“Lack of clear regulatory or taxation frameworks for e-commerce players is a challenge for future online retailing”, Harneet Singh, Founder and Head, Carkhana.com

While Indian ecommerce industry has been catching the attention of entrepreneurs across different sectors ranging from banking, retail, education, insurance and financial services, automobile sector is not left behind and being targeted by many companies, one of the recent ones being – Carkhana.com.  As a fast-growing start-up, Carkhana.com attempts to remove the inefficiency that exists in traditional sales and distribution network of the automotive after-market and components industry of India. In order to know more about automobile category player, iamwire caught up exclusively with Harneet Singh, Founder and Head – Carkhana.com. Below are the excerpts of the interaction:-

How do you see overall e-tail space in India and what opportunities Carkhana’s foresaw in automotive industry while entering?

We see the overall e-retail space as a fast evolving sector which is poised for extended growth in the coming future. This is obviously because of the strong fundamentals which drive the current interest expressed in the industry by customers, new players as well as investors. Although, very recently there have been talks of a so-called bust in the growth, over-valuations and unnecessary competition but we understand them as necessary aspects of any growing industry. In fact, talks about consolidation reflect a positive trend which happens with most industries as they evolve to the second-stage of market & economy.

With various independent analysts predicting 30-40% y-o-y growth for the sector, we as fast growing niche players, couldn’t agree more!

As Carkhana.com, we believe in offering a comprehensive e-commerce portal for all enthusiasts and customers. Although our centerpiece is e-retailing of automotive products, we intend to offer more services like magazine subscriptions, e-ticketing for auto events, fitment support, group buying etc. As a company, we foresee a bright future for the online sector especially in our automotive industry. Our sector has its own complexities but as a front-runner we expect to create mass awareness and impact on the consumer mind-space. Relying best on the figures released by Industry associations like ACMA and independent analyst calculations, the traditional (brick and mortar) sales and distribution setup of the Indian automotive after-market is estimated to be around USD 5 Billion growing at an average Y-o-Y rate of 13-15%. The market is expected to be over USD 15 Billion by 2020 and we, as any other niche e-commerce player, expect to convert around 10-15% of the same to online commerce, thereby an opportunity of around USD 1.5 Bn, without even counting the OEM segment!

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Throw some light on team size, warehousing – inventory management including logistic capabilities.

Our planned operations went live for customers across India from the 1st of January 2012. Currently we operate a small team of 5 people across Delhi and Bangalore involved in Marketing, Logistics and IT management. This core team is further supported by contractual staff for content management, marketing support and PR taking the total to around 12.

For logistics management, we engage actively with our vendor companies/ their nominated exclusive distributors regularly to plan sales projections and other variables. However, for most brands we maintain just-in-time setup using hub and spoke model (based on geographical proximity to our central collection and shipping point in New Delhi). This is kind of a win-win situation for our partner brands (they get immediate payment with no inventory holdups) and our own cash flows.

For some fast moving products though, like bike and car interior accessories, we do stock up for a week or two in advance in order to fulfill our customer commitment of fast deliveries.

Which marketing strategies Carkhana has in place across different digital marketing channels?

As an online retailer, while bulk of our marketing activities reflects on online platforms but we do take an active interest in off-line marketing to build up the community of enthusiasts across India. Online, we manage an engaging facebook page (currently 1300+ fans) including twitter wherein we post latest automotive buzz, reviews, comparisons, trivia and contests.

We also actively engage with affiliated marketing channels and are currently finalizing these plans with portals like Mydala.com, Junglee.com and others. Apart from these, SEO marketing, Facebook ads and similar efforts are also undertaken. We do co-partner with other leading brands for interesting activities like Auto Quizzes, Picture contests and trivia posts! As for off-line activities as part of our initiative to build a community of enthusiasts, we are actively creating hang-out zones in partnership with leading cafe and entertainment zones across India where enthusiasts can come and engage in talks, watch live F1 & Moto GP races etc.

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We have already partnered India’s only motorcycle museum cafe, Legends, in Bangalore and plan to expand our footprint very soon. Other mega-offline marketing campaign is planned for this quarter and details will be made public soon.

What are the expansion plans of Carkhana.com including its current reach across the country?

Our future plans include setting up a comprehensive portal which offers maximum depth in after-sales, performance products, accessories, branded merchandise as well as offering services like ticketing (Auto events, F1 etc), auto magazine subscriptions, financing, group buying etc.  On the short term radar, tying up with OEs, Auto Brands, more International moto gear companies is the priority. You will shortly see much more depth in car interior/exterior, bike riding gear, utility and entertainment systems and magazine subscriptions.

We currently ship to 70+ Indian cities through our premium logistics partners and this is expected to rise to 100+ cities by April-end. Post-this we plan to be offering door-step delivery Pan-India within the next 2 quarters.  As an additional convenience to our customers, we plan to roll out fitment services as a pilot project in Delhi NCR from April wherein Carkhana.com will assist our customers in fitting high-value entertainment and utility products in their vehicles (like music systems, tire care products etc).

What is the split of orders via call centers and online? Please share present day transaction and projected target for 2012?

Currently the split is around 70:30 (online:call centers). The e-commerce portal, as mentioned, went live for our customers from 1st January 2012. And I would definitely say, that the response has been very encouraging. Whether it’s the number of orders, expanding ticket sizes for orders (around INR 550 currently), demand from new cities and positive reviews by existing customers, we get inspired each day to offer more products and better service.

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As a recent start-up, we count our daily 15-20 inquiries and 5-8 shipments as healthy. This is expected to rise exponentially given our mega plans for affiliate marketing, off-line and online advertising campaigns and other endeavors planned for the first quarter. If all goes as planned, we should be shipping around 200 orders a day by December 2012

 

What are challenges of future online retailing? Your thoughts

If I have to list the key challenges for future online retailing, they would be

1.  Inefficiencies associated with India’s fragmented logistics setup

2.  Gradual rise in mass awareness and acceptance for online shopping dynamics

3.  General public concerns around security of online payment setups and as companies, issues with failure/drop rates of banking gateways 

4.  Lack of clear regulatory or taxation frameworks for e-commerce players

 

How the venture has been funded? Is Carkhana looking to raise fund – if yes, share some strategies on your pitch for fund raising?

As with any other first-gen start-up, Carkhana.com was funded primarily by the two co-founders – myself and Runal Dahiwade using our personal savings and help from family & friends. Our strong fundamentals in an otherwise traditional & complex aftermarket segment, focus on customer service and quality engagement and positive traction has indeed led to advanced levels of discussions with group of angels across Mumbai and Pune.

We have also had detailed discussions with premium VC funds in India over the last couple of weeks. Carkhana.com indeed needs to raise financial resources in order to emerge as a category leader and build on the momentum over the coming 20-24 months

Our pitch typically resolves around our target market, the niche offering we have, the commitment to alter the traditional S&D setup of the Indian after-market industry, our strong fundamentals in terms of brand partnerships, delivery capabilities and accessibility. Our prospective investors have appreciated the kind of engagement we have been able to generate around the brand among enthusiasts through our online and off-line efforts and this also emerges as a cornerstone of our approach.

 

 

 

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