A play on the Hindi words car ki arzoo, or desire for a car, Carazoo.com is the brainchild of Bangalore-based Logix Microsystems Ltd, which helps dealers and vehicle makers develop their websites, and is a publicly traded company. Carazoo.com, which aims to try and develop an online car sales model, was launched in June and will target six cities in phase 1.
Pankaj Patel, vice-president, India, talks about the portal’s business model and expected revenues. Edited excerpts:
What is the business model for Carazoo.com?
Our thrust area in the first phase is in Bangalore, Hyderabad, Mysore, Chennai, Mumbai-Pune and the National Capital Region. We have tied up with new-car and used-car dealers, who pay us a subscription fee in return for actual leads of potential car buyers. These are people who have visited our portal and signed up to receive price quotes.
We then send these leads to multiple dealers in the customer’s area so that he or she gets the best deals. We have also tied up with insurance and finance companies, namely ICICI Bank Ltd and Tata Motorfinance.
These companies would pay us on a per lead as well as a transaction basis. We also run pilot programmes for vehicle manufacturers, one example being a 15-day programme for Mitsubishi in India.
How many dealers have signed up on your portal?
There are 136 new car dealers, out of which 30% are revenue generators. The rest are still new, so we are giving them free service for a few months until they get used to the portal and the idea of getting leads and chasing them up.
On the used-car business, we have 30 dealers. Here we have a different style of operating. We visit every dealer on a two-days basis, photograph nine images of each car they have, collect all the historical data and upload it on our site.
Therefore, a customer not only gets historical data but also images which he or she as a used-car buyer would like to see. A person can also sell his car with no cost outlays on our site.
What would attract potential car buyers to your site?
We have a full-fledged animation tool, which gives a 360 degree view of new cars. We provide an unbiased, independent review of the car in a simplified language. There is also a glossary of technical jargons and the implication of these terms on your car.
Most important thing is that a customer can view all the available colours, which may never be available in a showroom.
Does this mean that you act like any other car manufacturer’s website for new car buyers?
I would not want to classify us as any other car manufacturer’s website because we offer much more than those portals. We are not influencing a customer to buy a car. We are assuming he or she has already made a decision to buy a car, but needs more information to make the correct decision.
We will be adding more features in our next phase by January, one of which will allow a customer to book a car online at an assured price and delivery time.
What is the revenue you expect to generate from this portal?
We have targeted modest revenue of about Rs1 crore from next year onwards. Dealer subscriptions would account for 45-50% of the total, the rest coming from finance and insurance agencies, and through advertising.
What would be your break-even point?
It would be upwards of Rs3 crore. We have spent more than Rs1 crore on developing the portal. We are spending nearly Rs1.5 crore on promotions and advertising. We have advertised in car magazines, and are soon going to start radio and outdoor advertising.
We would also do some event marketing. We also plan to tie up with manufacturers of high-end car accessories. If this happens, it will be an additional source of revenue. I should think we could breakeven in about 15 months, if all goes according to plan.