Eric Cheng’s used-car online platform Carsome has come a long way since its inception four years ago.
What started with a simple idea to solve the pain points of selling a car (think tedious processes, misleading photos or information), the firm is now Southeast Asia’s largest consumer-to-business platform to dispose used vehicles.
“In terms of market share based on transaction volume, we are already number one in Malaysia and Thailand. We are also going to be number one in Indonesia this month,” says Cheng during a sit down with AWANI Review in March.
Carsome prides itself as a one-stop solution to sell used car - from inspection to delivery - promising instant payment, minimal paperwork and a hassle-free process.
This entire process can be done within a day. We believe this is the most efficient way to sell your car
“Through our website, consumers submit a request to schedule inspection appointment across the four countries that we are available in (including Singapore).”
“We would then have the inspectors check the car and upload data of the car’s condition onto our website.”
Then, the interesting part begins; the car will then be put on auction. Carsome will filter the best bid prices offered by dealers. Following which, the owner will release the car (after inspection) if the offer is equal or higher than desired price - allowing for a transparent system and removing the need to haggle.
The auction is carried out for three hours from Monday through Sunday, where registered dealers - numbering some 5000 on the platform - put in their bids. Any logistical needs, such as transporting the cars, are handled through a third party.
“This entire process can be done within a day. We believe this is the most efficient way to sell your car,” says Cheng.
In 2018, about 17,000 transaction took place on the platform, bringing the total transaction value at USD170 million. According to Cheng, the number of transactions have tripled from 2017, underscoring the company’s growth prospects.
“The four countries that we are in are the biggest markets for used cars in the region. But our penetration rate is possibly, only about one percent of the entire market volume.”
“So, we are going to be very focused in going deeper into first and second tier cities in the markets we are in. At the same time, we are also looking at countries like the Philippines and Vietnam as new markets, and we want to work with (local) partners to do that,” says Cheng.
Carsome will also invest in setting up more inspection centres to ramp up growth, and improve access to the service, which is offered free of charge.
Currently, its 14 centres are located in Kuala Lumpur, Johor Bahru, Malacca, and Penang in Malaysia, as well as overseas in Jakarta and Bangkok. “We have a plan to widen coverage to 25 inspection centres by June, and 35 by the end of the year.”
“Within Malaysia, we will be covering Seremban, Ipoh and Kuantan soon.”
Helmed by a 400-strong workforce across four countries, Carsome is also looking to bring in more dealers to the platform. “At 5000, that only represents about 20-25 percent of the entire market.”
Cheng comes across as utterly resolute person, admitting that he found the allure of entrepreneurship far more exciting than the field of academics; he did not complete his tertiary education, choosing instead to get into the advertising industry in his early 20s.
Raised in Damansara Jaya, Cheng and co-founder Teoh Jiun Ee, saw an opportunity in the underserved used car segment. “Both of us are passionate about tech, and we saw a gap in the market.”
“It’s very ineffective, very traditional. So, we wanted to solve some of the pain points and help people dispose their cars in a transparent manner.”
The early days were painful and tedious, says Cheng, as he relates the challenges of getting car dealers, largely still operating in traditional ways, to give Carsome a chance.
“It was tough because most used car dealerships are still very traditional.”
“When you walk into one, you only see a white board or an Excel sheet - that’s how they track sales. There’s no proper system to manage this business.”
It’s very ineffective, very traditional. So, we wanted to solve some of the pain points and help people dispose their cars in a transparent manner
“I would walk into the dealership myself and introduce Carsome to them,” he says with a chuckle. “It was also tough for them to buy the used cars through auction, even before seeing them.”
Nonetheless, they soon got on board; having an inventory of used cars on the platform means dealers can spend less time and resources in sourcing. “It’s about empowering them and understanding that Carsome will be a useful business partner to them.”
Apart from expanding its geographical footprint, Carsome is looking to bring the business to the next level by expanding its value-added services, including offering financing to sellers, and providing management systems for dealers.
“Six months ago, we launched a B2B financing (to help dealers buy more inventory). The results are pretty good. Earlier this year, we launched B2C financing as well.”
“We also want to go further downstream,” he adds. “We are building a management system for dealers.”
“We are also looking to tie up with classified sites to do marketing.”
There are still a lot of gaps - and opportunities - within the used car segment, says Cheng; he envisions Carsome to be at the forefront of driving transformation within the industry.
“There are a lot of areas within the (used car) cycle that we can do better - to digitise it, to speed up transactions and make it more seamless.”
“We want to be recognised as the company that is considered as industry mover,” says Cheng with an air of confidence. “We want to be that company to drive the industry forward, and being in that position, will help us to grow the business, top line and bottom line.