Investing in India: Classifieds and marketplaces

Transcription

Page
Vol. 16 No. 17
Classified Intelligence Report
Consulting Services for Interactive Media and Classified Advertising
Vol. 16 No. 17 Sept. 3, 2015
2015 AIM Group special report
Investing in India:
Classifieds and marketplaces
Graphic by Robert Dibrell © 2015 Advanced Interactive Media Group LLC
Community sites become businesses, Page 52
© 2015 Advanced Interactive Media Group LLC
Premium content fuels auto growth, Page 56
info@aimgroup.com +1-407-788-2780
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Vol. 16 No. 17
Executive Summary
Lots of classified markets are hot. India is the hottest.
Billions of dollars of investment have flowed in during the past 18 months.
In four of the five classified categories, there’s an open battle for supremacy. Only in recruitment, where 18-year-old Naukri has a first-mover advantage and a well-managed, long-term
approach, is there an outright leader.
Big-name investors abound. Softbank, Sequoia, EBay, Tiger Global Management — the list goes on and on. One classified site, Quikr, landed $300 million in investments in a 13-month period during 2013 into 2014.
Profits? Few and far between. Most sites are in the “investment phase,”
meaning they’re losing money by design. Several sites we profile here were
profitable briefly, but management elected to increase spending (typically,
but not always on marketing), to try to gain long-term or even permanent category dominance.
The Indian classifieds / marketplaces field has two other unusual characteristics:
— Newspapers are still growing. In classifieds and in general. Circulation is up,
revenue is up, reader / consumer interest is up, and print classifieds are up in some places, down
in others. Print in India is not dead. It’s not even dying. It’s got a lot of legs left. Two of the biggest media groups, the Times of India (Bennett Coleman & Co.) and HT Media, publisher of the Hindustan Times, were smart enough to develop and run top-tier classified sites.
— You may have noticed we referred above to “five” categories rather than four. In India,
matrimonial classifieds are a major category, alongside cars, homes, jobs and “stuff.” They differ
from dating sites; they are growing steadily, and no one yet can claim to be the leader. Or, actually, all three top tier sites claim to be No. 1. It’s a fascinating story. (Example: What’s a “love marriage”?)
In “marketplaces,” e-commerce sites that include listings, SnapDeal and Flipkart are going
head-to-head, with Amazon and its interesting site Junglee growing fast too.
SnapDeal in August raised $500 million in a funding round that valued the company at $5 billion. In July, Flipkart was valued at $11 billion in a funding round of $700 million.
This special report was prompted by our clients’ interest in knowing a lot more about the
Indian market, and our need to take a deeper look. It’s not comprehensive, but it’s a great overview of one of the most fascinating classified / marketplaces we see anywhere in the world.
Questions? Call or email us. We’re happy to help.
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Vol. 16 No. 17
classifiedintelligence report
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Contents
Lead Story. Investors pour loads of cash into
classified, marketplace and technology companies
in India. Page 5.
Page 7. OLX and Quikr battle for control of India’s
huge online classifieds market.
Page 16. An all-app format can offer benefits,
challenges.
Page 19. Ebay sells off part of its stake in
SnapDeal to set up an independent refurbishing ecommerce business.
Page 21. Three sites strive to be king of online auto
advertising.
Page 28. Sites are struggling to succeed in India’s
online real estate advertising market.
Page 35. Naukri is the champ of recruiting advertising, but new competitor Round One wins praise.
Page 42. Marriage is big business in India, and millions
are looking for love online at matrimonial sites.
Page 47. China’s Alibaba makes its first investments
in India.
Pages 49-50. News and analysis from India.
Page 51. Contributors to India report.
Page 52. Community sites morph into commercial
businesses.
Page 56. CEO of Carsales in Australia wants to keep
car buyers engaged after the sale.
Cover art by Robert Dibrell © 2015 Advanced
Interactive Media Group LLC
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Vol. 16 No. 17
‘If you win here, you win big’
India’s vast potential attracts billions in investments
During the past two years, at least $5 billion U.S. has been poured into classified, marketplace and technology companies in India. And there’s no sign the money is stopping any
time soon.
The investors are blue-chip, from the U.S., Japan, India, and, well, just about everywhere. They’re companies like Sequoia Capital, Tiger Global Management, Softbank, Canaan
Partners, Amazon, EBay, Axel Springer, Qualcomm Ventures and Bessemer Venture Partners,
along with a lot of smaller funds and investors you might not have heard of.
Why is so much cash flowing in?
“E-commerce is a big and valuable market right now, and India ranks third in size after
the U.S. and China. If you win here, you win
big,” Sanjeev Bikhchandani told the AIM Group.
Bikhchandani is founder and vice chairman of Info Edge (India), the parent company of
Naukri.com. That’s the recruitment advertising
website that’s blowing away the competition and
making enough money to support a string of other (sometimes unprofitable) classified sites that
are being grown fast in hopes that they, too, will
take a dominant position in their particular vertical.
Battles abound in the classified field:
Who we covered, and why
About the companies and sites
we have covered in this report: We don’t
declare winners (or, generally, losers),
because most of the companies claim to
be leaders in one metric or another. And
we don’t provide a comprehensive look
at any given category, because a report
this size can’t cover everything or every
site. (We can, and do, offer deep-dive
analysis and revenue and market size
estimates on a time-sensitive basis as
consulting engagements.) Except for Info Edge, which is publicly traded, and
Matrimony.com, which recently filed for
an initial public offering, financials on the
vast majority of the classified companies
in India are private.

OLX vs. Quikr in general classifieds.

Three sites in matrimonial, all claiming to be
No. 1.

Automotive is also in flux, with CarDekho, CarTrade, CarWale and others, battling.

In property, 99Acres from Info Edge; PropTiger, with backing from News Corp. and Softbank; MagicBricks, from Times Internet (a sibling of the Times of India); and a half-dozen
other big sites, all hope to win eventually. Others focus on niches like luxury or regional /
local property.
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“We believe there will eventually be consolidation in the real estate online classified
segment, after which only two or three will be left,” an analyst with Motilal Oswal Securities
said recently. “Unless that happens, these portals are unlikely to make profits.”
He could just as easily have said it about automotive, matrimonial and general classifieds as well.
In general classifieds, Naspers-owned OLX and Quikr, the site backed by Kinnevik,
Tiger, EBay, Omidyar Network and others, are both spending lots of money but by all accounts not taking much in. One estimate said general-classified revenue is probably only $60
million to $70 million annually, with both sites (and others) engaged in a land-grab for listings
and traffic before they try to monetize. The expert who gave us that estimate, Saurabh Pandey, a former OLX executive, also has predicted OLX and Quikr will eventually merge. We
think that’s unlikely, because the massive market in India has so much growth ahead and
classified sites (especially the gen-class sites) are leading a massive cultural shift to sales of
used goods. They’re probably only 2 or 3 percent of the way to the far-off plateau when
sales, traffic and revenue level off. India is certainly large enough to support two generalclassified sites.
What are all the investors seeing? “If you look at [it] … with a 20-30 year horizon, the
fundamentals of India’s demographics are not going away. We are playing into that,” Raju
Narisetti, SVP-strategy of News Corp, told India Express. “It could take us a while and there
will be some up and down cycles, but we are willing to have a long-term view of brand building.”
Again: He was talking about the real estate segment. But the truth is the same regardless of the segment.
In 2104, about 243 million people in India were Internet users — mobile, desktop or
otherwise, for Internet penetration of 19.2 percent, according to Internet Live Stats. The
number is expected to double by 2018, which would still leave Internet penetration at about
40 percent. By contrast, Internet penetration in the U.S. as of July 2014 was 86.7 percent
and it was 46.03 percent in China. Even that will take India to penetration of less than half
the level in the U.S., with a population of 1.2 billion people, or almost four times the number
in the U.S. and just slightly fewer than China at 1.34 billion.
Keep giving those people smartphones, and they’ll be doing a lot of buying and selling
online or otherwise.
So a lot of the investment money is going to places like Flipkart and SnapDeal, horizontal marketplace sites that incorporate listings and e-commerce.
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Snapchat, Flipkart, and Amazon venture Junglee.com are all marketplace companies
worth watching. They offer e-commerce and some listings. They accept listing feeds from
various sources, including retail and auto sites.
Narisetti, a former newspaper editor in India, told the AIM Group that content and
engagement are critical for classified and marketplace companies. “More and more people,
especially in a country like India, will live their lives online and access it primarily through
mobile. … For publishers of transaction-only companies, … if they rely only on transactions,
with a few category exceptions, their customer interaction will be infrequent and the cost
of retaining or attracting new, transaction-only customers will be expensive.
“Realizing this, transaction-only companies are increasingly surrounding the transaction with a lot of tools, widgets, ‘news you can use,’ information and other content pieces.
Having taken the classifieds revenue away from publishers into transaction-only digital
businesses, now they are also coming after audiences with content-led initiatives,” Narisetti said.
Surprisingly, newspaper companies are not feeling the pinch in India the way they
are in the rest of the world. Two reasons: Newspapers are still growing steadily in India.
Print revenue, circulation, readership and other metrics are going up, not down.
Several major newspaper publishing companies have jumped heavily and effectively
into online classifieds. Bennett Coleman & Co., publisher of the Times of India and owner
of Times Internet, has two classified companies we listed, and others we didn’t cover. HT
Media, publisher of the Hindustan Times, also has several significant classified dot-coms in
its portfolio. The Hindu Group operates a property site. Malayala Manorama, a regional
company publishing in vernacular languages, offers print classifieds, of course, along with
matrimonial, real estate and services sites online.
“There is still a large audience that reads newspapers solely and we can and do
reach them. This means we have to continue investing in our print product,” Smitha
Vasudevan, senior marketing manager at Malayala Manorama, told the AIM Group. “My
reading is we may lose revenues in some categories, while in others we will grow.
“My digital products are already popular with those who move online. … It is also
true that in some contexts, digital does offer a lot more possibilities for classifieds than
print does.”
Will newspapers lose eventually?
“I think the Western stories [about print declines] have impacted the general mood
at most newspapers,” she said. “And that is when we give up before we have to.”
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OLX, Quikr battle for dominance
Competition likely to intensify as industry flourishes
In the fight to dominate India’s huge online classifieds market, OLX and Quikr each
have grabbed a sizeable share. But the victor in what the companies think will be a winnertakes-all contest can’t be determined just yet.
Both are raking in big money from investors and venture funds and have tilted the competition away from earlier players Sulekha and ClickIndia with heavy spending on marketing.
OLX.in
Launched: 2006 in India; 2006 overall
India headquarters: New Delhi
Parent company: MIH (Myriad Internet Holdings B.V), a subsidiary
of Naspers
Publicly traded: JSE: Symbol,
NPN
Related sites: Too numerous to
list. Flipkart in India (Flipkart Pvt
Ltd) is part-owned by Naspers,
which has invested almost $550
million in the company. Flipkart was valued at $1.6 billion
in November 2014. Flipkart and OLX have participated in
some limited projects together. (Tiger Global Management
holds a larger stake in Flipkart.)
Quikr.com has taken in
$346 million in six rounds of
funding from companies including Warburg Pincus, Norwest Venture Partners, EBay,
and Omidyar Network. After
Swedish company Investment
Kinnevik AB this summer
pumped in an additional $20
million (Rs127 crore) to become the company’s largest
shareholder, Quikr was reportedly valued at about $900 million (Rs5,760 crore).
OLX is owned by Naspers,
the publicly traded South African media house (JSE: NPN)
that operates OLX in dozens of countries, along with e-commerce, satellite and Web television
and print newspapers and magazines. In just the past three years, OLX-India has grown about
150 times. It generates about 1.5 billion page views a month.
While Quikr offers a mix of business-to-consumer and consumer-to-consumer advertising, without divulging specifics, OLX claims it has 80 percent of the c-to-c market. (Read more
here.)
Their competition is likely to become more intense. A Deutsche Bank report estimates
India’s online classifieds industry will nearly triple from 2013 and 2018 to a value of $685 million, a compound annual growth rate of 20 percent.
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Marketing to consumers and businesses
Each site has its own techniques for attracting customers.
"For some, QuikrCars is a place where you buy. For some, it’s where you sell. For some,
it’s where you get all the
details about your dream
Quikr.com
car," reads an ad for Quikr,
Launched: 2008; previous iterations were Kijiji.in, owned
one of India’s biggest online
by EBay
sites for used-goods searchHeadquarters: Bengaluru (It is
es.
widely reported that Quikr is headquartered in Mumbai, but it shifted
OLX, with similar
its headquarters to Bengaluru in
web metrics, uses similar
early 2015 “because we want to
lines, albeit a little more
double our tech and product
emotively in its recent camteam,” Chulet told the Economic
paigns on 'lasting friendTimes. “It would have probably
ships" and "old treasures."
taken us 18-24 months in Mumbai, but in Bengaluru we should be able to grow quicker.”
Both companies are
Investors: $346 million raised in six formal investment series, plus earlier EBay and other investors. (Details at CrunchBase.) Investors include Norwest Venture Partners, Nokia
Growth Partners, EBay, Matrix Partners, Warburg Pincus,
Omidyar Network, Investment AB Kinnevik (now the largest
shareholder), Tiger Global Management and Steadview Capital. As a sign of the strength of the investors’ interest, most of
the investors have participated in at least two rounds; Norwest
has participated in five.
Employees: 1,200 (estimated)
Related sites: Verticals including QuikrCars. Quikr also
launched a relationship in February 2014 with Junglee.com to
display its listings of used products on Junglee, an Amazonowned comparison shopping and listings site. The companies
are not otherwise related.
spending a small fortune on
marketing, but neither discloses the amount and
there are few estimates
available. OLX is focusing
heavily on expensive television advertising, while
Quikr is using more social
media and other media
(although it’s used television commercials as well).
One estimate in 2014 said
top e-commerce companies
were spending up to $11
million-plus annually in
marketing.
One reason is cultural. Before OLX and Quikr came along, selling second-hand goods
was widely considered culturally unacceptable in India.
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“We had to create the market — not take it from somebody,” Amarjit Singh Batra, CEO
of OLX-India, told Campaign India. “Converting someone to a seller is the most difficult task.
“Advertising has played a very critical role in changing consumers’ behavior and mindset about how they perceive used goods. People now know it gives them money, helps them
declutter, and helps them to buy or move to a better thing. I think we have to continue to advertise because the market is big. …
“It was our job to talk to people and tell them the benefits of selling their unwanted or
secondhand goods online. People were not selling because they did not even know … an option
like OLX existed.”
How the sites differ
The two primary differences between the sites are their revenue models and their tools
for capturing listings.

