. Both these companies have a very strong culture of “customer first”. We initially focused on the customer interest and then back calculated all that we needed to accomplish to provide customers a world-class experience.

Advanced technologies were used to integrate the business solutions for the target audience, while offline sellers were brought on board. Services and listings were carefully vetted and quality of service ensured. And now, Droom  is the only transactional marketplace for automobiles and automobile services in India with 9K+ B2C sellers, 15K+ products, 6K+ listings, $85mil.+ in listed GMV, 700K+ FB Community members (highest for any automobile community in India) and over 500k+ downloads for mobile apps.

Inc42: How did Droom happen?

Sandeep: After ShopClues, I wanted to breach a new market segment – online transactional automobile space – with a never-before used approach. I saw the fragmented, unorganised nature of the Indian automobile marketplace, and thus  the idea for Droom was born.

 

Inc42: How lucrative is the market for Droom? How does it plan to tap the available opportunities?

Sandeep: In 2012, the used car market in India became bigger than the new cars market. As India is the 3rd largest automobile market in the world, so, the addressable opportunity is huge. Moreover, less than 0.5% of this industry is penetrated online. We believe that the automobile industry in India will rise from $125 Bn to $225 Bn by 2020, and the online business will go up from $500 Mn to $20 Bn by 2020. There are 48 Mn automobiles sold in India and the total installed base of automobiles in India is 300 Mn. For every new car, 1.2 used cars and for every new two-wheeler, 1.4 used two wheelers are sold in India. However, at present, only 0.7% is penetrated online, which provides a vast potential market to tap into.

We are looking to add more services and categories to our existing offerings to augment our range. We have already covered the high-end as well as economical automobile categories, and have also launched an aerial category to cater to the HNIs and corporate professionals. We will also continue building our technology platform and work on our existing technology infrastructure. In time, we will extend our services to other parts of South East Asia as well as other regions across the globe to revolutionise how automobile business is approached across the globe.

Inc42: What is the revenue model for Droom?

Sandeep: The revenue model for Droom is as follows:

Current selling service fee of 1.5% on a successful transaction from seller. This can be increased to 2.5% in a year’s time.

Selling service fee of 12% on a successful transaction from service providers. This can be 15% to 18% in  a year’s time.

INR 99 to INR 299 per listing from C2C seller.

A monthly subscription fee of INR 500 for Pro-Seller Premium.

Online ad revenue that is almost 100% incremental gross margin business.

Inc42: How do you verify the listings on your platform?

Sandeep: Buyers suffer from lack of trust, standardization of pricing, and access to variety. Sellers suffer from lower pricing due to poor buyer perception, low trade velocity, expensive physical retail and limited reach. With Droom, we are building trust, selection and pricing advantage for buyers.

This is mostly done through Droom’s Full Circle Trust Programme. We enable savings of 8-10% with nine trust factors that grade seller, vehicle and documentation. The Buyer Protection ensures that the user’s money is safe in case the transaction fails to close. The brand verifies each seller and issues a Verified Seller badge that is visible to buyers. Also, to further ensure transparency, Droom offers independent, objective and unbiased automobile inspection reports. We also have an Orange Book Value-algorithmic pricing recommendation engine which currently has nearly 1000 B2C sellers and 6000 listings worth 250 crores.

Inc42: How has the company grown since its inception? What is the number of app downloads you have achieved so far? Please share some other numbers that depict the growth of Droom?

Sandeep: The company has grown tremendously since its inception. Since commencing commercial operations in January 2015, the company has grown by over 300 times and is currently driving annual GMV worth $30 Mn. We have 9k+ B2C sellers, 15k+ products, 6k+ listings, $85mil.+ in listed GMV, 700k+ FB Community members (highest for any automobile community in India) and over 500k+ downloads for mobile apps.

Inc42: What are your expansion plans for Droom?

Sandeep: It takes 6 to 8 years to create a world-class company. Keeping that in mind, we have formulated and planned a lot of strategies for the future.  We currently operate in 14 categories and we will expand to 20 by end of this year. By end of 2016, we are also looking to expand outwards from India and establish our services in SE Asia, Western Europe and North America. Additionally, considering the fact that Droom has the most robust and advanced platform for any ecommerce company in India, we will continue to expand our platform features and categories to keep up with the latest technological developments.

