One segment that does not enjoy the glamour and the buzz of the two-wheeler industry is used bikes and people who trade in these. These are typically small entrepreneurs with 100-200 sq.ft. shops in concentrated areas of the city with some amount of space in the front of the shops to display anywhere between 10-30 bikes. The only business they do is buy and sell used bikes and actually play a huge role in the 2-wheeler industry as due to them, customers are able to upgrade to newer, bigger and more powerful bikes and scooters as the exit and exchange of their existing bike is enabled by these used bike dealers. Every city within the top 150-200 cities of India will see a neighbourhood with about 20-30 of such dealers prevalent in that area and trading in used, pre-loved, second-hand (whichever way you call them) bikes. Meet an innovative company which has taken the responsibility to structure and influence this huge market – DoSeat. In an exclusive interaction with Faiz Askari of SMEStreet, Amit Bhartiya, Founder of DoSeat unleashed his plans for this lucrative untapped market and said, “These small businesses or rather I should micro businesses are DoSeat’s primary target audience and we aspire to soon upgrade them to being an important cog in the two-wheeler ecosystem with our efforts.”
Please discuss about the Two-Wheeler industry and opportunities for SMEs within this sector.
The Two-wheeler industry in India is large and organised as far as new ones are concerned. New bikes (Bikes means scooters, bikes, mopeds etc.) spurs one of the largest clusters of SMEs in the trade across sale, service stations, spares, wash, accessories, paperwork etc. The spectrum covers the largest and resourceful new bike dealerships to the small garages and workshops servicing bikes. With over 10 crore bikes on the road across India, this is one sector that enables livelihood and opportunities for tons of small entrepreneurs and traders across the remotest parts of the country.
What’s the typical profile of these used bike dealers?
Used bike dealers unlike their counterparts on the 4w side are essentially small proprietorship concerns with trading in used bikes being the primary business. These are traders looking to earn 8-10% return on their working capital (ranging between 5 -10 lakh per month) and will try and turnover their stock of assets in a month at least 1.5 times to achieve the same. They may also be involved in other businesses such as property brokerage, trade of other goods etc. 75% of these traders are mostly city locals and have an extensive network of garages and mechanics to source their inventory of used bikes. Their primary source of income is the margin from trading and hence their expectation is to make their 10% from the trade itself.
There are 2 sets of traders within these – one who source and sell bikes to other dealers (B2B) and others who has a shop and sells to customers (B2C). Unto a few years back, most used bike dealerships were run by individuals who had previous service or mechanic backgrounds and the money was provided by small investors and money lenders at 3-4% per month. Today, most of them have graduated to being able to fund the business themselves and growth and scale in the business is squarely based on the access to working capital and the ability to source bikes (supply)
Most traders are in their early 40s and those in metros and larger cities are smartphone users. Interestingly dealers in Punjab are amongst those unique ones who are IPhone users within a community of android loyalists.
How is the used bike trade in India shaping up? What are the key trends you are witnessing in this space? Is it similar to other countries in the West?
I wish we were similar to other countries in the West but no, India being the largest 2w market in the world (similar to Indonesia), the same goes for its used bikes market as well. There isn’t a comparable industry in the West given the penetration of bikes and 2w in these countries. While around 1.5 crore new bikes sell every year in India, around 1.2 crore used bikes change hands as well. 30-40% of these bikes change hands within the community (family, friends, colleagues, neighbours, society etc) and the balance get enabled by used bike dealers, brokers, mechanics, classified sites etc (B2C). The average selling price is Rs 30,000 and sales patterns are similar to those seen in new bikes – Honda Activa, Suzuki Access, TVS Scooty and some of these great scooter brands see huge demand as they add to the ownership of 2w in an existing household. Whilst new bikes are usually bought on loan by the primary bread earner in a household, used bikes are bought for the other members in a household (spouse, children, parents etc.) which creates a huge demand for these. However, cities that see large youth populations comprising of students, young employees and professionals prefer bikes to scooters. Another big section of society that creates large demand for used 2w is expats and migrants – people who come to other cities for education, trade, employment opportunities or consolidation of families. Given that their presence in the city is temporary (2-5 years) they prefer buying used 2w rather than new. Moreover, since they don’t have adequate KYC and resident proof, they don’t qualify for new bike finance and that’s another reason for their preference of used 2w.
What is DoSeat’s business model and how do you play a role in the lives of these Two-wheeler dealers?