Revenue: OLX is generating very little revenue, primarily through Google AdSense. Until
this year, all ads were free. Batra announced in February that the company would offer
paid upgrades starting sometime this year. Advertisers can pay optional fees to move their
free ads to the top of the category, known in the industry as “top-ups.” Batra would not
discuss the amount, but the fees were expected to be nominal. Earlier, he said OLX wants
to be the only used-goods site in India. “This is the reason we are focused on marketing
and not on anything else. We will continue to do it until the time we are comfortable. My
revenues are a byproduct.” (OLX India wouldn't give us a revenue estimate, and we couldn't find any from other sources. It’s probably in the $10 million to $20 million range annually.) Quikr’s revenue was estimated in 2014 as $50 million on an annual run rate. The
company has three revenue streams — advertising, lead generation and premium listings.
CEO and cofounder Pranay Chulet told Economic Times that early on, “our focus was on
growth and user base, but over the last two years, monetization has become increasingly
important for us.” As soon as its monthly unique user total crossed 10 million, it started
charging users and businesses for premium listings to move up in search results. On bigticket items, real estate and cars, Quikr charges Rs300 to Rs400 ($4.50-$6 U.S.) for a listing. Quikr says about 100,000 small businesses pay for its services and it has more than 80
million active listings.

Ad placement: All ads on OLX are user-generated. The company does not offer a call center
or other way for users to place ads. “We are the only company in our space that is 100 percent UGC,” Batra said. “Others have call services, or employees posting ads on behalf of
sellers.” Quikr touched the national psyche by offering a “missed-call service,” where users called an ad-placement phone number but then hung up immediately before the call
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Vol. 16 No. 17
was answered. That saved them costs on their mobile phones, and gave Quikr a way to respond quickly but not necessarily immediately, smoothing out traffic to and from its call
center. Missed-calling is common in India; for example, a missed call may signify “I’m
downstairs” or “on my way.” Shortly after launching the service, Quikr noticed a sharp
rise in users from Tier 2 and Tier 3 communities, and high sales of products like cattle,
tractors and farm equipment. Users can also place ads online by themselves, of course. As
in almost all countries, the battle in India is shifting to smartphones. OLX gets almost 85
percent of its traffic from mobiles. Quikr gets about 80 percent. "For us, both mobile app
and mobile browser are important," Chulet told the AIM Group in an online interview.
Features vary
Quikr recently launched Quikr NXT, an instant messenger service so buyers and sellers
can chat and exchange photos of
listed products without revealing
phone numbers. Quikr also offers
a “maximum selling price” calculator to help users estimate a
reasonable price range for a
product.
Quiker launched QuikrCars in August.
In August, it launched
QuikrCars, highlighting not only
cars but bicycles, commercial vehicles and other vehicle content.
QuikrCars offers vehicle inspection reports and a “localized car
discovery module” to search for
specific vehicles.
The company said it would launch verticals real estate, jobs and services sites
by the beginning of Q4.
"We are verticalizing our business in potential categories such as cars, goods, jobs, real
estate and simultaneously widening our horizontal offering provides to adopt a scalable way
to grow," Chulet told us.
The future
In many markets around the world — even the biggest, like the U.S. and Germany —
there’s one dominant general classifieds site. Is India big enough to support two?
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Saurabh Pandey, a former COO of OLX who now runs a digital ad agency, thinks OLX
and Quikr are headed to a merger soon. He notes in a blog post that Naspers and Schibsted
(which has no involvement with Quikr) rationalized many of their sites last year.
JustDial business is booming
Online local business search engine Just Dial Ltd, which
had a market capitalization of Rs7,600 crore as of July 30, is another rising star in e-commerce and listings. It has more than 25
Search Plus products live on its local business search platform.
JustDial.com is gradually morphing into a marketplace
with new revenue streams by adding a new mini enterprise resource planning platform for small businesses. Called JD Omni,
the tool is designed to help small businesses manage inventory,
billing and third-party logistics online and offline through a plugand-play cloud-hosted system that includes bar-coding and QR
codes. JustDial also plans a hyperlocal product ordering service
that will put it in direct competition with Grofers and Peppertap,
among others.
As for OLX and
Quikr, Pandey said, “Both
of them have burnt a lot
of marketing money and
have failed to onboard
more than 2 to 3 percent
of active Internet user
base in India, despite being in a duopolistic situation.”
We disagree. Perhaps someday they’ll
merge, or one will
emerge victorious, but
we think that day is a
long way off.
Naspers seems
committed to OLX India
for the long term, spending millions of dollars on
marketing with little
short-term monetization.
It’s beginning to generate
revenue in other countries, though, and even taking baby steps toward a revenue model in India with the upsell plan.
Just Dial posted an 18 percent increase in net profit for
the quarter that ended June 30, on account of higher traction
from paid advertiser campaigns. The Mumbai-based firm recorded a net profit of Rs33.1 crore ($5 million U.S) against Rs28.1
crore in the year-earlier quarter.
And the investors in Quikr, which include EBay and Kinnevik, aren’t slowing down. In
just 13 months, from March 2014 through April 2015, they signed up for three funding rounds
totaling $300 million.
Plenty of growth left
The India market is huge, and still pretty much untapped.
“We do not have much trouble growing,” Batra said in 2014, “except that India is
such a big market that you always end up reaching only a small number of people. With 200
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million Internet users, expected to grow to 500 million in next three years, I think the only
challenge is how we grow faster.”
Chulet agreed. “Whether you are a classifieds business, a pure play e-commerce company or something else, if you want to be a forward-looking business, you have to see how
you can offer an endto-end solution to
PayTM — money on the move
your users and make
them do as little
PayTM is a central bank-approved mobile wallet that can be
work as possible.”
used to pay bills, recharge mobile accounts, shop online and pay for
numerous other online services.
It is owned by a consortium of investors: Ant Financial, the
financial arm of Alibaba that runs the Alipay online payment platform; SAIF Partners; Sapphire Venture and Silicon Valley Bank.
The PayTM wallet is available on mobile platforms including
IOS, Android, Windows, BlackBerry and Ovi Store. PayTM recently
reached a base of 100 million users, who carry out over 75 million
transactions every month. Its wallet is accepted by over 80,000 merchants. The company reportedly signed a deal worth $585 million
U.S. (Rs3,804 crore) for a 25 percent stake in the company with
Alibaba Group in February 2015. In June, Reuters reported it was in
talks with Alibaba again for a $600 million round of funding that
could take the Chinese group’s total holding in PayTM to around 40
percent.
The PayTM wallet can be loaded using a debit card, credit
card, ‘Net banking and over 20,000 cash deposit locations. PayTM
works with various banks so users can add money through bank
branch and ATM machines. It added peer-to-peer fund transfer functionality in July 2015.
PayTM is owned by Delhi (NCR)-based One97 Communications.
Chulet believes the day will
come when marketplace sites like Flipkart or Amazon’s listing-and-e-commerce
site Junglee, may
phase out or merge
to serve the Indian
market better. For
instance, with OLX
and Quikr doing well
on the sell side,
there is an equal opportunity for companies to focus on the
BUY part of an etransaction, especially in locally produced
products such as
ready-to-eat snacks
or jewelry brands.
"Listing sites
should encourage better display of such products," Hitesh Sachdev, VP-Emerging India Fund
of ICICI Bank, told the AIM Group. “They could also offer easy financing options and not just
equated monthly installments on credit cards. They could also improve on after-sales service
assurance for high-value products.”
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Exploding market excites investors
E-commerce growth boosts possibilities of big profits
With the e-commerce market maturing in India, there is a clear shift to value-added
transactions and higher valuations of horizontal marketplaces.
To get the best deal for a new mobile phone, Shabda Pawar, 24, wanted to trade in her
3-year-old Samsung Grand 19082 for a new MI4 Xiaomi. She logged on to Flipkart.com to check
the exchange offer posted there. In the end she paid Rs12,000 ($184 U.S., all inclusive) instead of the retail price of Rs15,000 ($229) for the new handset. The trade-in transaction was
completed at one ecommerce site, India's biggest horizontal marketplace, Flipkart, which is
owed by Yuri Milner’s DST
Global, South Africa’s
Naspers and the Qatar Investment Authority. The
portal is valued at $15.5 billion.
This trendy young
woman, one of 1.25 billion
Indian citizens, is part of an
economic tide in India,
where the e-commerce
market has grown steadily
from $4.4 billion in 2010 to $13.6 billion in 2014 and likely will reach $16 billion by the end of
2015, according to an April 2015 study by Assocham-Deloitte Group.
Although e-commerce is a 15-year-old trend in India, the maturing ecosystem
(3G to 4G now) is now contributing to phenomenal growth of almost 50 percent. The number
of users making online transactions in India is expected to grow from 11 million in 2011 to 38
million in 2015, said an Ernst & Young study, Re-birth of E-commerce in India. With this comes
newer business models, making it easier for consumers to transact online from a single portal.
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Vol. 16 No. 17
The country’s $1.9 trillion GDP offers a lure for all businesses, especially the online
classified sector, which is drawing huge investment.
Classifieds, the earliest migrant to online, is also seeing a shift from vertical (a single
category) to horizontal (many categories), along with used-goods offerings. Pure-play aggregators, such as Amazon's Junglee, took baby steps in this direction last year under a “related
product listing” when it entered a strategic tie-up with Quikr.
Last month, EBay entered the used goods market with the launch of 'EBay choices' in
association with seven refurbishers who represent about $500 million of the $15 billion organized refurbished market in India, news agency PTI reported.
Although still small ($60 to $70 million) in comparison to the vertical market that is valued at $1.5 billion, general sites are growing significantly with the increasing focus
on consumer experience through the addition of newer features and more categories.
The possibilities for profits are also
growing.
In 2014, Source: Your Story
"A company monetizes by a transaction fee, which is much more than a listing fee. At each juncture, there is a valueadded transaction. We are going to see
more of that trend in China and India," said
Saurabh Pandey, founder and CEO of
dotConverse, who has worked with OLX in
the past.
Venture capitalists and private equity players are also making note of these opportunities. They have witnessed a huge unorganized market now going online and have upped their
investments in response.
Growth rocketed from $55 million in 2010 to $305 million in 2011. They expect continued growth and see the high stakes involved.
"Because e-commerce is a big and valuable market right now, and India ranks third in
terms of size after the U.S. and China, if you win here, you win big," said
Sanjeev Bikhchandani, founder and vice chairman of Info Edge, owner of Naukri.com and
99Acres.com.
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Vol. 16 No. 17
About the shift of venture capital action from vertical to horizontal, Devangshu Dutta,
chief executive, Third Eyesight, a retail consultancy said, "The costs of entering and sustaining
a horizontal marketplace are now immense. If one were to look at the magnitude of total investment being committed, possibly horizontal marketplaces are receiving more than the verticals. For venture funds interested in earlier stage businesses,
The world's fastest-growing e-commerce market
vertical rather than horizontal is
Morgan Stanley expects the size of the Indian inthe logical way to go, as the tickternet market to rise from $11 billion U.S. in 2013 to
et sizes are smaller, valuations
$137 billion by 2020. Market capitalization of these intermore reasonable and return on
net businesses could reach $160-200 billion, up from $4
expectations higher."
billion at present. Only three internet companies are
Potential investors on the
listed in India but with the pace at which venture capital
sidelines wonder how long this
firms and private equity firms are pumping money into
investment momentum can last.
India, several internet companies could possibly look at
But no one can tell, as vallisting in the next couple of years.
uations can be a complex play of
As the market matures and more companies are
investor perceptions at successive
listed, the market cap of internet companies will expand
rounds and internal and external
too.
market conditions.
Analysts at Morgan Stanley believe that when In"So far, perception for edia's internet market grows to $137 billion by 2020, ecommerce in India has been bullcommerce will form the largest part of the internet marish, and companies themselves
ket at $102 billion. In relatively more advanced markets
have been in high acquisition,"
like China and the U.S., the top listed internet companoted Dutta. "However the attennies account for 12 percent and 4 percent, respectively,
tion is also shifting to margin imof the total market capitalization. Internet commerce
provement and business stability.
tends to account for more than 50 percent of the market
cap among listed internet firms. Morgan Stanley expects
"Initiatives such as inventoIndia’s e-commerce market (revenues) to grow from
ry-less marketplace models, pri$2.9 billion in 2013 to over $100 billion by 2020, making
vate label merchandise, app-only
it the fastest growing e-commerce market in the world.
environment that reduce customer reacquisition costs and customer attrition, changes to shipping charges, are being pushed,” he added.
“Provided the profitability performance can be substantially improved and market conditions remain conducive, high business valuations would be more justified than they have
been in the past.”
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Vol. 16 No. 17
Companies ponder going all-app
Strategy carries risk of shutting out buyers on PCs
What makes e-tailers in India confident of the future of mobile-commerce?
Just five years ago, 32-year-old Abhishek Ghazan had to lug his gunny bag of chunky
fashion accessories from one local railway station in Mumbai to the next in search of business
customers. A self-taught costume jewelry designer, he outsourced the production work to an
army of 150 artisans (karigarhs) managed by their broker-supervisors. The business ran from
the shed of Ghazan's home on 91 Banganga Road, Walkeshwar, Mumbai. He did the dispatch
himself, on foot, on local trains or with the merchandise thrown
into the boot space of his Maruti-Suzuki van. He stayed in touch
