Will have integrated approach towards TV and online for the first time: Sandeep Aggarwal
Founder & CEO of Droom, talks about upping the marketing budget to Rs 400 crore, the pre-owned automobile market in India, revenue model and mediums they will focus on this year
Droom, an online marketplace to buy and sell used vehicles, has increased its marketing spends from Rs 225 crore to Rs 400 crore. This is a 77 percent increase from the previous year, and out of the new total budget, Droom has allocated Rs 150 crore for the digital medium alone.The e-commerce platform is in its fourth year.
Sandeep Aggarwal, Founder & CEO, Droom, talks more about the pre-owned automobile market in India, revenue model and the marketing strategy they adhere to. Excerpts:
You have almost doubled your marketing budget. This shows 2017-18 was good in terms of revenue. What all did you achieve in the last year?
We have doubled our budget, because we have quadrupled in terms of GMV and net revenue. We have seen a 30% increase in our workforce, close to 217% increase in our GMV, and around 370% increase in our net revenue in comparison to last year. That’s the reason our marketing budget has doubled, in fact, our overall top line growth has been much faster than the increase in the marketing budget. We are ready to take our brand to the masses.
Droom has allocated Rs 150 crore to digital marketing alone. What new will we be seeing from your end?
A total of four television campaigns are in the pipeline over the next 12 months. The first campaign will focus on the auto portal’s Orange Book Value offering — a pricing tool — and is scheduled to run for two months across 37 television channels, pan India. The next campaign will be launched in August to position Droom as a partner in the entire lifecycle management of the vehicle. This will be followed by another burst around Diwali on auto financing for Droom Credit. Also, this year, the focus is more on Hindi channels with the portal seeing increased traffic from tier II cities and beyond. The share of Hindi channels will be 65%, while the share of non HD channels will be 80%. Droom will also have an integrated approach towards TV and online for the first time, with parallel video ads running on digital along with TV for brand creation.
Rs 150 crore is segregated between ATL and BTL activities. How does BTL work as a medium for the company?
Our marketing budget goes into ATL, BTL, Digital and PR activities. BTL advertising is an integral part of our marketing initiatives. This provides a more personal touch where we can engage and communicate with the audience. As a brand, we get valuable feedback while creating a long lasting impact on the consumers' mind. We have experimented with various formats; from creating experiences like chopper, plane, supercar and superbike rides in partnership with Uber, to activations in auto markets, where we provide instant valuation of any vehicle.
The used car market is quite scattered in India and several other companies tried bringing it online, but no one has really succeeded. Comment.
There may be a lot of online automobile player due to its large market share, which is 12% of the Indian GDP and almost all large automobile industries across the globe have 6-8 or more meaningful multi-billionaire online automobile players. Even when we started we had very little capital and online classifieds such as Olx and Quickr, and online store platforms such as Car Dekho, CarWale, Gaadi.com, were all very big, but this fact did not discourage us because we focused on our original thinking, innovation, customization, and our competition.
We currently hold 70% market share of all the automobile transactions taking place online, so we have already beaten competition. We get 33 million traffic, which is probably larger than any other automobile-focused portal. So, we feel that we can dominate this category for the next four decades.
How do you plan to disrupt the pre-owned automobile market? Offers and promotions don't last forever, what other strategies do you have?
We intend to strengthen our ongoing efforts by reaching out to more consumers with this amplified monetary allocation.
We will be running several campaigns soon, as I said, that focus mainly on the innovative mechanisms adopted by Droom. We aim to offer our customers listed certificate packages that include certificates for pricing history and inspection. In August, we want to focus on auto financing too. Droom has tied up with numerous insurance companies to provide customers with policies. Furthermore, Droom has one of the largest RTO networks, ensuring that customers are able to complete their RTO transfers seamlessly.
From researching about the vehicle to buying, maintaining and disposing it, Droom aims to emerge as the one-stop solution for all these needs.
What is your long-term revenue strategy? What percentage of commission are you playing at currently?
Currently, we are making 2.5% of our GMV net revenue. This number used to be 1.7% just a year back, so we have seen 80 basis points improvement in our net revenue and we think in the next one year we will be running at close to 3.5% and above that we are expecting full profitability. Unlike any other e-commerce company, we have five different distinct revenue sources, and each one is growing rapidly. Out of these five-revenue sources is transactional revenue sources, where someone sells automobiles or automobile services and we make a commission anywhere between 2%-15%. Second is, we provide subscription service to large dealers, third is advertising, fourth is premium tools such as a premium report from Orange Book Value, ECO and HISTORY and fifth is Loan and Insurance. These Five distinct revenue sources are ramping up very nicely and we think in a year’s time, we will be profitable.
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