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Sandeep Aggarwal, Chairman -; CEO, Droom Technology Limited

17 Jan 2022 , 03:35 PM

In an interaction with Mamta Maity, indiainfoline.com, Mr Sandeep Aggarwal, Chairman & CEO, Droom Technology Limited said "Our strategy is focused on high-quality traffic, focus on traffic at Droom and let all other products and services adapted at Droom rather than their independent website. The third is focus on conversion improvement rather than bringing high traffic."

Could you brief us about your company its journey, and milestones? Take us through the IPO?

I started the company in April 2014. The idea behind the company was very simple like fashion, technology, travel every category is moving online so why not the automobile. What can be done to increase the adaption of automobiles online. With that idea, Droom started, I had already created the 1-billion-dollar company with Shopclues so I was a proven entrepreneur but was going through some personal crisis, so, that’s how the company started, we followed an atypical Startup approach piece by piece, we started selling only cars, only used in only NCR. Then we started selling cars and motorcycles in NCR, then we started selling used cars and motorcycles in 50 cities and that’s how we expanded and now Droom sells Cars, Motorcycles, bus, trucks, jeep, planes and yacht and we are in 1151 cities and we have close to 20,000 dealers and they give us close to 3Lakhs + supply of vehicle which is each of it transactable and on the way we also built the entire ecosystem which is needed so that this category can be shifted online.

So, OBV — Orange book value pricing, ECO for inspection of the vehicle, History for the historical record, discovery for vehicle finder, credit for loan and insurance, and velocity for delivery of vehicles. That is how we have created a fully integrated vertical offerings and on the way we raised 100’s of millions of funds from global institutions investors and on 12th November 2021, the company filed its IPO for the Indian subsidiary for our possible listing at Bombay Stock Exchange and National Stock Exchange.

Where do you see sales trending in the next 12 to 24 months?

Considering we are IPO bound, we will not be able to share any forward-looking statement

How the strategies of the company going to be in the coming years?

I cannot talk about the future, but I can tell that we are working on building last-mile delivery through our Velocity product. We are building loans and insurance through our Droom credit product. We have also launched a new set of algorithms that are taking e-commerce to the next level, more like combining where Amazon meets Tinder-like matching algorithms like it is one of the high-ticket item categories and these are some of the initiatives we are working on.

Who are the emerging competitors in the industry in which you operate? 

This space has multiple players, and they all are well known.

What will be your utilization of your net proceeds?

Net proceeds will be utilised for strategic acquisition opportunities to access new geographies, categories and services. It will also look at acquisitions to enhance its technology platform with a focus on blockchain, AI/ML, big data analytics and IoT space. The company will also evaluate regional or last mile delivery players for doorstep delivery of vehicles as part of its Droom Velocity offering.

In fiscal 2019 you made a loss of Rs105.37cr, in 2020 it came down to Rs89.60cr and in 2021 it was Rs68.88cr, so will it break-even in fiscal 2022?

I cannot talk about forward-looking, but if I talk about historical trend, the year we have improved the unit economy and ability to monetize and contain cost and see the benefit of technology and scale and every year hike our total expenses in the absolute rupee came down, but our business kept on growing so we have absolutely done a good job in compelling unit economics.

Your traffic is coming down drastically from 426.22 million in 2019 to 102.97 million, what is your current strategies to increase it going forward?

Our traffic is going down drastically is not something which we struggle with, the reason for this decline is because of the shift in our strategy. Earlier, when we built six products, we started driving separate traffic for those sites, and then we realized that we were actually spending way too much money on 6 different products wherein someone just needed Droom and also services coming from Droom. Each service of ours has also named our one product we did not name after to run separate marketing strategy this is one part. Second is the company started spending more effort and it was a part of our strategy in improving conversion rather than increasing traffic. So, our conversion has gone up 3 years back roughly 8 basis point in total traffic to 20 basis point in last fiscal year because of that we actually drop the same output with one third the traffic.

Our strategy is focused on high-quality traffic, focus on traffic at Droom and let all other products and services adapted at Droom rather than their independent website.

The third is focus on conversion improvement rather than bringing high traffic.

Your conversion rate is improving consistently from 0.08% 2019 to 0.17% in 2021, what are your predictions for the years to come? Have shar

Mostly we have spoken in last questions, we thought that we have a lot of low hanging opportunity in conversion improvement in different phases when you build out the company you focus on different things and conversion came slight late, we were focusing on building our infrastructure, basic user experience, and all other things in terms of making sure everything is working like a machine but then we started working on conversion and we saw a lot of opportunity in it for future I won't be able to comment.

How is the scrappage policy going to benefit Droom Tech?

Scrappage policy is aligning India’s automobile market in line with the global benchmark which cannot hurt Droom but can only benefit. Scrappage policy means when you buy a new vehicle, the registration for 20 years rather than 15 years that means the total cost of ownership for per year basis for owning a vehicle has come down which means higher adoption for the automobile. There is a proper way how you can get rid of the vehicle sometimes tax rebate etc. everything vehicle is churning or staying longer on roads, it is good for Droom.

How do you envisage your revenue model going forward?

Being IPO bound, cannot comment of forward-looking but for first 6 years, the company focused on making money through transaction model but in last few quarters, we have been trying to monetize our platform through loan and insurance, through last-mile delivery, through certification service and subscription through the dealers.

With loss coming down every year, will Droom break-even in FY2022?

Historically, each of the operating year, we have increased not only in absolute rupee but in percentage also have dramatically cut down our losses.

Do you face issues with fraudulent sellers, what mechanism do we have in place to detect and eliminate them?

The moment any marketplace platform or any other e-commerce business is there, there will always be gaming opportunities. People will find several types of gaming opportunities and we are not immune to that either. However, we only accept 7% of the sellers who sign up, second — they go through a detailed KYC, third — we have verified the bank accounts, fourth — we have ratings and reviews which is given by the users and finally we have a very tight seller policy.

Now with the third covid wave around the corner, how has Droom Tech strategies itself to sail in the covid wave?

I do not want Droom to grow at the expense of human life, but the reality is - where someone cannot step out or avoid contact with others or prefer social distancing or they do not want to touch and feel physical stores, all that, whatever are the reasons this is happening, this is good for Droom. Wave one was bad for us because the country has a complete lockdown not because we could not run the business. Wave two after May month some correction because it was really bad, you know our business actually bloomed up and grew very rapidly and we think after 2 waves, the company has been completely ready in terms of its readiness.

How do you see the online automobile classifieds business shaping up?

Sorry, I cannot comment on classified, Droom is in the e-commerce business. The classified players are something we would not like to comment on. We are in an e-commerce business, and we are no different on how Amazon third-party business with fulfilment buying works we are e-commerce and same as Amazon rather than New York Times journal as a classified.

What part of the business do you think is being ignored that has more upside potential?

Two big initiatives that we started in 2021 were ignored in the past because we had many others a part of our roadmap many other things to take care of. One was making money through loans and insurance, second is taking care of last-mile delivery. With these two offerings, we have a full stack vertically integrated offering with nobody else has in this country.

Related Tags

  • Bombay Stock Exchange
  • Droom Technology ahead of listing
  • Droom Technology IPO
  • Droom Technology Limited
  • Droom Technology UPCOMING ipo
  • National Stock Exchange
  • Sandeep Aggarwal Chairman & CEO
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