This incident dates back to sometime in mid-2017. The car buyer, who requested not to be named because he doesn’t want to be involved in any mess, was looking for a good used car.
After searching for a while across listing companies such as CarTrade, Olx, Quikr, and many others, he found and liked a car on CarWale. In Mumbai. Next, he gets the dealer’s number and calls him to set up a test drive. The car in question is a 2014 Volkswagen Jetta.
As with all such transactions, the buyer did a test drive, liked what was on offer, and started negotiating with the dealer for the best price. The listing was for Rs 15,50,000 ($21,350). After much haggling, both parties settled on a price of Rs 14,50,000 ($19,970).
“At this point, the dealer asked me to make a token payment,” says the buyer. “So I went to his shop and made the payment by cheque. The dealer then offered to arrange a used car loan for me through HDFC Bank at a very good interest rate, to which I agreed. After the loan formalities and approval, payment of the loan amount was made by the bank to the dealer in a few days. Soon after, I went and picked up the car.”
Clear so far? Now, let the fun begin
The buyer doesn’t exactly remember when it happened, whether at the stage of the token payment or when he went to pick up the car, but sometime around then, the dealer told him to expect a call from Droom.
Needless to say, the buyer was suspicious. Droom wasn’t even in the picture. On the contrary, he’d found the car on CarWale. “I remember that I then went to Droom and found the car listed there by the same dealer,” says the buyer.
“Anyway, the dealer asked me to say something to the Droom caller, but I can’t recall what exactly he asked me to say. I think he asked me to tell the Droom caller that the sale is finalized, but the payment hasn’t been made yet, or that the sale is final and payment has been made. One thing is for sure—the dealer was trying to prove to Droom that this sale happened through Droom.”
Except, it didn’t. Droom had nothing to do with this transaction. No value-add whatsoever. But because the dealer, lured by the company’s incentive, wanted to make a cool buck, he had no qualms in showing that the transaction happened in Droom. In return, Droom got GMV worth Rs 14,50,000. In the world of e-commerce and for people who snort GMV, no matter how ridiculous the metric is, Rs 14,50,000 is a lot. In fashion e-commerce terms, that’s a 1,000 dresses worth.
On 14 September, Ken sent a detailed questionnaire to Droom.
Response to the email
In a detailed emailed response, Sandeep Aggarwal replied to all questions, running in at over 2100 words. In no place does Aggarwal categorically deny that any of the incidents or practices cited by The Ken took place, but he makes a few key points.
That, firstly, the “lifetime value” of a car owner or two-wheeler owner in India is $42,000 and $3000 respectively. Customer lifetime value refers to the sum total of all future profits a business can earn over the lifetime of its relationship with a customer.
Thus, “acquiring these buyers and owning them for a lifetime can create significant, sustainable long-term value for Droom and its shareholders,” he wrote. Aggarwal provided no source or corroboration for these figures.
Other considerable facts
Secondly, Aggarwal says that when Droom “acquires” buyers and sellers through offline efforts, there is a “very high likelihood that they would subsequently buy and sell their automobiles on Droom or other services.” Unfortunately, the history of e-commerce around the world and in India is littered with the corpses of VC-funded firms that tried to do just that – offer discounts to buy lifetime value. What they got instead were opportunistic bargain hunters.
Lastly, in the case of this car buyer’s experience, Aggarwal said that there is no way a buyer could say that he did not know about Droom for the transaction.
“The only thing mathematically then is possible is that when two conditions have to be met,” he said. “1) dealer has not told the buyer about Droom and 2) dealer has used his credit card, debit card or net banking to make payment for the 3% token amount.”