When Arnav Kumar started looking for his first car, he was determined to buy a used one to save money. The process of sorting through online listings and trying to figure out which were legitimate was so tedious that he gave up after a day. To save other buyers from the same headache, Kumar founded Gozoomo, which just landed a $5 million Series A from returning investors SAIF Partners.
“Unlike the rest of Indian e-commerce, which does a great job, this was insanely difficult,” Kumar says. “The biggest classifieds, similar to Craigslist, were just too difficult to navigate and use. Similar cars, with the same age and mileage and make, were listed at many different prices. I could hardly shortlist based on the pictures and the information was incomplete. Many listings were fake, put up by dealers to reel users in.”
Based in Bangalore, Gozoomo (also called Zoomo) helps buyers and sellers by providing a pricing algorithm, an inspection team that verifies the condition of vehicles before they are listed, and post-sales support. It claims to already have the largest collection of verified peer-to-peer secondhand car listings in Bangalore and Mumbai and plans to launch in a new city every month (including Delhi, Pune, Hyderabad, and Chandigarh) until the end of this year.
Kumar says that in June, Gozoomo facilitated 200 transactions in Bangalore and 100 in Mumbai, where it launched just six weeks ago. The startup’s target is to achieve 1,000 transactions every month by October.
In order to do that, Gozoomo plans to use its new funding to refine its pricing algorithm, support its new training program for inspectors, and launch new consumer-facing and internal products, including apps for Gozoomo’s car inspection team.
Kumar is confident about Gozoomo’s growth potential because India’s used car market is currently worth $10 billion, he says, and expected to increase dramatically over the next five to seven years. The country’s motorization rate is still just 18 per thousand people, but car sales are expected to jump as the economy grows and people have more disposable income.
Buyers and sellers don’t have a local equivalent of the United States’ Kelley Blue Book to consult for car values or marketplaces like Carfax, however, and a lack of dealership regulations makes purchasing a used car difficult.
By solving these problems, Gozoomo hopes to convince more consumers that a secondhand car is a good value and doesn’t involve tons of research and haggling. To determine out valuation without a guide, Gozoomo built its own pricing model based on data collected from online listings, transaction data, and offline dealers. Its inspectors use Gozoomo’s apps to take photos, rate components, and create listings after they approve a vehicle.
Gozoomo’s main competitors are online classified portals and car dealerships. The site sets itself apart by insisting on peer-to-peer transactions and not charging brokerage fees. Instead, it plans to monetize through post-transaction services, like loans, title transfers, refurbishment, and insurance).
“We believe (and know) that a platform with dealers on it can never do justice to end users, given how opaque and unregulated the dealers are. If you are earning revenues from dealers, how can you penalize them for bad inventory or ripping off end users?” says Kumar. “The unorganized dealers have not done a good job and hence people want to avoid them. No dealers and zero brokerage is a very strong draw for customers.”