“We attribute our strong recovery to three key reasons.”
Eric Cheng, the co-founder and CEO of second-hand car platform Carsome, answered me promptly over our Zoom call.
I had poked to know exactly what helped the company record a V-shaped recovery in post-coronavirus numbers since the easing of COVID-19 lockdown measures across Malaysia, Indonesia, Thailand, and Singapore.
In June, Carsome has almost fully recovered its high transaction volume pre-lockdown periods, leading to a three-fold jump over May 2020, and over 70% year-on-year increase.
It’s an impressive feat, given the widespread impact of the coronavirus pandemic on businesses. In an almost one-hour-long interview, Eric tells us how Carsome not only survived but flourished in unprecedented circumstances, the initiatives and efforts made in adapting to new challenges, and of course –– the three defining factors that tied it all together.
Credit: Eric Cheng
500 Durians: At a glance, what is Carsome’s business model and what are its revenue streams?
Eric: On the C2B front, Carsome provides an end-to-end selling solution for car owners – from
inspection to ownership transfer – delivering a seamless and hassle-free experience to customers.
On the B2B front, used car dealers are able to bid for the cars on Carsome’s bidding platform. This ensures that they have access to a constant stream of inventories.
500 Durians: You mentioned in an interview that Carsome has a penetration of 1% of the Southeast Asian used-car market, with plans to increase to 5% over the next five years. Could you share how you plan to do that?
Eric: To do that, we need to consolidate more supplies on our platform and ensure distribution on the demand side. We achieve this through:
a) Using data analytics for transparent pricing
The more cars we transact, the more data we will have and the more accurate, or reflective of market price, our pricing will be. When pricing is transparent, more consumers will sell their cars to us, creating more supplies on our platform. Our market supply will also ensure the increase in demand from dealers.
b) Standardizing car conditions
We have a high set of standards for car inspection to ensure quality and consistency in-car conditions. This gives assurance and confidence to dealers who buy from us, as our strict standards ensure that they get only the best quality inventory.
We believe that by constantly striving for the most transparent pricing and car conditions, we will be able to consolidate the supplies on our platform and increase market share in the used car industry.
500 Durians: In Malaysia, Carsome had a bounce-back and experienced a V-shape recovery to pre-COVID daily sales. What are the factors that have attributed to this strong comeback?
Eric: We are excited that we have made a V-shaped recovery and exceeded our previous records with the highest ever number of transactions in June 2020. We attribute our strong recovery to the three key reasons below:
a) Our people
We ensured that the health and wellbeing of our employees were taken care of during the lockdown periods. We immediately implemented the work-from-home policy and made sure that full salaries were still paid. We also launched the COVID-19 Support Fund to provide financial assistance to employees who wish to undergo COVID-19 tests, or have unfortunately tested positive for it.
It is important to give reassurance to our people in such times of uncertainty. As a result, morale and productivity remained high during and after the lockdown periods. Everyone was so eager to dive straight into work and keep the ball rolling when we returned to the office, and that momentum has helped us bounce back strongly.
b) Increase demand for private vehicles due to safety reasons
Consumers are more cautious about their personal safety, preferring to travel in private vehicles than using public transport. This increased the demand for private vehicles, be it new cars, used cars or even bikes.
c) Accelerated digitalization
Due to the pandemic, consumers are limiting their visits to car dealerships. As such, they are more inclined to sell their cars through services like Carsome instead of visiting multiple used car dealerships. Dealers are also inclined to source supplies from us, as we are seeing more bids for cars on our platform.
500 Durians: How does Carsome measure its month-on-month growth and how did those metrics fare during, pre, and post-COVID?
Eric: Before the lockdown measures came into place, our sales volume was going strong. Historically, February is one of the slowest months of the year for us. However, this year, our February sales volume hit a record high.
While there were no transactions during the lockdown periods, daily sales in a recent couple of months surpassed pre-lockdown periods. In June, our sales volume hit another record high and we foresee the trend to continue into July.
500 Durians: How does Carsome plan to continue this momentum?
Eric: Before the COVID-19 pandemic, we were already planning to digitalize the used car industry as much as possible to consolidate the very fragmented market.
Since consumers and dealers are becoming more receptive to car-selling solutions like Carsome, this will continue to become a trend and subsequently, a norm in Southeast Asia.
The pandemic has accelerated the digitalization of the entire automotive industry, so we will leverage on the situation to extend our reach further, not only by helping more consumers sell their car in a hassle-free manner, but also buy cars in a new and trusted way.
500 Durians: What separates Carsome from its competitors is its strong reliance are its digital-centric solutions? What are some of the tech developments that have been put in place to mitigate the COVID-19 crisis?
Eric: Throughout the lockdown, our teams have been working hard on:
a) Fine-tuning our inspection app to increase productivity while ensuring the quality and performance of our car inspectors.
b) Upgrading the backend infrastructure of our bidding platform, which now sees a 50% increase in the number of cars supported.
c) Upskilling our workforce through accreditation. We believe this increases productivity rather than to embark on a mass hiring exercise.
500 Durians: What did the Carsome team learn from this pandemic?
Eric: The first thing we learnt was the importance of communications. Throughout the lockdown period, we kept in constant contact with our employees to give them assurance and also to ensure transparency of how we are doing. It was also the first time we organized a regional townhall for all our then 700+ employees across the region.
The second thing was that working from home is an effective model during the lockdown periods and we will not be afraid if another situation calls for all of us to work from home again. Our people were still productive working from home. However, we still missed the social element which is key to building the company culture.
We’re constantly inspired by our founders and portfolio companies for their ability to adapt during seasons of change. Eric and the Carsome team embodies the spirit of entrepreneurship and perseverance we see daily in the 500 Durians family.
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