with his clients through the free mobile messenger service What's
App.
Today, Ghazan occupies a plush office at Dhanji Street, and
most of his business is fetched from overseas through his newlylaunched website, glitzandglam.co.in.
Ghazan still doesn't know much about the nitty-gritty's of ecommerce, payment gateways, privacy policies and shipping protocols, but he understands the fundamentals of his business and hopes to emerge as India's next
Binny Bansal, founder of the country's largest e-commerce platform Flipkart. Ironically, he
depends even more on the simple, free What's App for his day-to-day communications.
More than 235 million people in India access the Internet through mobile devices, and
e-tailers with mobile apps are reaching out to them. Quikr, OLX, Sulekha and Clickindia have
launched mobile apps are are collecting millions of customers.
India ranks as the third largest smartphone market in the world, after a recent report
by IAMAI and KPMG indicated that India may reach 236 million mobile Internet users by 2016,
and 314 million by 2017, with over eight million mobile app users.
Another study reveals that nearly 90 percent of smartphone users in India use apps,
which is close to 158 million. The country ranks second only to the U.S. in the use of shopping
apps.
The app-only option
The first to go app-only was Bengaluru-headquartered e-tailer of branded apparel, Myntra. The company is partly owned by Tiger Global, IDG Ventures and Indo-US Venture Partners,
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Vol. 16 No. 17
which was acquired by e-commerce giant Flipkart.com for $310 million U.S. (Rs 2000 crore) in
2014. A few months later, FlipKart did the same and dropped its website to go all-app.
Apps make smartphone purchases easier but can lock out and alienate customers who
do not have a smartphone and rely on a desktop computer or a website.
Since this strategic move, Myntra and Flipkart together command a market share of
over 50 percent in the online fashion space, and the former has been growing at a fast pace.
Myntra expects to hit the $1 billion mark in revenues by 2016. The platform receives
over 90 million visits every month and services over 12,000 pin codes across the country.
Taking a less risky, middle course, the country's second most valued e-tailer SnapDeal
also rolled out an app, but continued to offer its services on the PC.
While app-only made sense for Myntra that caters to brand-conscious Indian youth, who
are conversant with making online purchases, money transfers, bill payments, and recharges;
the strategy is not so clear for Flipkart, Quikr and SnapDeal, except when used to widen their
reach with a different channel in addition to their website.
Mobile-only or app-only?
"Mobile is the single biggest change agent in the classifieds industry in the last decade.
It’s changing everything from consumer habits to the DNA of classifieds business," Pranay
Chulet, founder and CEO of Quikr, said. "For us mobile is super important, as 80 percent of
our business is on mobile now. But for our model, both mobile app and mobile browser are important. We think of our business as mobile-only and not app-only."
While a mobile-first strategy allows e-tailers to tap into the hundreds of millions of
young Indians who access internet through their mobiles, businesses also realize that these
new users may eventually have space for only very few apps on their basic smartphones.
"The app economy is efficient and relevant for a portion of mobile users, but it's unlikely to be a major share of the universe, any time soon. It is also dependent on companies like
Apple, if iOS based, to help with the discovery, which also remains a major hurdle in the Android universe of apps,” said Raju Narisetti, News Corp. SVP-strategy. “In that sense, the idea
of forcing consumers to go app-only seems both premature and unwise, in general. “The
closed environment of an app works only when user-behavior and brand loyalty can be clearly
defined by a brand and leads to not just downloads but frequent use-cases," he added.
"Eventually, it's going to be a tussle between value customers and egoistic listing sites
(May I say Flipkart?)," said Chulet. "Any kind of restrictive practices would mean potential loss
of consumers. Only-apps will not work as consumers having transactionable net access are still
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Vol. 16 No. 17
limited in India. While the urban consumer is intelligent enough to not shop before he compares, the semi-urban and rural too will evolve to behave like the urban consumer.”
Businesses must be careful to offer consumers options they can use.
"Any kind of restrictive practices (e.g app-only model) during this phase of evolution
would mean potential loss of consumers," said Pavan Patil, VP-investments at ICICI, a sectoragnostic domestic fund for fast-growing emerging companies in India.
Can mobile match websites?
There are several “ifs and buts” attached to selling on multiple channels. The first relates to consumer experience. Industry watchers are doubtful that every sales experience can
be delivered to a consumer as effectively through a mobile device as through a website.
Supporters of the app-economy counter that the recent roll out of 4G services may
change that.
Sunil Bharti Mittal-led Bharti Airtel recently expanded its 4G services to 300 cities, while Mukesh Ambani-owned Reliance Jio, the only pan-Indian 4G telecom operator, is set
to launch its 4G-enabled handsets in the second week of September, Business Standard reported.
As the mobile ecosystem improves, along with
greater penetration of handheld devices and android
adoption, a highly personalized experience can be offered to consumers that is presently offered in a very
primitive mode.
For instance, Myntra is already working on a new fashion line with the help of
data science and artificial intelligence, reported Times of India, that it will deliver on its app.
"4G connectivity will allow a more immersive, engaging and stickier experience to be
created by e-commerce players and potentially drive better value and more margin per transaction," said Devangshu Dutta, chief executive of Third Eyesight, a retail consultancy.
When that happens categories that have a lot of look-and-feel reliance (auto, housing,
fashion apparel, jewelry, etc.) can also be successfully brought on the app platform.
"Given India’s demographic differences (compared with) the U.S. or the U.K. market,
the future business model will make optimum utilization of the existing channels (brick and
mortar kirana, which ITC and HUL have developed for the hinterland) with new tech-driven
models. Parts of the model where existing capacities can be used will remain a part of the supply chain, while real estate intensive merchandising may migrate to tech models," Chulet said.
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Vol. 16 No. 17
EBay sells off chunk of SnapDeal
E-commerce titan wants bigger refurbished business
BY RADHIKA SACHDEV
EBay sold nearly 30 percent of its stake in SnapDeal, India's second-largest online retailer, to boost its business in the refurbished category. Foxconn has picked up some of the
stake sold by EBay, according to Livemint.com.
Bullish on the ecommerce market in India, EBay India Pvt Ltd has been upping its investments in the country since March, according to the the U.S. company's filings with the
registrar.
EBay entered the
Indian ecommerce market by acquiring Baazee.com in 2004, but
could not stand up to
the tough competition
posed by the next crop
of top players: Flipkart,
SnapDeal and AmazonIndia.
EBay has sold nearly 30 percent of its stake in SnapDeal to boost its
business in the refurbished category. Foxconn has picked up some
of the stake sold by EBay, according to Livemint.com.
Revisiting that
strategy and taking a
cue from Amazon-India,
which had tied up with
Surpluss to sell refurbished smartphones by
Samsung and Xiaomi,
EBay is now focused on
doing what it does best
— hawk refurbished and
used goods through 'EBay choices.'
"We are partnering with seven refurbishers who represent about $500 million of this
$15 billion organized refurbished market in India," EBay VP and Managing Director Latif Nathani told Indian news agency, PTI.
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Vol. 16 No. 17
He said the refurbished market in India is twice the size of the market for e-commerce.
The company said that in India, of the total live listings in mobile phones, laptops and tablets
category, 90 percent is new and 10 percent refurbished. "Over the next year, the platform
will not only see 20 percent increase in total listings in these categories but also see a change
in the mix: 80 percent new and 20 percent refurbished," Nathani told the Economic Times.
Refurbished goods are a
new concept in India. These are
repaired or professionally restored goods, the ones that go
back into the supply chain because of customer returns.
Since these are not
secondhand, used goods, they
come with a warranty of a refurbishing company. They are
usually 30 percent below the
marked prices of the new products.
E-commerce companies
in India are increasingly adding
refurbished goods as a category
in a move to make new customClose to 10 percent of products listed on eBay are refurer acquisition in smaller towns,
bished, but the company expects it to touch 20 percent by
where the customers' purchasthe end of 2015.
ing power is limited. Earlier
this month, e-commerce marketplaces Amazon and SnapDeal announced plans to launch a refurbished goods category, especially for small towns.
“So far 4 percent of our annual business came from refurbished and used products,”
Nathani told Livemint.
Close to 10 percent of products listed on EBay are refurbished, but the company expects it to touch 20 percent by the end of 2015. EBay, which has over 30 million product listings, plans to add 1,000 live listings of refurbished goods and second-hand goods.
Interestingly, EBay owns 18 percent of Quikr, so its entry into the market for refurbished goods puts it directly into competition with Quikr as well as SnapDeal and Flipkart.
(It’s similar to Latin America, where EBay owns about 18 percent of MercadoLibre but also
competes directly with MELI.
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Vol. 16 No. 17
Sites seek share of online car sales
Investors make tracks to cash in on growing market
India’s auto market is huge. It’ll soon be the third-largest in the world, behind China
and the U.S. And it underwent a fundamental shift in the past year or so, as sales of used cars
exceeded new-car sales.
The online market is fragmented. At least three sites — CarDekho.com, CarWale.com
and ZigWheels.com — claim to be No. 1 in one metric or another. None of them can truly
claim to have the market locked up, or even dominated.
As in many markets, mobile is both the present and the future. Traffic to auto sites has
generally crossed the 50-percent plus threshold for
mobile traffic vs. desktop traffic. And with fast
“We expect the secular adoption
growth in the use of smartphones and even “feature
of automobiles to continue … at
phones,” (which could also be referred to as
“dumbphones”), that trend is likely to continue.
least for the next decade and a
half.”
CarWale, CarDekho, CarTrade and Droom.in
are all on our “sites to watch” list, with CarTrade
— Droom founder notable for its investment from Chip Perry, one of
Sandeep Aggarwal our all-time favorite car-advertising guys. Perry was
Employee No. 1 at AutoTrader.com, the U.S. site
that was named AutoConnect.com when he
launched it in 1998. He grew it to the No. 1 site in the United States with a laser focus on
“what do dealers want?”
Investors want a piece of this market. We list more than a dozen investment companies and individual investors below, including some of the biggest names in the business: Sequoia Capital, Tiger Global Management and Warburg Pincus. Others are newcomers, such as
Lightbox, which invested in July in Droom, its largest investment to date.
“We believe less than 0.5 percent of the total automobile industry is online [in India],
and the experience provided by online classifieds and content-rich discovery platforms is substandard,” wrote Droom founder Sandeep Aggarwal. “Nearly 25 percent of households in India have two-wheelers and only 5 percent have cars … . However, India is among the fastestgrowing automobile countries in the world. We expect the secular adoption of automobiles to
continue … at least for the next decade and a half.”
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Vol. 16 No. 17
CarDekho.com
Launched: 2008
Headquarters: Jaipur
Parent company: Girnar Software Pvt. Ltd.
Investors: Series A, $15 million, Sequoia Capital; Series B, $50 million, Hillhouse Capital (China) (lead); Tybourne Capital (China); Sequoia Capital; Ratan Tata (individual investor, chairman emeritus of the
Tata Sons conglomerate). Additional round (undisclosed
amount), May 2015, HDFC Bank, India. Series B round valued Girnar Software at $300 million.
Employees: About 800 out of 1,000 who work for Girnar
Software; plans to hire an additional 1,000 people in 2015,
according to the company.
Founders: Amit Jain, who serves as CEO; Anurag Jain.
Acquisitions: Acquired Gaadi.com, another automotive portal, from Naspers’ company
Ibibo, in September 2014, for an amount reported as $11 million. Gaadi.com is wholly owned
but still operated independently. Acquired BuyingIQ.com, an “intelligent shopping engine,” in
April 2015.
Additional languages: Hindi, Tamil, Telugu (e.g., Hindi.CarDekho.com)
Related sites: TrucksDekho.com (launched in August); TyreDekho.com (launched in
May); BikeDekho.com; PriceDekho.com; MobileDekho
Related companies: CarBay.com, an automotive site that has launched in Indonesia,
Malaysia and Thailand and is planned for launch in up to 30 countries.
Profitability: Profitable from 2007 until 2014, when it posted its first loss due to heavy
investment. (Source: Business Standard.)
CarDekho
CarDekho has tremendous plans for growth in India — and beyond.
In the last year, it has acquired Gaadi.com, a competing auto site, and BuyingIQ.com,
an “intelligent shopping engine.” It’s launched three vernacular-language versions of
CarDekho, TrucksDekho.com for trucks and other commercial vehicles, and TyreDekho.com
for information about and the purchase of tires (tyres in the British / Indian spelling).
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Vol. 16 No. 17
The company said its vernacular sites would lead to explosive growth.
“With [a] more personalized experience, CarDekho.com is targeting an entire new set
of audiences via the language sites so that we double our traffic within this fiscal year,” said
product director Rahul Yadav. “It became imperative to carefully translate every single word
on the site. Since the technical architecture of the previous CarDekho.com site did not support multilingual and multiregional capabilities, we built a new platform from scratch to
achieve this.”
Perhaps more important, CarDekho and parent company Girnar Software have
launched CarBay.com, a spinoff that’s expected to reach into 30 countries — kind
of like the Rocket Internet model of cloning out sites in lots of markets without a
lot of investment. So far, CarBay is in at least three markets. Mohit Yadav, CEO for AsiaPacific markets at CarBay, said in his LinkedIn profile that the company is “looking for entrepreneurs who can help us build our business in new territories. If you are [a] maverick, innovator and believe in writing your own job description, then write directly to me.
“We have launched some innovative products and tools in India that will be very
useful in Malaysia and Thailand as well because the markets are very similar,” Yadav added.
“We have also developed CRM tools for dealers that will provide better consumer experience,
increase efficiency and overall dealer profitability.”
CarDekho.com is also focusing heavily on new cars. It just named Nalin Kapoor, the