DoSeat is India’s premier and widest marketplace for certified used bikes. We provide bikes and a buying experience that is trusted, certified and guaranteed. We inspect bikes available with these used 2w dealers and after an 80-point check, we ascertain the exact condition of these bikes and make this visible for our buyers on DoSeat.com. Most of these bikes that meet our quality criteria are also guaranteed by us – wherein we provide a 6-month warranty on these used bikes. This is unique and a huge advantage for buyers as it protects them from any major repairs to the bike after purchase. DoSeat also extends the experience to being as cool as buying a new bike by offering other trust-building incentives like offering doorstep services, accident insurance, roadside assistance as well as insurance for fractures emanating from bike accidents to its customers. The DoSeat certification and warranty becomes a great stamp of quality endorsement for the dealers who then find it very easy to sell their bikes to customers (especially the younger lot who are starting to seek peace of mind and convenience in ownership vs. those merely seeking a cheap priced bike).
DoSeat is also enabling various other products and services for the dealers to be able to upsell to customers who come to buy their bikes. These could be offerings such as insurance, used bike loans, services as mentioned above such as warranty, roadside assistance, accident covers, doorstep services etc. Thus the dealer is now able to upsell these offerings to the customer and earn margins on these as well and this helps augment sales for the dealers as the entire burden of earning returns on a sale now shifts from the margin earned on the bike to these services complimenting the margin as well. This allows the dealers to become more competitive and offer bikes to customers at better prices.
Is DoSeat doing anything to address the supply issues for these dealers as you have stated that its one of the two important problems for scale?
Indeed, DoSeat is addressing the supply problem by getting dealers access to more and more customer bikes and getting them a larger share of the C2C pie. This happens in 2 ways. First is through supply of exchange bikes. DoSeat has already started working with some OEMs and their showrooms to facilitate auction of exchange bikes. So if a customer walks in to the showroom to buy a new bike and has an old bike to exchange, most showrooms find it difficult to facilitate this request or even if they do it through some used bike dealers, they find it hard to meet the customers exchange price expectations. With use of its auction technology available on its proprietary Dealer App – DoSeat Business Centre and also its proprietary Inspection App – DoSeat BikeNostic, its enables the showroom to offer the exchange bike in a quick auction within DoSeat’s used bike dealer community in that city which results in the best exchange price for the customer. This also generates a larger supply of used bikes from customers for these used bike dealers. Typically 1 of 4 customers of new bikes exchanges their old bikes in return. The other way of increasing supply is by offering customer bikes to these dealers (those listed directly by customers for sale on our website).
Tell us a little more about these services that you are enabling the used bike dealers with? What are the key unique offerings that you ?
Used bike dealers are not a very accessible lot. Also, they aren’t technology enabled (You will barely be able to spot a PC at any of these outlets) and also are not savvy with banking, online payments etc. DoSeat is solving each of these issues one at a time. Amit Bhartiya, Founder at DoSeat, has done the same previously at eBay Motors where the team created India’s biggest and online trading savvy community of over 10,000 used bike dealers. At eBay, he learnt that SMEs in India understand the language of business – be it English, be it online auctions, be it use of technology or platforms. The Indian entrepreneur does not let these come in the way of growth opportunities. At DoSeat, most of these issues are being tackled by incorporating these as features within easy-to-use smartphone apps. DoSeat has gone the extra mile to have these dealers trained on operating these apps and indulging in these products and services by theiron ground teams. While online payment is encouraged, there are also options for dealers to make offline payments for these services. Another big factor is that most of these products are not available off-the-shelf. Be it warranties, used bike loans, insurance counters for both third party insurance as well as comprehensive and DoSeat, in a short period of time, has developed these products and services for distribution through its website as well as through its dealer community. Access to these services now enable the dealers to either be more competitive, make more margins or make the sale and after-sales a lot more convenient for these customers.
So from what you are saying, you could actually inspire individuals and small entrepreneurs to enter the used 2w trade through DoSeat?
Absolutely. If you have access to some capital and have some mechanical background or can hire some folks with mechanical skills, you can now enter the used 2w trade with DoSeat. DoSeat helps you get supply of these bikes, it helps generate demand for you through its website and also enables services for you to upsell to the customer. The DoSeat Dealer App is a one-stop shop to do all of the above, and that’s all one needs access and training for to start the used 2w trade. In fact, you may not even need to open a shop in the concentrated neighbourhood in your city, you can do the same in your own neighbourhood and drive demand through DoSeat.
Is DoSeat geared up to execute these major plans of bringing this new opportunity for small businesses?
DoSeat has invested a lot in creating these simplified technology products and integrations to help enable the above opportunities for dealers. Being a premier platform for certified bikes, its taking the sting out of used bike transactions for customers and the warranty is a great after-sales assurance for the same. It has already launched across 15 cities – both metros and tier-1 cities and counts 2500 dealers as part of its network. There are over 4000 listings of certified used 2w on the site at any time due to its ability to inspect bikes within 24 hours across all of these cities. DoSeat secured seed funding early on and is adequately funded to go after each of these opportunities in ensuring a great future for the used 2w industry in India and across other large 2w markets.