A Generous Sprinkle of Trust is All it Takes- Decoding the Story behind Droom

• ByTejika Bajaj     |    December 14, 2021

“The idea behind Droom was that India is the third-largest automobile market in the world but why not to give 21st-century experience to consumers for automobile buying and selling and how we can overcome India’s structural constraints of the high cost of capital and very expensive real estate and yet provide the largest selection, low price, trust and transparency for automobiles online,” said the co-founder of Droom, Sandeep Aggarwal.  

With the rise of the Indian middle class population, the demand for used cars has seen a spike in the past few decades. The used car marketplace has existed in India for over two decades now, however it still experiences hiccups and hurdles around its development. Lack of trust amongst the buyers and sellers is still a major hurdle which is yet to be conquered in the used car segment. In an attempt to change the dimensions of the automobile business, the online platform Droom was conceived.

Founded in 2014, Droom is an online transactional platform which offers 21st Century experience in buying and selling used as well as new vehicles in India as well as other relevant markets. The startup not only offers a platform for trade of automobiles but services like life cycle management and all automobile ancillary services to its clients.

Rising from Ashes

It is interesting to note that the Washington University graduate, Sandeep Aggarwal, started Droom following a deep personal crisis in the year 2013 which left his career crippled. A commerce graduate, Aggarwal found solace in the business world and worked closely with various MNCs before taking on his own entrepreneurial venture.

In 2011, Sandeep embarked on his entrepreneurial journey with the online marketplace ShopClues. Soon after, the company witnessed massive success and earned the coveted unicorn status. However, the year 2013 brought forth allegations of insider trading on the entrepreneur resulting in the career of the co-founder being put into jeopardy.

The entrepreneur left his previous establishment and dwelled  on his true calling. In 2014, the young graduate established Droom along with a fellow comrade Rishabh Malik to break the hurdle of trust in the used car marketplace and revolutionise the used vehicle space.

Reminiscing how Droom came into inception, the co-founder and CEO of Droom, Sandeep Aggarwal said, “The idea of Droom came to me when I was at my lowest point. At that time, I realised that I want to be king of my hill again and how Droom occurred was rested on three things – India is the third largest automobile market in the world, buying and selling an automobile is so 19th-century experience with frictions, and why not use my marketplace knowledge and experience to disrupt this industry.”

Decoding the billion dollar idea

The Delhi based startup’s core business idea is focused on the parameter of building trust amongst the customers. The brand offers four different product modules namely Eco (inspection tool that checks vehicle on 121 checkpoints), Orange Book Value (software which uses algorithms to determine the fair market value of vehicle based on several parameters), Company Rates Sellers (informational platform for buyers) and History of the Vehicles, all of which address the key issue in hand.  

The current business model of the startup follows four formats- Business to consumer (B2C), consumer-to-consumer (C2C), consumer to business (C2B) and business to business (B2B) accompanied by three pricing alternatives- auction, fixed price and best offer. While ninety-two per cent of the used car business is from B2C, 7 per cent is from C2C, and the rest is covered by the B2B model.

The online platform generates revenue in the form of commission and subscriptions. The commission varies between 2 percent and 2.5 percent for used cars, and 2.5 percent and 3 percent for used motorcycles; for new it is 1 to 1.25 percent, or a flat booking fee. Fifteen percent of the revenues come from subscriptions of dealers who pay between ₹45,000 and ₹1 lakh.

Funding and Achievements

Till date, Droom has raised a consolidated sum of $333 million over 8 successive rounds of funding through a list of prominent investors like BeeNext, Lightbox, Digital Garage, Toyota Tsusho Corporation, Joe Hirao and Integrated Assets Management.  The latest round of funding was worth $200 million led by 57 Stars and Seven Train Ventures in July 2021.

The startup has also established itself as a pioneer in the field by bagging multiple awards for its business model. In 2017, Droom was accredited with the title of ‘Best Creative Advertising’ at the exchange4media Primetime Award as well as the silver and bronze at the Magzimise Awards the same year. In 2018, Droom was voted as the Asian Super Startup of the Year by the netizens across the globe in addition to bagging the coveted Effie Awards.

Further, the Sandeep Aggarwal led startup has also filed its DRHP (draft red herring prospectus) according to which it is planning to raise an estimated amount of INR 3000 crore through the public market which would include an offer for sale worth INR 1,000 crore and a fresh issue of shares worth up to INR 2,000 crore.

Foreseeing a bright future

While Droom started off as a mere online platform for buying and selling used cars, it quickly expanded to become the automobile giant we know today with a valuation of $2.1 billion. However, this is only the tip of the iceberg for this unicorn as it plans to expand further.

Looking at their future plans, the automobile startup aims to replicate its success in the international market as it eyes being listed on NASDAQ by 2022. The company is also planning to increase its gross revenue and net revenue substantially by the end of the fiscal year. With the MoUs signed with Toyota, Droom will initiate its expansion plans in Singapore, Indonesia, Malaysia, Philippines, Vietnam, Thailand, Cambodia, Myanmar and Laos.   

Talking about their plans for the future, the co-founder and CEO of Droom, Sandeep Aggarwal said, “We at Droom have been creating India’s most delightful experience in buying and selling automobiles online. Lately, we have been investing in making loans and insurance easier after you buy an automobile at Droom. We are also investing heavily in our last-mile delivery solution for the automobile including test drive or delivery of a car at your doorstep in a flatbed truck.  Besides, as COVID-19 will settle down, we will resume our international expansion in South East Asia, Middle East, and Africa. Before COVID-19, we did expand in Thailand and Malaysia and our used vehicle-pricing engine OBV (Orange Book Value) is available in 38 countries.”

While Droom still happens to be a prominent name in the used car marketplace, a subsequent rise in similar platforms like CarDekho and Cars24 provide tough competition to the startup. The recent failure of the IPO of fintech giant One97 Communications further adds speculation on the success of the future plans of the startup. Nevertheless, with a dynamic work environment and a sound strategy in place, Droom is all set to conquer the market one vehicle at a time.

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