former group head of Hyundai Motors in India, as its COO for new cars.
CarTrade.com
CarTrade.com focuses its efforts heavily on auto dealers, business-to-business and business-to-consumer sales, rather than consumer-to-consumer sales.
The company offers software for auto dealerships, like Manheim, the auto auctions that
are part of Cox Automotive Group in the U.S. (which also owns AutoTrader.com). It also helps
car dealers, banks and fleet owners auction off their used-vehicle inventory. The company offers auctions across 80 cities.
In 2014, founder Vinay Sanghi told BusinessStandard, about 8,000 vehicles were auctioned on the site each month. At the time, the site had about 30,000 vehicles listed. It’s now
up to about 180,000 (as of August 2015).
“We’ve been doing business with CarTrade.com for 5-6 years and the experience has
been extremely good,” Prashant Sawant of Tata Motors Finance, told BusinessStandard.
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Vol. 16 No. 17
“Earlier we auctioned by advertising in newspapers, etc. With CarTrade.com the process is
simpler. It usually takes 27 days to clear inventory on the website and we also get good prices
for the vehicles as the number
of bidders is large.”
CarTrade.com
Sanghi is a car guy by
Launched: 2010
background. He worked at family-owned car dealerships from
Headquarters: Mumbai
1992 through 1999, and then
Corporate name: MXC Solutions India Pvt. Ltd.
started the Mahindra First
Choice dealerships with auto
Investors: Series A, December 2009, undisclosed
amount, Canaan
manufacturer Mahindra & MahinPartners, Austin Lidra. Ten years later, he
gon, former CEO of
launched CarTrade.com.
CarMax in the U.S.,
“There is an entirely new
and others; Series B,
December 2010, undisclosed amount, Canaan Partners
middle class that wants to buy
and Epiphany Ventures; Series C, 2011, $13 million,
its first car,” he said. “The issue
Tiger Global Management and Canaan. (Sources: Variis, ‘Where do I find the car I
ous.) Additional round, October 2014, $30.2 million, Tiger
want to buy?’”
Global, Canaan, Warburg Pincus. (Source: Crunchbase.)
In February 2015, Chip Perry, founding CEO of AutoTrader.com (U.S.), made an individual, undisclosed investment. Additional investors include founder Vinay
Sanghi and Rajan Mehra. (Source: BusinessStandard.)
“The Internet is the best
way forward.”
Any online automotive
sales company that has Perry as
Founder: Vinay Sanghi, former CEO of Mahindra
an investor and advisor is worth
First Choice, a multi-market Indian used-car dealer.
more than one look. AutoTradBusiness model: Consumer-oriented sales, and a dealer.com in the U.S., the world’s
er-centric portal called CarTrade Exchange. The compalargest online automotive businy also offers b-to-b and b-to-c auctions of used cars.
ness, which he started essentially from scratch, focuses first and
foremost on dealers’ needs and wants, rather than consumers’.
CarWale
CarWale marks its 10th anniversary this month.
In the early 2000s, the founders tried to launch a telemedicine project, but failed. So
in 2005, founder Mohit Dubey spent three months on a 10,000-rupee project to develop a
website for a used-car dealership.
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Vol. 16 No. 17
“I spent three months understanding the business,” he said at a tech conference. “My
team wondered why I was spending three months for a 10,000-rupee contract. But the software that we built for the used-car dealership, we started selling to other used-car dealerships. I sold the software to 30 dealerships. And after a while realized
Carwale.com
that none of them were using the
software to sell cars.
Launched: 2005
“We decided that something
Headquarters: Navi Mumbai
was wrong, and changed the model
Ownership: Axel Springer, 52.1 percent; India
within 10 days. We decided to take it
Today Group,
to the customers directly ourselves.”
18.3 percent;
With seed-round funding from
founders, 29.6
SeedFund, the site broke even in
percent. Transaction an2007 and raised funding from Sierra
nounced Nov. 10, 2010.
Ventures in 2008 before the early investors sold the majority stake to AxOriginal investors: SeedFund, an early stage inel Springer and India Today in 2010.
vestment fund, was an initial investor. Sierra Ventures invested $7 million in a Series A round in
Since the launch, CarWale has
2008. Axel Springer and India Today also publish
become one of the top two auto sites
Auto Bild India, a fortnightly print automotive ad
in India.
publication that they describe as “the world’s No. 1
car magazine.”
In July, it launched a guaranFounders: Mohit Dubey, who currently serves
as CEO; Arun Sahlam; Gaurav Verma and Tufail
Khan.
Corporate name: Automotive Exchange Pvt Ltd.
tee program that offers “India’s most
comprehensive extended warranty
program” for used cars, with an inspection that includes 217 points like
a laser paint inspection and a review
of the car’s electronic sensors.
In August, it rolled out a redesigned site that provides “a consistent and seamless experience across all devices.”
The company said it serves about 21 million visits per month across its CarWale.com
and BikeWale.com sites.
CarWale traffic was up 43 percent year-over-year in July, with BikeWale traffic up 60
percent year-over-year, the company said.
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Vol. 16 No. 17
ZigWheels
Redesigned in late 2014, ZigWheels is the automotive business of Times Internet, the
Times of India’s digital operation. It reports more than 5.5 million unique users monthly and
claims to be the No. 1 automotive site in India. It offers live chat sessions, a WhatsApp tool
and ZigLine, three ways for consumers to reach auto experts.
ZigWheels.com
“We have received and anLaunched: 2008
swered queries ranging from
budget, fuel type, comparisons,
Headquarters: New Delhi
build quality, maintenance, mileParent compaage for cars, and styling, hanny: Times Indling, and mileage and compariternet Ltd., the
son for bikes,” business unit head
digital division
Akshay Chaturvedi said. “These
of the Times of
are [a] few initiatives through
India. (Times of India is in turn a unit of Bennett, Colewhich we have empowered the
man & Co. Ltd.)
user with information and aim to
become the first reference point
Business unit head: Akshay Chaturvedi
for any research on new cars and
(motor) bikes while making sure
Print tie-in: Published in conjunction with ZigWheels, a
[we offer] easy availability across
monthly paid-distribution magazine intended to “deliver
platforms for our users.”
not just the most comprehensive but also the most enjoyable, informative as well as enlightened automotive
Droom.in
content to readers, lay persons, enthusiasts, the indusDroom.in is small — only
try and also to opinion makers … [and] to penetrate into
6,500 listings as of July 2015 —
the massive Indian hinterland.”
but it has big ambitions, and now
lots of money in the bank. The
site closed a ($16 million U.S.), Series A funding round in July, led by Lightbox. Droom’s initial
funding was led by Beenos of Japan.
The company expects to add 200,000 listings in the next two years and plans to expand
into Southeast Asia by early next year.
Founder / CEO Sandeep Aggarwal said current auto sales methods “suffer from unsatisfactory and dubious experience. Droom offers an unparalleled advantage for buyers on trust,
pricing and selection.” Aggarwal, who pleaded guilty in the U.S. in November 2013 in an insider-trading case, told the Economic Times: “I was worried about investors’ reception given my
legal case, but I underestimated the power of track record.”
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Vol. 16 No. 17
Droom.in
Launched: 2014
Headquarters: Gurgaon
Parent company:
Droom Technology
Pvt. Ltd.
Founder: Sandeep Aggarwal, current CEO
Investors: Lightbox (great URL: http://
www.lightbox.vc/ ) (India); Beenos (Japan), in two
rounds, June 2014 and July 2015
Investor / partner Sid Talwar
of Lightbox told YourStory.com that Droom “is finally disrupting an industry where user behavior hasn’t changed since the
advent of the Internet in the country. The added bonus is that we
have worked with Sandeep in the
past, know what he’s capable of
building, and so (are) excited to be
along for another ride.”
Aggarwal was previously
founder and CEO of Shopclues, an
online marketplace.
Additional sites
OnCars.in, owned by India.com.
MotorTrend.in, formerly Carazoo.com.
Launched in 2007 as a division of Logix Microsystems
Ltd., it became a separate unit in 2012. A majority stake
was sold to TEN: The Enthusiast Network, a global integrated media house that operates 70 enthusiast publications and more than 100 websites. It was rebranded as
MotorTrend India in 2013.
GoZoomo.com / Zoomo is a start-up that offers
used cars that are inspected and guaranteed by the company. Launched initially in Bengaluru and Mumbai, it
plans to launch in a new city each month for the rest of
2015, including Delhi, Pune, Hyderabad and Chandigarh.
(It’s not related to ZoomCar, an auto rental start-up.)
GoZoomo.com / Zoomo is a start-up
that offers used cars that are inspected and guaranteed by the
company.
99Cars.com focuses on providing information
about cars, rather than listings. Shoppers can configure a
car, then compare models, check specifications and get a quote and monthly payment figure.
Operated by Accentium Web Pvt. Ltd., based in Udyog Vihar, Gurgaon.
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Vol. 16 No. 17
Real estate sites strive to survive
Opportunity abounds, but no one is profiting — yet
The online real estate advertising market in India is anyone’s game. And everyone’s in
it, or so it seems. And no one’s making any money, at least for now.
“We believe there will eventually be consolidation in the real estate online classified
segment, after which only two or three will be left,” an analyst with Motilal Oswal Securities
said recently. “Unless that happens, these portals are unlikely to make profits.”
Info Edge site 99Acres.com, the oldest site of note, is losing money because of heavy
investment in an effort to become the market winner. “Though we are in a leadership position
in this segment, we are trying to become a dominant player, similar to [co-owned] Naukri.com’s position in the recruitment business,” Info Edge executive Chintan Thakkar said.
MagicBricks.com, owned by the Times of India and tied to it with an optional print /
online advertising package, also claims to be the market leader.
But don’t count out the other big players: PropTiger, which has raised more than $30
million from investors including News Corp. during the last year; Housing.com, backed by Softbank and others, a company that’s seen more turmoil than India-Pakistan politics the past few
months; and CommonFloor.com, which is shooting for profitability within the next two years.
India’s so large, with such an overwhelming need for housing in a wide range of demographics, that niche sites also have a tremendous opportunity.
“If you look at the real estate segment with a 20-30 year horizon, the fundamentals of
India’s demographics are not going away. We are playing into that,” said Raju Narisetti, a
board member at PropTiger.com and SVP-strategy for News Corp. “It could take us a while
and there will be some up and down cycles, but we are willing to have a long-term view of
brand building.”
99Acres
It’s a good thing 99Acres has sister site Naukri.com and others around. It would be a
money-loser on a standalone basis.
But parent company Info Edge is profitable overall and plans to continue investing
heavily in 99Acres — i.e., subsidizing its losses — for the foreseeable future.
“[At] 99Acres our margins are likely to fall because we plan to invest substantially in this business going forward,” CEO / managing director Hitesh Oberoi told CNBC TV 18 in
July after the company’s most recent quarterly results were released.
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Vol. 16 No. 17
“It’s a 6,000 crore ($921 million U.S.) market. A lot of the spend has to move
online,” he said. “So I do not see investment in 99Acres going down. We will continue to invest
aggressively in this business for the long
run.”
99Acres.com
Chintan Thakkar, Info Edge fiLaunched: 2005
Headquarters: Noida
Parent company:
Info Edge (India)
Ltd.
Publicly traded:
Symbol: NAUKRI on NSE (National Stock Exchange of India); initial public offering April 2006.
Employees: Info Edge employs 4,000 in 48 offices in 31 cities in India, with four additional offices in the Middle East.
nance head, added that the company
was spending heavily on technology and
marketing.
“Though we are in a leadership
position in this segment, we are trying
to become a dominant player, similar
to Naukri.com’s position in the recruitment business,” he told BusinessStandard.
Launched in 2005, 99Acres is one
of the oldest real estate portals in India.
Founder: Sanjeev Bikhchandani
Info Edge financials show it lost
Rs37.4 crore ($5.7 million U.S.) on revRelated sites: Naukri.com (recruitment classifieds), Jeevansathi.com (matrimonial classifieds),
enues of Rs100 crore ($15.3 million) in
Shiksha.com (education portal), many others
the 12 months ending March 21, 2015.
With the increased investment, it lost
Profitability: Substantial losses at 99Acres in
Rs36.1 crore during the quarter ending
2015 due to heavy investment. See article.
June 30, but Info Edge has a significant
cash balance from a Rs750 crore qualified institutional placement it made last year to support the 99Acres investment.
Common Floor
Virtual tours and virtual reality are some of the elements CommonFloor.com touts as it
tries to distinguish itself in the online real estate field. Soon, profitability may be another distinguishing feature.
“We will definitely turn profitable in the next two years,” CEO Sumit Jain told BusinessStandard.com in May. The company employed 900 about a year ago and was targeting a
workforce of about 1,500, with expansion into new markets.
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Vol. 16 No. 17
CommonFloor offers a “Retina” device (999 rupees, about $15 U.S.) for virtual reality
views of properties that are under construction and for V-R tours of some of the listed properties. “Photographs are a thing of the past now,” Jain said.
Separately, the company offers tools for management of apartment communities and for the people who live in
those communities to connect, work
CommonFloor.com
with vendors and build, well, comLaunched: 2007
munity.
Headquarters: Bengaluru
Investors: Series C, $7.5 million, June 2013, Accel Pointers, Tiger Global
Management; Series D,
$10.4 million, January
2014, Accel, Tiger Global;
Series E, $30 million, September 2014, Tiger Global;
January 2015, $15 million,
Google Capital
Employees: More than 1,000
Founders: Sumit Jain, who now serves as CEO;
Lalit Mangal, now CTO; Vikas Malpani, VPcommunities
Acquisitions: January 2015: “ Acqui-hire” of Bakfy,
Bengaluru-based mobile app developer; undisclosed
terms
Profitability: Not yet. Company expects to be
profitable “in the next two years.”
Business model: Focuses primarily on apartment
communities, gated developments and new construction.
Its latest investment came in
January 2015, when Google Capital
funded a $15 million round.
“We will launch a new innovation every quarter going forward,”
Jain said.
CommonFloor also bought a
company specializing in mobile app
development in early 2015. The purchase was described as an “acquihire,” because Bakfy, the company’s
app, was abandoned, and the Bakfy
employees were melded into the
CommonFloor workforce.
“We liked the founders and
their work in building a mobile-only
anonymous social network,” Jain
told the Times of India.
“We are bullish on mobile and the
Bakfy team brings proven capability
of scaling up a mobile-only social
network in India, which is quite
unique.”
Housing.com
Hollywood, or Bollywood, couldn't come up with a better script for a thriller, or a comedy, or a drama, than the story at Housing.com during the past year:
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Vol. 16 No. 17
The mercurial 26-year-old CEO and cofounder gives away his shares to his employees.
Then he insults the board of directors in a memo that gets leaked. He resigns. Unresigns.
Gets fired. And the investors are left to pick up the pieces. Layoffs follow. And the former
CEO, in an echo of Arnold
Schwarzenegger, says (sort of),
Housing.com
“I’ll be back -- somewhere else -after this LSD time-out.”
Launched: June 2012
Drama? Comedy? All of the
above? The scriptwriters are already at work, or they should be.
Parent company: Locon Solutions Private. Ltd.
Investors: Angel round, undisclosed amount, February 2013, private investor Zishaan Hayath and others; additional round, undisclosed amount, March
2013, private investor
Haresh Charla and others;
seed round, $2.5 million,
June 2013, Nexus Venture
Partners; venture round,
$18 million, April 2014, Helion Venture Partners and
others; $19 million, June 2014, Helion Venture Partners
(lead), Qualcomm Ventures (lead), Nexus Venture
Partners; $100 million, November 2014, Softbank Capital (lead) (Sources include Crunchbase)
Through it all, Housing.com seems to be progressing.
It’s working with an interim CEO;
it’s got a new chief business officer; it’s planning to tighten its
focus to just rentals and residential property sales in large cities
(at least for now). And it’s hired
a top-drawer executive search
firm to help it find a new CEO
and CFO.
In August, the company
announced it had reached a total
of 1 million verified listings in
Employees: About 2,600; 600 layoffs are expected.
three years, with a compound
growth rate from January through
Founders: 12 college friends from Indian Institute
of Technology, including Rahul Yadav
June 2015 of 31 percent. (It
claimed to be “the first online
Acquisitions: India Real Estate Forum, real estate
real estate platform in the world
discussion forum, March 2015, $1.2 million; Realty BI,
to have 1 million verified listreal estate business intelligence company, June 2015,
$2 million, specific terms undisclosed; HomeBuy 360,
ings,” a claim that’s demonstrasales-cycle management tool, August 2015, $2 million,
bly false, but we suppose like so
specific terms undisclosed
many other things it depends on
how [and what] you count.) The
company employs 750 “data collection managers” and has set a goal of capturing 10,000 listings in a single day. It reached 9,000-plus in July.
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Vol. 16 No. 17
Softbank, the giant Japanese investor, has Jonathan Bullock on the company’s executive
committee, which also includes interim CEO / COO Rishab Gupta, Haresh Chawla, the company’s first angel investor, and CTO Abhishek Anand.
In June, Economic Times reported that Quikr was in talks to buy Housing.com, but so
far nothing’s come of that report; both Housing.com and Quikr declined comment.
The end of the script probably won’t come for a long time. But it’s been a long and
wild story in the three years and $120 million in funding that the company’s been through so
far.
MagicBricks.com
MagicBricks.com claims it became the No. 1 property site in India within three months
of its launch in August 2006, and as of May 2015 was the market leader “in terms of total
unique visitors, percentage reach, average daily visitors, total pages viewed and total visits.”
It’s operated by Times Internet, the Times of India’s digital unit, and is (obviously) the
only national online property site to offer the
advantage of a print / online package. With
MagicBricks.com
an enhanced online listing, MagicBricks offers
Launched: 2006
a print combo buy with a classified listing in
eight Times regional editions at prices ranging
from 2,500 rupees ($38 U.S.) in Hyderabad to
Parent company: MagicBricks Realty
5,500 ($84 in Delhi.)
Services Ltd.
MagicBricks claims more than 800,000
is owned by
Times Interregistered users including more than 65,000
net Ltd., the
property agents and 13,000 builders. It has
digital divimore than 500,000 listings and 200,000 daily
sion of the Times of India. (Times of India
visitors, based on Score data released by the
is in turn a unit of Bennett, Coleman & Co.
company.
Ltd.)
Like most of the real estate sites, it
has a heavy focus on mobile, including
“MagicSMS,” click-to-call and MagicBricks on
Mobile. Prospective buyers and sellers can
send free SMS texts through the websites; click-to-call allows users to call sellers for free
through the site. For agents, it offers “property leads on SMS,” a premium service with immediate SMS updates of new listed properties based on the user’s requirements.
Related sites: ZigWheels.com,
TimesJobs.com, many others
It launched a new map-search feature in June, and in February 2015 released its first
quarterly “PropIndex Rental Market Analysis Report,” reviewing supply-and-demand trends in
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Vol. 16 No. 17
the rental market. In June, it also worked with Google to run the “Great Online Home Festival,” a 10-day promotion intended to “reignite transactions in the real estate market,” according to CEO Sudhir Pai.
On the marketing front, MagicBricks is a sponsor of India Premier League cricket.
PropTiger.com
PropTiger.com
Launched: 2011
Headquarters: Noida
Parent company: Elara Technologies Pte. Ltd.,
based in Singapore
Investors: Initial round,
2011, $2 million, Softbank,
Horizen Ventures and individual angel investors; second
round, 2012, $5 million from
SAIF Partners Adnd Accel
Partners; third round, November 2014, $37 million including $30 million from News Corp. and commitments for additional $7 million from SAIF, Accel and
Horizen.
Employees: 500 in eight offices
Founders: Prashan Agarwal, who recently left
the company; Dhruv Agarwala, who now serves as
CEO; Kartik Varma
PropTiger.com is less than
five years old, but it’s clearly a contender. It’s a corporate cousin of
both Realtor.com in the U.S. and
REA Group, the Australian company
that owns RealEstate.com.au and
shares in Move Inc. of the U.S.,
IProperty Group of Asia, and a number of other property sites worldwide.
With a $30 million investment
in November 2014, News Corp. became the largest shareholder in
PropTiger at 25 percent. It later increased its stake to 30 percent.
SoftBank and Accel Partners are
some of its other big-name investors.
The first cross-pollination between PropTiger and another News
Corp. asset? Luxury homes listed on
Acquisitions: Maakan.com, real estate listings
PropTiger will also be offered on
site; Out of Box Interaction, a real estate design inMansionGlobal.com, a global luxury
terface and marketing firm. Both in April 2015; terms
real estate site launched in May
were undisclosed.
2015 by News Corp. subsidiary Dow
Related sites: Makaan.com still operates as a
Jones & Co., publisher of The Wall
separate brand.
Street Journal. Listings and content
are offered in English, Chinese and
Spanish on the site. “Indian ultrahigh net worth individuals are seeking to invest in premium residential property both in India
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Vol. 16 No. 17
as well as abroad and now have a single destination for starting their search and completing a
transaction,” PropTiger CEO / cofounder Dhruv Agrawala said.
In April, PropTiger parent Elara Technologies acquired Makaan.com, a real estate listings site. It said it plans to operate the sites separately.
Earlier in April, it acquired Out of Box Interaction, a company that designs user interfaces and marketing tools for real estate projects.
Terms of both deals were undisclosed.
Raju Narisetti, SVP-strategy of News Corp.
and a PropTiger board member, said his company
is a strategic investor. “It could take us a while
and there will be some up and down cycles, but
we are willing to have a long-term view of brand
building. We have historically had a very strong
real estate business.”
Additional sites
As of August, Grabhouse.com it operated in
11 cities, including Delhi and Mumbai.
Grabhouse.com, a rental site founded in
2013, charges users for recommendations after
the first two and offers offline assistance as
well as online searching. As of August 2015, it
operated in 11 cities, including Delhi, Mumbai
and Bengaluru. It raised $2.5 million from Sequoia and Kalaari Capital in January 2015, and
was previously funded by India Quotient.
Nestaway.com, a rental and roommate
site that focuses on “bachelors, whether men
or women” or young people looking for a place to live, either in their own flats or in shared
accommodations. Launched in January 2015, it landed $1.2 million in seed funding in March
from IDG Ventures India, InMobi and some individual investors. It followed that investment in
July with a $12 million found from marketplace site Flipkart and Tiger Global Management.
Oku Tech operates BroEx, a network of real estate brokers. It was founded in 2014 and
raised $1 million from Lightspeed India in July 2015.
RoofOnTop.com launched in 2013 as “India’s first consumer-centric property portal.” It
is heavily integrated with Google Maps.
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Vol. 16 No. 17
Naukri’s No. 1, but rival impresses
Recruiting site dominates region where print is strong
Naukri.com is the category-killer in the recruitment advertising field in India. No other
site comes close.
But the most interesting business model in the recruitment / professional networking
field we’ve seen anywhere in the world is also in India. While it won't overtake Naukri anytime soon, or even ever, Round One sure has our attention.
Naukri just knocks the ball out of the park. It’s No. 1 in just about every metric, and its
profits are carrying publicly traded parent company Info Edge (India) Ltd. through significant
planned losses at its property site, 99Acres.com.
"Naukri's EBITDA margins are over 53-54 percent now and because Naukri grew by 25
percent in the last quarter — that boosted the margins of the company as a whole," Hitesh
Oberoi, MD & CEO, Info Edge told CNBC-TV18 in May.
Its competitors include MonsterIndia.com, owned by Monster Worldwide; Shine.com,
owned by HT Media Ltd., publisher of the Hindustan Times; LinkedIn, of course; and dozens of
local, regional and niche sites. (A handful of those are profiled below. We could probably
write about dozens and just scratch the surface.)
Naukri’s the oldest, launched in March 1997, just three years after Jeff Taylor
launched the predecessor to Monster.com and two years before TMP Worldwide launched
Monster.com by merging Online Career Center (OCC.com) and TheMonsterBoard.com. Naukri
said it has about 60,000 corporate customers and about 18 million active users at any given
time out of about 40 million registered users.
Several start-up job boards have gone out of business recently in India, including TalentPad.com, which generated about a million dollars in revenue and an undisclosed level of
investment in the 18 months before it closed in August 2015. WhistleTalk.com, another social
referral / recruitment site, folded in June.
Recruitment advertising in India is unusual among global markets, because Indian newspapers are still strong and growing. Long-term, they are expected to decline, but they are
widely believed to have another five to 10 years of significant growth ahead due to an expanding middle class and rising literacy. HT Media, for example, has reported continuing
quarter-by-quarter gains in print advertising, circulation and circulation revenue. (Digital revenue is still less than 5 percent of the total at the company, which also owns and operates a
wide range of broadcast and mobile assets.)
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Vol. 16 No. 17
The National Career Service, operated by the country’s labor ministry, may be changing the job board landscape through a plan announced in July to build a public-private partnership and give private recruitment sites access to its candidate database of more than 20
million.
“We will give free access to private players to our database and take their help in improving service,” a government official told LiveMint. “There is no point competing. We
have to evolve a model which is sustainable.”
Monster India
Monster India is growing revenue through new products, including its TalentBin online
networking aggregation tool and its “Twitter Cards” promotion of job listings, the company
said. Monster Worldwide expects 2016 revenue growth of about 15 percent overall in its Asia
-Pacific markets.
MonsterIndia.com
Launched:
2003
Headquarters:
Hyderabad
“Our business in India has performed
consistently on the top line for several
years,” Monster Worldwide CEO Tim Yates
said on the company’s earnings call for Q2
of 2015.
Managing director Sanjay Modi, manParent compaaging director for Monster India and the rest
ny: Monster Worldwide, publicly traded,
of its Asia-Pac markets, said Naukri.com is
NYSE: MWW.
his most important competitor in India,
“We’ve never thought of LinkedIn as competition.” In an interview with LiveMint, he
described Monster India as an aggregator of talent, serving a “broad base of the
[recruitment] pyramid.”
Modi said TalentBin captures candidates and their skills through their online social
media and professional media profiles, and their online activities, and gives recruiters a
time-saving tool for finding “unfindable” candidates.
Other features the company has launched recently include its MPower Search tool for
mobile job-searching; Monster Analytics for recruiters; an affiliation with the Indian Air
Force to help retiring Air Force members find second-career opportunities in the corporate
world; and Rozgarduniya.com, a job site exclusively for job-seekers in rural India so employers can find talent outside cities and metro areas.
The company has also been offering virtual career fairs since 2013.
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Vol. 16 No. 17
Naukri.com
Naukri.com throws off more than 50 percent in EBITDA profits, and is growing between
18 and 25 percent per quarter.
As a result, it’s subsidizing the
Naukri.com
rest of Info Edge, its parent company.
Launched: 2007
Headquarters: Noida
Parent company: Info Edge (India) Ltd.
Investors: Publicly traded, National Stock Exchange
of India, symbol NAUKRI.
Initial public
offering, November 2006.
Founders: Sanjeev Bikhchandani
Related sites: NaukriGulf.com, recruitment site serving GCC countries including the UAE, Saudi Arabia, Qatar and others; 99Acres.com, Indian real estate site;
Jeevansathi.com, Indian matrimonial sites; FirstNaukri.com, post-college hiring site; Shiksha.com, education
portal; Quadrangle executive search.
Related companies: In addition to its wholly owned
sites, Info Edge has invested in six companies, including
a 50-percent stake in Zomato, a food-delivery and restaurant portal that operates in more than 20 countries,
and PolicyBazaar.com, an insurance site.
“The jobs business accounts for almost 100 percent of
our profits, because the other
businesses are in investment
mode,” Hitesh Oberoi, managing
director and CEO, told the Economic Times. “Naukri.com continues to grow healthily. We are
in the high teens — 18 to 19 percent.”
Oberoi recently said
EBITDA at Naukri was almost 55
percent, and revenue grew 25
percent in the quarter ending in
March.
“Going forward Naukri
margins are likely to improve if
Naukri keeps growing at 25 percent per annum, but that will
depend on [the] economy to a
large extent,” Oberoi said recently.
Founder Sanjeev Bikhchandani said investors understand why most of the Info Edge
businesses are still losing money.
“Naukri is stable and predictable. The others less so. So it is a blended model with
some volatility because of the other businesses. But by and large, investors are well-informed
and well-researched and they factor this in their decisions,” he told Economic Times.
With such strong metrics and profits, what does Naukri have to worry about during the
next few years?
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Vol. 16 No. 17

