Good time, cheap | The star
MANY e-commerce platforms have flourished dramatically over the past 18 months, with businesses going online to reach their customers and consumers browsing the internet to shop.
For Carsome, founded in 2015, the pandemic may have added another windfall: a return to private vehicles.
Eric Cheng, co-founder and CEO of used car platform group Carsome, notes that more and more people are opting for private cars over public transport and paging services due to the increased public health and hygiene concerns.
According to a consumer survey conducted in its main markets, the company found that 79% of Malaysians, 74% of Indonesians and 55% of Thais were uncomfortable sharing a car ride with foreigners or traveling with foreigners. ‘use public transportation.
“We have also observed that consumers who watch their spending and budget have a preference for used cars over new cars for their affordability and value for money,” he says.
Coupled with the rapid acceleration of digital adoption amid the Covid-19 pandemic, Carsome is indeed enjoying the perfect recipe for growth.
“Consumers are increasingly adopting an ‘online first, only online’ approach to shopping, even for a traditional industry like the used car industry. Before last year, it took more than 10 years for the digital penetration rate in retail in Southeast Asia to reach 3%. But it took less than a year for that figure to drop to 6%.
“Before that, we were already digitizing the used car industry as much as possible to consolidate a very fragmented market. And online used car sales platforms in Malaysia and Indonesia have grown in popularity during and even after the lockdown period.
“These opportunities have now become the right time for us to introduce the new way to buy cars by providing customers with a seamless online and offline used car shopping experience, with peace of mind and a quality assurance, “said Cheng.
At the start of the movement restrictions, Carsome focused its efforts on increasing productivity and strengthening technical skills as business activities were halted in the second quarter of 2020.
They have refined and extended their technology and products to increase the productivity and convenience of its auto dealers and inspectors, as well as upgraded its back-end infrastructure.
Therefore, Cheng says Carsome was able to quickly capitalize on the situation and pent-up demand as restrictions were relaxed to achieve a V-shaped recovery last July – just two months after resuming operations in May.
“We have been able to navigate these uncertain times and have emerged stronger, thanks also, in part, to the continued support of our investors in the form of advice on running the business in times of uncertainty, sharing vital information that influence key business decisions. and also build relationships with key industry partners, ”he says.
Malaysia Venture Capital Management Bhd (MAVCAP) is an investor in Carsome through venture capital funds, namely Superseed Fund, 500 Durians, MAVCAP Gobi Fund 3, Meranti Asean Growth Fund and Vynn Capital.
Last December, the company also raised $ 30 million (RM 123.28 million) in its Series D funding round, which was considered one of the largest equity fundings in the Southeast Asia online auto industry.
The funds will be used to strengthen its existing consumer-to-business (C2B) used car e-commerce, accelerate its new offering in the business-to-consumer (B2C) segment and support any potential merger and acquisition opportunities. .
Its significant performance over the past year has also placed Carsome on a more solid footing for an accelerated growth path for years to come. Reports indicate that the company achieved operational profitability in October 2020, excluding head office costs.
“We ended 2020 on a good note and in the first quarter of 2021 recorded a further 50% growth in monthly revenue compared to December of last year. We are about a quarter ahead of our forecast for the year and growth continues to accelerate, ”he notes.
Carsome currently trades 100,000 annualized cars for a total of US $ 700 million (RM 2.88 billion) in traded value, making it the largest integrated car e-commerce platform in Southeast Asia. .
Nonetheless, Cheng points out that this is only nearly 2% of the total market. As such, there are still vast opportunities for the group to expand into the existing markets in which it operates.
This year, Carsome is targeting three-fold annual growth, and Cheng says the platform is on track to surpass US $ 1 billion (RM 4.11 billion) in transaction value as it continues to expand its reach. footprint to more cities in Malaysia, Indonesia and Thailand. .
To achieve this, the company seeks to strengthen its existing regional leadership and improve the customer experience. It will also invest in the deployment of new solutions powered by big data and machine learning.
Cheng adds that the launch of its Carsome Certified program in March also paved the way for its next chapter of exponential growth in retail sales.
And with the growing consumer online shopping behavior, Cheng is optimistic that the online used car industry will continue to experience sustainable growth.
He points out that interest in online used car platforms has increased by 55% in Malaysia, 34% in Indonesia and 19% in Thailand.
“Based on our observations in several key markets, including China, used car sales continue to hold up after the lockdown. During times when personal hygiene and safety are highly valued, consumers are generally in favor of opting for private car ownership.
“We continue to be extremely focused on creating a significantly superior and differentiated consumption experience by improving transparency and trust factors throughout the used car journey.
“We want our consumers to move forward with confidence, whether it’s selling their car the fastest, most seamless, and convenient way, or buying a certified pre-owned car with confidence online. We do this by applying technology and data in our decision making and product offerings, ”he shares.
The intelligence of the data, he adds, will allow the platform to know more about consumer demand in a detailed and dynamic way. This will allow the team to gain a better understanding of their products and ensure constant improvement and better control of their supply chain in terms of sourcing and inventory management.
“It also allows us to provide data-driven information to determine the best possible price for consumers. With a doubling of revenues and promising growth prospects, Carsome had initially indicated its goal of an IPO by the end of 2023 in the United States.
Notably, there has been a recent wave of tech companies looking for listing opportunities in the United States amid strong sales spurred by the pandemic. One of the most important is the upcoming listing of Grab through a merger with a US blank check company.
When asked if Carsome could potentially advance its listing ambitions to capitalize on the Special Purpose Acquisition Company (SPAC) boom, Cheng said, “We see strong business fundamentals and a great market opportunity. which supports an accelerated schedule. We are currently evaluating all of our options to get there.
Despite its growth into a regional company, Malaysia has remained its base.
Cheng says the digital startup space in Malaysia is extremely dynamic and most of these initiatives are led by government-linked companies such as Malaysia Digital Economy Corp (MDEC) and Malaysian Global Innovation & Creativity Center (MaGIC). “We are the direct beneficiaries of these initiatives thanks to the cultivation of a rich pool of digital talent. We also appreciate the willingness to collaborate between the public and private sectors in Malaysia.
“The participation and contribution to the ideation, co-innovation and commercialization discourse of our partners, be they local banks, companies or startups, has greatly contributed to the growth of Carsome.
“Malaysia also provides a world-class talent pool. Our pillar of strength has always been our people, and it’s easy to bring local and foreign experts from their respective fields to join us and build the Carsome brand, ”he says.