Inc42: How have you used the $16 Mn (INR 100 Cr.) funding towards the development of Droom? Can we expect another funding round soon?

Sandeep: The funding secured has gone into the continued development of our tech platform and in the launch of new categories. Moreover, the investment will also power our expansion in India and SE Asia, as well as in building the leadership team with strategic hiring of the right talent.

Inc42: You are a veteran of the ecommerce space. How is ecommerce landscape in India evolving? What can we expect in the future?

Sandeep: The ecommerce ecosystem in India is entering a phase of maturation. Startups have now adopted a smarter approach towards business solutions. The increasing smartphone adoption and internet penetration will further boost the growth and present businesses with an unparalleled opportunity to scale up. We can expect the industry to grow over the next five years before entering a phase of consolidation.

The ecommerce ecosystem in India is entering a phase of maturation. Startups have now adopted a smarter approach towards business solutions.

Inc42: Digital commerce is still in a nascent stage in India. As per the recent Gartner report, it accounts for less than 1% of the total retail sales in 2015. What’s missing? How can the ecommerce players drive growth and capture more market share?

Sandeep: Digital commerce in India has largely been driven by the smartphone revolution in the country. However, despite the massive increase in consumer adoption, less than 20 percent of the total population has leveraged the benefits of internet penetration and smartphone usage. As such, there is a potentially large market which is untapped at present.

Improving infrastructure will definitely go a long way in improving the ecommerce growth within the country. Mobile operators and ecommerce players need to come together to make a ubiquitous high-speed mobile networking possible. Moreover, online businesses should also make their interface interactive, yet simple to provide a smoother and more seamless experience for the end-user.

Inc42: A lot of ecommerce players are also going offline. Do you think it’s a wise move? Is online and offline integration the way to go?

Sandeep: Yes, definitely. While they have embraced online commerce with open arms, Indian consumers have long been accustomed to the comfort and trust factor associated with brick-and-mortar stores. Omnichannel ventures combine the benefits of digital commerce with those of the offline channels to optimise their businesses and enhance the consumer experience.

Omnichannel ventures combine the benefits of digital commerce with those of the offline channels to optimise their businesses and enhance the consumer experience.

Inc42: What’s your take on the hype surrounding the startup bubble? Do you think it has finally burst as the funds are drying up? In such a scenario, according to you, which startups will prevail?

Sandeep: The bubble hasn’t burst; rather, it is just cementing itself into something concrete. After widespread proliferation, the startup landscape in the country is going through a stage of evolution as the existing startups concentrate on consolidation after a rapid scale-up. Funding for the startups will help them leverage technology for their growth and business, and ultimately these are the ones which will prevail.

Inc42: How has the funding scenario changed in the current scenario? Do you think it will get tougher for startups to raise funding in the future?

Sandeep: The investment landscape in India has evolved a lot over the past few years. After the initial heavy investments into all startup ventures, both investors and entrepreneurs have grown smarter about capital management. The focus today has shifted on building robust products that can really create a tangible impact in the market rather than just follow what is trending and successful.

As such, we are seeing a renewed dedication towards early stage and seed stage investments. Several growth incubators, accelerators and early stage investment facilitators have cropped up to guide and support startups, while angel investors with entrepreneurial experience are also open to mentoring the upcoming wave of entrepreneurs. I, personally, have also been involved as an angel investor and keep my eyes open for the next big innovative venture that leverages technology and has potential to disrupt the market.

 

Inc42: Any words of advice for entrepreneurs currently facing a tough time with their startups and contemplating shutdowns.

Sandeep: I have but one thing to say to entrepreneurs going through a rough patch with their ventures – never give up and never let your dreams die. Every entrepreneurial journey entails testing times where your vision and faith in your venture would be tested to the limits. There are learning experiences to be gleaned from every hurdle, ever stumble. Remember, there will always be challenges when you venture off the beaten path, but if you stay strong and keep an open mind to learning, you will find your success.

Exiting a venture and creating/developing a completely new venture from scratch can be a tricky and tough endeavor. However, Sandeep does it with flair and makes it look easy. His journey is like a phoenix rising from the ashes. With Droom vrooming ahead, he aims to soar high; wishing him all the success.