LinkedIn

Losses of mass to niche sites

Difficulties in the Indian economy

Complacency
Frankly, continued 20 to 25 percent revenue growth looks likely, unless the Indian
economy tanks again.
Round One
Everyone knows the best way to find a job is to be referred by someone at the company. Studies (like those from our
friends at CareerXRoads) have
RoundOne.in
proven that repeatedly.
Launched: 2011
Parent company: Round One Network Pvt. Ltd.
Investors: “ Pre Series A,”
$1 million, April 2015,
Shine.com (HT Media), individual investor Arun Duggal
Founder: Nishant Mathur
Business model: Jobseekers pay for guaranteed
interviews with employers at
the companies they are seeking to join. Those “company insiders” in turn may refer the
candidates to the company if they feel they are qualified.
Interviewers are compensated with points that can be converted to cash, hospitality vouchers or donations to charity.
We’ve seen lots of referral sites, but Round One in India
strikes us as unique. Definitely
worth watching. Otherwise it
wouldn’t belong in this report,
because it’s not one of the
“majors.” (We’re a little embarrassed that we haven't reported on it sooner; maybe it
was just too small to catch our
eye.) Founded in 2011, it offers
candidates a guaranteed 30minute interview with an individual at more than 2,500 companies for a fee.
The company doesn’t
guarantee that the candidate
will get a job, but it provides a
refund if it can’t arrange an interview. If the interviewer, who’s an individual at the target company, is impressed with the
candidate, presumably he or she will refer the candidate to the company for specific openings. CEO / founder Nishant Mathur called it “incentivized networking” in an interview shortly after the launch.
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Vol. 16 No. 17
Reviewers are paid in points, which can be converted to cash, meals or hotel vouchers,
or donations to a youth charity. Fees range from Rs99 ($1.50 U.S.) for a single guaranteed interview to Rs1,299 ($20 U.S.) for a six-month plan.
“Anybody can buy a guaranteed interview,” Mathur said. “Unlike job portals or websites where anybody and everybody who has a small chance ends up applying because it is
free, Round One’s monetary filter ensures only those that truly believe they are a good fit use
the service.
“Apart from this self-filtration mechanism, the interview itself is a screening.
Only applicants that are deemed suitable by the interviewers are passed on to the company,
with a recommendation. In a sense, Round One employs every employee to become a screener / recruiter. And if a company wants to hire the best people, it should ideally be the employees, not outsourced recruiters, that screen candidates,” Mathur added.
“Round One … meaningfully allows one to connect with practically anyone by replacing social capital, (the currency of favors), with a monetary incentive.”
Shine, the HT Media recruitment website, invested in a $1 million funding round
in March 2015, along with individual investor Arun Duggal of Info Edge.
Mathur called online recruitment “an old and crowded space” and has talked about expanding into Singapore and even the U.S. In a market the size of India, the $1 million he captured as a “pre Series A” round won’t go very far.
He’d do well to triple or even 10-x his growth in India before he tries to move into another market, but his model is intriguing.
We’d bet LinkedIn is watching closely. If not, it should be. (Now, we will be too.)
Shine
Shine, which describes itself as India’s “most innovative and fastest growing recruitment portal,” has made heavy use of social media in its path to growth since it launched in
2008.
The company said it has more than 16 million candidates and 220,000 job listings.
It differentiated itself from other job boards early on by using technology from RedMatch, an Israeli company, to match candidates to job openings. It also made heavy use of Facebook and later used an 11-hour Twitter contest to reach thousands of users. One study of
the company’s social media campaign said the contest’s message, “Yaar Tu God Hai,” reached
3 million users worldwide. (“Yaar Tu God Hai” literally translates to, “You are God, my
friend,” but the company’s messaging implied that a friend could help you find a job.)
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Vol. 16 No. 17
Like TimesJobs, Shine.com has the option of integrating online with print. Shine
Jobs is a recruitment supplement on Tuesdays in the Hindustan Times. The company said that
makes it “the only recruitment product
with an integrated print and online ofShine.com
fering.”
Launched: 2008
Shine incorporates networking
through Round One (see separate profile) and MyParichay, a social media
Parent company: HT Media
recruitment tool that is part-owned by
Ltd., publisher of the Hindustan Times and business
HT Media.
publication Mint; radio, eduRevenue growth at the site has
cation and other media and
been impressive, although it’s difficult
digital assets. Formerly held
to tell just how impressive because the
by Firefly E-Ventures, a
wholly owned subsidiary of
company does not disclose amounts,
HT Media, Shine.com was merged back into HT
only percentages. In Q2 of fiscal year
Media in 2011.
2015, Shine revenue increased 28 percent year-over-year; in Q3, HT Media
Related sites: HindustanTimes.com; LiveMint.com; DesiMartini.com (entertainment site),
said Shine’s revenue was up 43 percent
HTCampus (education lead-generation portal),
year-over-year.
and others.
Related companies: Round One, a unique business-model professional networking and recruitment site, in which Shine.com has invested.
Additional sites
TimesJobs.com is also one of
the leading job boards in India. It’s
owned by Times Business Solutions, a
division of Times
Internet Ltd., which is in turn a division of the Times of India, owned by
Bennett Coleman & Co. Ltd. It’s based in Noida and is affiliated with JobBuzz and StepAhead, two career management sub-sites and TechGig.com,
“India’s most passionate technology community.” Its corporate cousins
include MagicBricks.com, the property portal; SimplyMarry.com, a matrimonial site; and HappyKeys.com, a separate property portal for Delhi and
the national capital region. TCNext.com is an ad-booking engine for the Times company’s
online classifieds, while Ads2Book.com is for print classified line and display ads.
ClickJobs.com is operated by Perspi Interactive Pvt. Ltd., which is in turn a subsidiary
of the Sadhna Group, a media / broadcast / advertising company based in New Delhi. ClickJobs promotes itself as the “first and only ISO 9001:2000 certified job portal in India.” It was
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Vol. 16 No. 17
TalentPad.com shut down in August 2015 after just 18 months of operation.
sold to Perspi in July 2012 by Matrimony.com, which operated BharatMatrimony.com and other classified sites.
WorkCircle.in is an aggregator of jobs, similar to
Indeed.com or SimplyHired. It’s an offshoot of a London
company, WorkCircle.com. As of late August 2015, it
claimed almost 350,000 job listings in India. “We search
India’s top job boards, employers and agencies, so you
don’t have to.”
TalentPad.com, which launched in February 2014 as TalentAuction.com, shut down in
August 2015 after about 18 months of operation. The company, run by Zobtree Ventures Pvt.
Ltd. and backed by Helion Venture Partners (India), charged employers after they hired someone they identified through the site. “We failed to figure out a scalable business for a big
enough market,” the company said in a blog post called, “It’s time to say goodbye.” The company said all job-seeker profiles would be permanently deleted by Sept. 30, and companies
that had paid for new hires would receive refunds if the candidate left the company within 90
days of joining.
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Vol. 16 No. 17
Sites help millions meet their match
More Indians arrange their marriages via dot.coms
India has dozens of matrimonial sites but the big three — BharatMatrimony.com,
Jeevansathi.com and Shaadi.com — all claim to be No. 1. And all appear to be growing steadily. But the only one that publishes financial data is unprofitable (albeit barely so). The other
two probably are, as well.
Matrimonial is a classified category that’s almost unique to India. In most markets worldwide, “dating” sites
are prevalent for relationships,
but they are used by young men
and women directly to find dates
that could either lead to a casual
friendship or more. Dating sites
are a relatively recent development in India. On the other hand,
Shaadi launched almost 20 years
ago, and BharatMatrimony went
live just one year later.
Why “matrimonial?”
About 90 percent of all
marriages in India are arranged
by the parents and immediate
family of the bride and groom,
based on social status such as religion, caste and regional origin.
“Parents tend to be the primary
decision-makers, although with
increasing education levels, the
bride and groom are also having
their say,” Matrimony.com Pvt.
Ltd. noted in its draft prospective
for an IPO. Matrimony.com is the parent company of BharatMatrimony.
Ironically, “love marriages” is the common phrase for marriages that are not
“arranged,” but are based on relationships developed directly by the bride and groom.
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Vol. 16 No. 17
“A multitude of factors like increased exposure to other cultures, higher educational
levels and joint families giving way to nuclear families in Indian society has led to [a] new
generation of Indians who are more actively taking control over … their lives,” Matrimony.com
noted. “One of the resources singles in India have resorted to for finding their life partners is
online matchmaking sites which provide them access to a huge database and help them approach a potential bride / bridegroom after applying a desired selection criteria to search on
such database.”
Weddings and marriage are huge business in India. A high-end wedding can cost upward
of Rs10 million, or more than $150,000 U.S., with up to 1,500 guests and ceremonies lasting as
long as seven days. Even a low-end wedding typically lasts one to two days with
“A multitude of factors like increased
100 to 300 guests and costs $3,000 or
exposure to other cultures, higher educamore. About 12 to 13 million weddings
tional levels and joint families giving way to are projected for India each year from
nuclear families in Indian society has led to 2016 through 2020.
[a] new generation of Indians who are
more actively taking control over … their
lives. One of the resources singles in India
have resorted to for finding their life partners is online matchmaking sites which
provide them access to a huge database
and help them approach a potential bride /
bridegroom after applying a desired selection criteria to search on such database.”
— Matrimony.com
Safety and security of users is a
major issue for matrimonial sites. Most
offer some sort of verification mechanism, and the government Department of
Electronics and Information Technology
proposed in July that individual
“Aadhaar,” a 12-digit government ID, be
required in order to block fake profiles
and improve user safety. Earlier, the minister for Women and Child Development
said her department received a lot of
complaints about women being scammed
while trying to find husbands online.
Several of the sites offer services in multiple countries. All also offer services for “NRI,”
non-resident Indians who may want to meet other Indians in their countries of residence or
may want to meet someone in India for an arranged marriage and either return home or live
abroad with their new spouse.
Matrimony.com
In its draft prospectus for an initial public offering, released in August, Matrimony.com
Pvt. Ltd. said it’s the No. 1 site in India for matchmaking, based on data from ComScore —
Page 44
Vol. 16 No. 17
leading both Shaadi and Jeevansathi in unique users, time spent on site, page-views, average
pages per visitor and average time per viewer.
BharatMatrimony.com
Launched: 1997
Headquarters: Chennai
Parent company: Matrimony.com Pvt. Ltd.
Investors: Initial round, 2006, $8.7 million, Yahoo Inc.
and Canaan Partners. Second round $11.75 million,
Mayfield Fund, initial investors. Yahoo later sold its
stake to Bessemer Venture
Partners, which is planning to exit in the upcoming IPO.
Founders: Murugavel Janakiraman, currently CEO
Related sites: EliteMatrimony.com, CommunityMatrimony.com, MatrimonyDirectory.com, Matchify (mobileonly relationship app)
Related companies: Formerly, ClickJobs.com, IndiaProperty.com (divested to focus on core business)
Profitability: Profitable only in FY ended March 2013;
losses in year ending March 31, 2011, 2012, 2013 and
2014. Loss in FY2015, Rs29.29 million ($438,000 U.S.),
down from Rs91.3 million in FY14 and profit of Rs104.1
million, FY2013.
IPO Draft Red Herring Prospectus: Click here
Revenue has been soaring.
Matrimony (the company) reported revenue growth of almost
250 percent over the five-year
period from fiscal year 2011
through 2015, from Rs1,018 million in FY2011 to Rs4,428.4 in
FY2015.
The company’s losing
money, but not much. It earned
Rs104.1 million in profits in its
fiscal year ending March 31,
2013, but lost Rs91.6 million in
FY2014 and just Rs29.3 million
($437,600 U.S.) in FY2015.
The prospectus said the
company had 647,000 paid subscribers in FY2015, up from
571,000 in FY2014 and 568,000
in FY2013.
No date or price target
was given for the IPO, but the
company first floated the idea of
an IPO in 2013.
In preparation for going
public, Matrimony.com spun out
other classified sites it was oper-
ating, including ClickJobs.com and IndiaProperty.com.
But it launched additional sites, including a wedding photography site and e-commerce
sites for wedding gifts.
For more about the prospective IPO, like who’s selling, who’s buying and how much the
company hopes to raise, see the brief we ran at AIMGroup.com or click on the draft prospectus.
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Vol. 16 No. 17
Jeevansathi.com
Like the other two sites listed, Jeevansathi claims to be the No. 1 matchmaking
site in India. It offers free listings, and users have to pay to get contact details of potential
matches they are interested in.
Jeevansathi.com
Launched: 1998
Headquarters: Noida
Parent company: Info Edge (India) Ltd.
Investors: Info
Edge is publicly
traded on the
NSE (Symbol:
NAUKRI)
Employees:
230 as of 2014, in 54 offices in 37 cities in India
(Source: Wikipedia.)
Founders: Sanjeev Bikhchandani and Ms.
V.N. Saroja of the Indian Institute of Management
Kashipur
Corporate trail: After launch, the company
was sold to brothers Amit and Rohit Tandon, although founder Bikhchandani retained a 35 percent stake. Info Edge bought it back in 2004.
Related sites: Naukri.com, others
Jeevansathi is the Hindu word for
“life partner.”
The site was founded by Naukri.com / Info Edge founder Sanjeev
Bikhchandani in 2004 with Ms. V.N. Saroja of the Indian Institute of Management Kashipur. (Interestingly, she also
participated in the launch of Naukri.com
but is rarely mentioned as a cofounder
online or in company materials.)
Just two years ago, in July 2013,
Info Edge CFO Ambarish Raghuvanshi
said the company was continuing to invest into the site, which he said was
then in a No. 3 position among matrimonial sites.
“Over the next year and a half we
will be taking a clear position on what
we want to do with Jeevansathi.com,”
he told CNBC-18. “So if growth does not
scale up at the level that we have anticipated then we will certainly look at
selling it. It is too early to call that right
now.”
Info Edge hasn’t talked publicly recently about selling off Jeevansathi.
Shaadi.com
Shaadi claims to be “the world’s No. 1 matchmaking service,” with 35 million members
and 4 million matches made since it launched in 1996.
Like many of the matrimonial sites, it offers several levels of membership.
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Vol. 16 No. 17
Rates range in India from Rs3,900 ($58 U.S.) for a three-month gold membership
to Rs8,700 for a one-year platinum membership. U.S. rates range from $97 for gold to $223 for
platinum; Singapore, SGD109 (U.S. $77) for gold to SGD240 for the one-year platinum membership.
Shaadi.com
Launched: 1996
Parent company: People Interactive (I) Pvt. Ltd., a
unit of People-Group
Investors: Sequoia
Capital, Saama
Capital, Intel Capital, Citibank. (Dates,
funding rounds,
amounts unpublished.)
Employees: Parent corporate group overall, about
1,200
Founders: Anupam Mittal, who stepped down in July 2015 as CEO. (Gourav Rakshit, COO, took over as
Shaadi CEO; Mittal remained CEO of parent company
People Group.)
Related sites: Both related sites Makaan.com (real
estate, see separate listing) and Fropper.com, social
networking site, were sold in 2015.
Other packages, upsells
and durations are offered.
Operating in India, the
U.S., U.K., Singapore and Australia, its global Alexa traffic rank
dropped sharply from the low
600s to 1,287 in August, but it’s
still among the top 150 sites in
India.
Founder Anupam Mittal,
40, who is a past chairman and
founding member of the Internet
and Mobile Association of India, is
a serial investor and entrepreneur
with more than 50 investments.
He married well-known
Mumbai model Aanchal Kumar in
2013. “The duo met through common friends,” WeddingSutra.com
reported.
Additional sites
Related companies: Mauj Mobile
SimplyMarry.com offers
services in 12 languages, to people of five religions and five communities. It’s owned by Times Business Solutions, a division of Times Internet Ltd., which is in
turn a division of the Times of India, owned by Bennett Coleman & Co. Ltd. It’s based in Noida
and is affiliated with TimesJobs.com and MagicBricks.com, the property portal, among others.
MyZamana.com has been described variously as a matrimonial site for India, based in
Massachusetts, but it now describes itself as “a vibrant social network for meeting people.”
Investors include Gabriel Weinberg, Steve Welch and Dogpatch Ventures.
Page 47
Vol. 16 No. 17
China’s Alibaba expands into India
E-commerce colossus invests in PayTM, SnapDeal
After having tested the waters by investing in PayTM and SnapDeal, Alibaba is now searching
for more mature entities in India and has switched its focus from start-ups to established ecommerce companies.
BY DON GASPER
E-commerce behemoth Alibaba has chosen India as the beachhead for its global expansion, pinning its hopes on the country becoming the first key overseas market in which the
company can replicate its phenomenal success in China.
Sources familiar with the group say that Alibaba believes its model of developing an
online ecosystem consisting of e-commerce, financing and banking, could be very appropriate
in overseas markets such as India.



Ant Financial Services investment
in PayTM.
Alibaba’s investment in SnapDeal
Alibaba said to be seeking suitable
targets for further investment in
India.
What makes Alibaba’s strategy attractive is the fact that the company is ready to
invest in promising local companies instead of
trying to do everything by itself.
It was just last year that the Hangzhoubased company’s founder, Jack Ma Yun, declared that India would become a priority
overseas market for his group. Now the train
has already left the station.
In February this year, Alibaba affiliate Ant Financial Services Group paved the way for
future developments by starting to invest in India’s largest mobile payments firm, PayTM, a
mobile payments platform similar to Paypal or China’s Alipay. In 2014 PayTM became India’s
largest digital commerce firm.
According to unconfirmed media reports, in its first-ever investment in India, Ant Financial has paid up to $575 million U.S. to acquire a 25 percent stake in One97 Communications, PayTM’s parent company. In June, it paid another $600 million to lift its stake in PayTM
to 40 percent.
Basically, Ant is helping PayTM by beefing up both its technological and its business capabilities.
Page 48
Vol. 16 No. 17
One example relates to dealing with fraud. “We are developing a new risk-management
product for PayTM,” a Chinese engineer from Ant Financial at PayTM, who requested not to be
named, told Indian media. “We have seen and done that in China. Now we are implementing
the same here.”
PayTM founder Vijay Shekhar Sharma is quoted by India’s Economic Times as saying:
“Alibaba is helping us build the largest payment cloud in
the country.” An investment banker who advises global
investors on startups in India added: “Alibaba knows how
to run the platform as they know how to handle scale.”
In this connection, in early August, a team of
about 25 engineers and business managers from Ant Financial and Alibaba reportedly visited the PayTM office
to train its staff on how to manage and build scale.
“With over 1 billion people, India’s payments market has vast untapped potential,” said
Cyril Han, VP of Ant Financial. “As smartphone use continues to rise in India, we see great opportunity in the mobile wallet space and PayTM, as a leader in this field, is best equipped to
build a mobile payments ecosystem in the country.”
Meanwhile, Alibaba has also joined Foxconn Technology Co. Ltd. the Taiwanese mobile
phone manufacturer that produces IPhones for Apple, and Japan’s e-commerce colossus Softbank Corp. in investing $500 million in SnapDeal, India’s No. 2 e-commerce site that started in
2010 as a daily deals platform.
According to sources close to Alibaba, after having tested the waters by investing in
PayTM and SnapDeal, the company is now searching for more mature entities in India and has
switched its focus from startups to established e-commerce companies.
The sources say that Alibaba has appointed Citi Group, Goldman Sachs and Bank of
America-Merrill Lynch to seek out suitable targets in India for a further round of investment
with a base of more than $100 million.
India’s e-commerce market was worth about $13.5 billion last year, just a fraction of
the $440 billion that the Chinese market is estimated to be worth. From its own experience in
China, however, Alibaba knows the advantages of getting into a developing market right at
the beginning.
If Alibaba’s new strategy works out, the implications are huge: China already has approximately 650 million Internet users and India about 350 million. Thus together the two
countries would have approximately three times as many netizens as the United States.
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Vol. 16 No. 17
More India news and analysis from AIMGroup.com
Matrimony.com files initial IPO plan
Matrimony.com Pvt Ltd, which owns a clutch of dating/matrimony-related online portals, such as BharatMatrimony.com, EliteMatrimony.com, CommunityMatrimony.com, AssistedMatrimony.com, MatrimonyDirectory.com and Tambulya.com, has filed its Draft Red Herring Prospectus with securities market regulator SEBI to float its initial public offering.
A red herring prospectus does not have details of the price of the securities and is
meant to boost interest.
The company, which is known for its flagship property BharatMatrimony.com, is looking
to raise Rs 350 crore ($53.6 million U.S.) through a fresh issue ... (Read more here .... )
India’s major auto portal relaunches
CarWale, India’s largest automotive portal, owned by Automotive Exchange Pvt. Ltd.
and part of the Axel Springer Group, unveiled a new look for its website, mobile site and the
mobile app.
The outcome of months of months of consumer research and usability testing, the new
design has a contemporary, minimalist feel to it. The new design follows the new flat web,
scroll-down, tile format with separate modules dedicated to each stage of the auto-buying
process.
The redesign comes as the company prepares to bring in its 10th anniversary in September. CarWale has been recognized by IAMAI ... (Read more here .... )
Housing.com buys HomeBuy360 for $2m
India’s online real estate portal, Housing.com, has acquired HomeBuy360, a cloudbased sales lifecycle management platform that connects developers, agents and buyers, for
$2 million. This is the second acquisition in 2015 for Housing.com, after it bought Indian Real
Estate Forum (IREF), a platform providing property information to consumers and realty BI to
property buyers and financial institutions.
With this, Housing.com is now the only online real estate listing platform in India to
own a developer CRM company, reports The Hindu. Softbank led a $90 million investment in
Housing.com with Falconedge and a few others in December 2014. Thereafter, the portal has
closed ... (Read more here .... )
Page 50
Vol. 16 No. 17
Internet firms in India to double by ’16
E-commerce is booming in India, and how.
Top online marketplaces — Amazon-India, SnapDeal, PayTM and Flipkart — are ramping
up resources fast to build capacity, leading to a hiring spree, reported the Economic Times.
SnapDeal is looking to double its employees from 5,000 by FY16, reports ET. It’s hiring
across functions in technology, products, sales, supply chain and marketing divisions, as well
as software and product development, quality assurance, operations, studio and photography
divisions, HR and finance.
Likewise, PayTM plans to double its headcount in FY16 with ... (Read more here.)
Housing.com adds new C-level exec
Realty portal Housing.com in India, which reportedly plans to lay off about one-quarter
of its staff, named Jason Kothari its chief business officer.
He’ll drive the company’s overall strategy and growth in India and will be a member of
the operating committee.
He and interim CEO / COO Rishabh Gupta report to the company’s operating committee
and board of directors.
It’s the second major appointment at Housing.com after its co-founder and ex-CEO Rahul Yadav was sacked last month.
Kothari was cofounder and CEO of Valiant Entertainment ... (Read more here .... )
Major layoffs expected at Housing.com
Housing.com, the Indian real estate site that last month fired its co-founder / CEO,
plans to lay off almost one-quarter of its staff and eliminate a wide range of non-core businesses, the Times of India reported earlier this month.
Housing.com has been in turmoil for months. Its CEO / founder quit, rejoined the company and then got fired.
It currently employs 2,600; the Times of India report said it would lay off 160 employees in the non-core businesses and another 440 elsewhere.
“Housing is being completely restructured and performance for each employee across
departments is being (scrutinized),” the report quoted “a top executive at the company” as
saying. “While some people have been asked to leave because businesses ... (Read more
here .... )
Page 51
Vol. 16 No. 17
Contributors
Robert Dibrell, who provided our cover art, began drawing when he was small, continued drawing as he got big and keeps drawing as he gets old. He's got a BFA and an MBA
from the University of Houston. For 20 years he worked as a news artist for the Houston
Chronicle until they had second thoughts. He's currently Marketing Manager for Deepwater Corrosion Services, and will be until they, too, come to their senses.
Radhika Sachdev, the newest addition to the AIM Group team, is a long-time financial
journalist in India. She worked as deputy features editor for Financial Express for more
than three years, followed by a two-year stint with Financial World from 2012-2012.
She is a partner in Write Solutions, a copywriting and editing company that works on ebooks, industry white papers, training and websites. She is following classified and marketplace sites for CIR in India.
Patrick Peterson has 30 years of journalism experience as a writer and editor. He
served as editor of Classified Intelligence Report for most of 2015, and has worked with
the AIM Group for almost two years. He edited most of the articles in this report.
Jim Townsend is editorial director and a principal of the AIM Group / CIR. He leads
our global team of analysts and writers, and has been with us since 2001. He has more
than 35 years of experience in news management, including stints at the Houston
Chronicle and other newspapers and websites.
Peter M. Zollman, founding principal of the AIM Group and CIR, compiled much of the
information in the vertical section, and oversaw development and production of this
report. He has more than 40 years of experience in journalism, interactive media and
classifieds, and is a frequent keynote speaker at international classified advertising
and media conferences.
Sourish Bhattacharyya is a journalist with 28 years of experience, including senior editorial positions at Indian newspapers Mail Today, Hindustan Times and The India Express. He has written for the AIM Group off and on for eight years.
Don Gasper joined the AIM team in 2005. Based in Hong Kong, he covers mediaindustry trends in the Greater China area. He graduated in Oriental Languages at Cambridge University and went on to study Political Science and Political Economy.
Michael Gaffey has been a page designer for the AIM Group since January. He has more
than 30 years of experience as a reporter, editor, page designer and photographer at
newspapers and magazines throughout Florida.
Page 52
Vol. 16 No. 17
From community site to business
Yallamotor, PistonHeads, Bazoom forge own brands
Consumers are weary of traditional advertising and marketing campaigns and increasingly rely on their own friends and networks to influence their buying decisions. This trend
change creates opportunities for community sites, some have morphed into classified businesses, which ultimately became multimillion-pound enterprises.
BY LISA WALLS-HESTER
The digital age has changed the way we shop. The constant connection to our networks
means that we are now more than ever influenced by friends and followers. Brands are increasingly being forged by social association and savvy
CEOs are tuning into this evolution and creating a busi The digital era has
ness models around it.
widened consumer
influencer networks to a
global reach.
Some brands have developed from the bottom up,
in that the community came first and a commercial enterprise developed as a result.

Wherever there is
community, commerce will
ensue.
Here we take a look at three classified sites that
started out as community sites and evolved either by accident or by design, into valuable classified businesses.

Increasingly consumers,
users and followers can
forge a brands evolution.
Yallamotor
Yallamotor.com started as an auto guide for the
enthusiast in the UAE and is now the largest automotive
site in the Middle East. The website is a managed business unit of Bayt.com, the leading job site in the Gulf
and Middle East. The site was launched as an experiment by Bayt, with an initial investment
of just two employees.
The embryonic site started with auto guides, reviews, news and directories but evolved
into hosting classified ads. Within one year of its launch, the website had accumulated over
75,000 unique users and over 650,000 page views per month.
Page 53
Vol. 16 No. 17
Yallamotor has expanded and is now represented in Saudi Arabia, Qatar, Kuwait, Bahrain, Oman and Egypt as well as the UAE.
Commenting to AIM
Group, Omar Tahboub, VP of
Yallamotor
Product for the Bayt Group, said
URL: yallamotor.com
“The initial investment that we
Owner: Bayt
put in Yallamotor when the
Address: Dubai, UAE
product was launched was a
Launched: 2012
very small one — in the order of
Traffic: 5 million page views per month
two full-time employees. In
Revenue: Unknown
some ways, we are pleasantly
No. of employees: Unknown
surprised with the quick growth
Business model: Revenue from ads and sponsored
of the user engagement that
content
Yallamotor has been able to
Bottom line: Automotive classifieds site spreading
generate - especially in light of
across the Middle East
Contact: Rabea Ataya CEO/Founder Bayt. Omar
the experimental nature of how
Tahboub VP of Bayt
we launched the product.”
The website generates
Email: rabea.ataya@bayt.net ot@bayt.net
most of its revenue from display
advertising and a lead generation engine for regional financial institutions who offer their services to auto buyers. The Yallamotor strategy now is to
build on the success of the auto buyer's guide and put more focus on the classifieds section.
Tahboub said “In line with the our newly placed emphasis on the auto classifieds business, we
will expand our network of clients to work with auto dealerships in countries like UAE, Saudi,
and Qatar to enable them to post premium classifieds and generate leads through our platform.”
PistonHeads
PistonHeads.com was founded by David Edmonston, he started the U.K. website in
1998 while he was designing trading systems for Lehman Brothers.
One year in, the site was generating modest revenues and Edmonston resigned from his
day job to focus his time solely on the PistonHeads website.
The website started life as an online magazine and forum for sports auto enthusiasts,
Edmonston realized consumers wanted auto news quicker than print media could deliver it.
Page 54
Vol. 16 No. 17
He told the AIM Group “To get proper traction, identify a niche or community to target, building a niche is a way into classifieds.”
PistonHeads
It was when users started to
URL: pistonheads.com
trade items in the forums that EdmonOwner: Haymarket Meston decided to develop a classified
dia Group
area. "Classified ads were initially a
Address: London, UK
Launched: 1998
useful source of user generated conTraffic: 60 million
tent, within 18 months dealers wanted
page views per month
to advertise too. Private listings remained free whilst the dealers were
Revenue: Unknown
charged."
Business model: Revenue from ads and sponIn 2007 Edmonston sold the site
sored content
to Haymarket Media Group, the speBottom line: Automotive classifieds site U.K.
cialist media and information group.
Based
Contact: David Edmonston Founder. Lee WilToday PistonHeads.com is the U.K.'s
liams Executive Director Of Digital for Pissecond biggest motoring website betonheads.
hind AutoTrader.
Phone: Lee Williams +44 7795 520663 David EdThe executive director of digital
monston +44 7968 484082
for Pistonheads, Lee Williams, told the
Email: lee.williams@haymarket.com daAIM Group; “Pistonheads is focused on
vid@edmonston.co.uk
leveraging the expertise of its community of motoring experts.” He believes
that focusing on content and insight “will set us apart and win through from a number of
pointless 'me too' competitors.”
Bazoom
Unlike the experimental adventures of Yallamotor and PistonHeads, Bazoom.com started life as the brainchild of industry veterans Kenneth Andersen and Ramin
Karampour. They created the Bazoom community in Denmark with the sole aim of developing
a classified business. Andersen brought extensive experience to the project having worked Bilbasen.dk and served time as head of Ebay’s other Motors activities in Denmark and the Netherlands.
Andersen believed “By building a niche you can maneuver into classifieds.” He attributes the success of Bazoom to his career experience and says his knowledge and networks are
a barrier to entry for new players.
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Vol. 16 No. 17
Bazoom is the third-largest site in Denmark and the brand has expanded into eight different European countries.
In March this year, Bazoom was
purchased by the Danish media company
Nordjyske Medier, despite approaches
from other buyers. Anderson considered
Nordjyske the best strategic fit for Bazoom.
Bazoom
URL: bazoom.com
Owner: Nordjyske Medier
Address: Denmark
Launched: 2002
Traffic: 100 million page
views per month
Revenue: Unknown
Business model: Revenue from ads and
sponsored content
Contact: Kenneth Andersen founder and
CEO
Phone: +45 4084 9898
The new owners purchased the
business outright. However, Anderson remains as CEO and he has further expansion
in his sights.
“Our focus is now on Germany,” he
said. “In order to take the next step, we
are considering a licensing model in local
media with a strong presence.”
Both Bazoom and Yallamotors have
stretched their tentacles into other markets outside of their traditional home turf,
PistonHeads has plans to do the same in the future.
Email: mail@kennethandersen.dk
While users have shaped these brands, the value of expert influencers should not be
underestimated.
All site owners agree: sites still need to host content from both industry experts and
users to nurture the audience.
When a major part of community dialogue is buying, selling, sharing and swapping, it
follows that a site which brings together individuals with synchronized passions will eventually
develop a commercial zone, even if that were not the original intention of the enterprise.
Yallamotor
PistonHeads
Bazoom
Year Launched
2012
1998
Current Page Views Per Month
5 Million
60 Million
2002
100 Million
Page 56
Vol. 16 No. 17
Content fuels auto sales in Australia
Carsales CEO aims to keep car buyers engaged
BY KATE LYONS
According to IBIS World research, the online car classifieds industry in Australia was
worth AUD$261 million ($191 million U.S.) as of December 2014 with average annual growth of
11.3 percent over five years to 2015. Growth in Australia is being fueled by the declining cost
of motor vehicles, low interest rates and increased turnover in car ownership. Federal Chamber of Automotive Industries' figures showed that last July was the biggest July on record for
auto sales in Australia, with sales predicted to exceed 1.1 million and beat what was a record
sales result in 2013.
However a perennial
issue for auto classifieds is
how to engage users and cement brand loyalty beyond
the three- to five-year cycle
of actual buy and sell. Market leader Carsales, which
currently accounts for 70
percent of the market and
for up to 90 per cent of
online search time in the
Australian auto classifieds
space (source:Nielsen), is
employing a raft of showcase
and premium advertising formats, lifestyle content, naCarsales accounts for 70 percent of the market and up to 90 per- tive content and ancillary
cent of search time in the Australian auto classifieds space.
services to achieve just that.
Carsales CEO Cameron McIntyre told the AIM Group his business had seen steady
growth in inquiry volumes and in both new and used car sales during the past 12 months. Used
car volumes were up 7 percent for Carsales, while private sales were up 11 percent year over
year.
A government tax write-off this financial year for small to medium business also provided a brief upsurge in sales of vehicles like utes and vans.
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Vol. 16 No. 17
However, McIntyre says that premium content and enhanced product, together with
provision of ancillary services such as finance, car maintenance and editorial depth, will be
the real keys to future growth in automotive classifieds.
“On the advertiser side, advertisers want to differentiate themselves through a range
of advertising opportunities, from premium to show“Advertisers are also looking case ads,” he said. “The other strategy for us lies in
membership. In the automotive space people are in
for unique content to advertise
the market only once every five years or so. The
around, and this means that naproblem is how to keep them engaged beyond that
tive content is becoming much
buy-and-sell cycle.”
more important on both the user
and seller side of the business,”
he told AIM. “The issue is how do
we connect the buying needs and
searches of users with the right
content, whether that is editorial
advice, video content or enhanced services.”
One tool which Carsales employs to cement
user engagement is membership in online “clubs”
such as Garage, which gives users the ability to keep
track of their registration, insurance and car
maintenance deadlines, and allows Carsales to alert
customers to new models and other offers.
Carsales' strategy of continual engagement is
borne out by recent Nielsen research into buyer behaviour in the automotive industry. A recent Global
— Carsales CEO Survey of Automotive Demand by Nielsen found that
Cameron McIntyre three in five, or 58 percent, of Australian online users intended to buy a new or used car within the
next two years and that, in the online environment,
interest in new cars was stronger than interest in used car purchases.
‘Fluid’ approach
The key strategy recommended to marketers by the Nielsen research, particularly in a
mature market such as Australia, was to create a “fluid” approach to user marketing as buyers
shift between vehicles. Achieving this, according to Nielsen, relied on forging an emotional
connection between users, brands and sites, and on investing in online assets to maximize access to new car buyers hungry for information and advice.
McIntyre agreed that content is becoming vital in the car classifieds space, whether
that is editorial content, rich media content or mobile content delivered through phones and
tablets.
“Advertisers are also looking for unique content to advertise around, and this means
that native content is becoming much more important on both the user and seller side of the
Page 58
Vol. 16 No. 17
business,” he told AIM. “The issue is how do we connect the buying needs and searches of users with the right content, whether that is editorial advice, video content or enhanced services.”
One way Carsales is doing this is through “lifestyle search,” where users' search criteria
— size of vehicle, child-friendliness, ease of parking and safety features, for example — are
connected not only with specific cars for sale but with related or native content. McIntyre
says the future of classifieds will lie in this ability to integrate lifestyle, vehicles and appropriate content, in turn increasing the brand loyalty to the Carsales site.
A major trend McIntyre points to among buyers is an increased 'agnosticism' around
brand. Whereas the Australian market in the 80s and 90s could be divided into buyers with
brand loyalty to either Ford or Holden, consumers in 2015 are less concerned with badging
and more focussed on buying the widest range of features possible, at the best price.
“On the dealer side, dealers are looking mostly for accountability,” he said. “They
want results, they want to be able to see returns on their marketing investment, they want to
differentiate themselves from the competition, and they want the most reliable and accountable way to sell product.”
Here, depth of product is important, McIntyre said. For example, Carsales' Main Event
tool allows dealers to display stock more prominently and allows for additional display, related content and premium listings.
Carsales has followed a steady strategy of adding ancillary or related services to its
portfolio, including finance through its majority ownership of Stratton Finance, the purchase
of a controlling interest in mechanical inspection business Auto Inspect, and the purchase in
March this year, with Stratton, of UK-based peer to peer lender RateSetter.
On the global stage, Carsales has been busy with strategic alliances and acquisitions in
the burgeoning markets of South East Asia, Latin America and North Asia, with acquisitions
and partnerships in Korea (SK Encar), Mexico (SoLo Autos) and South East Asian markets like
Thailand and Malaysia (iCar Asia). McIntyre said Carsales was also keeping an intent eye on
opportunities in the Chinese market.
“Our strategy is to find high growth markets where we can take a No. 1 or ascending
No. 2 two position, through an initial minority or controlling stake, depending on the market.
We bring not only money to the table but intellectual property enabling our partners to power up to the next level.”
McIntyre said Carsales will be “actively” looking at potential partnerships and acquisitions that fit this bill during the next 18 months.

Investing in India: Classifieds and marketplaces

Transcription

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