Buying a second-hand two-wheeler is never easy, because of the hassles involved with discovering the right price as well as the lack of transparency in disclosing defects in the vehicle.
A similar experience led to the creation of CredR, an online marketplace for buying pre-owned vehicles, which promises to offer a CIBIL-like rating for pre-owned two-wheelers, based on which customers can make their choice. CredR was founded by IIT Bombay alumni Sumit Chhazed, Nikhil Jain and Nittin Mittal. “None of the companies or startups have thought about putting up a platform to do second-hand bike buying in an organised way. The trust factor was lacking,” said Sumit Chhazed.
The firm’s name was derived from the Latin word Credere, meaning to believe or trust. “We tweaked the name to CredR, to denote the resale of credible products,” said Mr Chhazed.
CredR research across customer segments showed that three major problems arise in the process of buying a used bike. One is that no one trusts delivery or quality of the product. Second, there is no transparency in price, with the seller trying to fool the buyer and vice-versa. The third most important aspect is in ease of buying a used two-wheeler. A buyer has to make 15-20 calls, only to discover that the listed phone number does not exist or the bike is already sold.
“Our idea was to bring credibility to the process. We have built a team of auto experts who inspect the bikes. Documents are verified and only then listed on the platform. We also provide a six-month warranty on the vehicle based on our review. This is done through a third party,” Mr Chhazed said. The firm also makes available the review report on each bike, he said.
The firm said research showed there is a 8-12 per cent difference between the listed price and the actual price. “We have created a CredR score, which is similar to a CIBIL rating. We rate the bikes on a score of 1-5. Based on these scores, you get the pricing, and there is no negotiation,” Mr Chhazed said.
The firm pegs the size of second hand two-wheeler market to be at 15 million vehicles, making it a $10-12 billion market.
CredR is selling 100 bikes a day across five cities of Mumbai, Pune, Bengalaru, Delhi and Hyderabad. “Interestingly, we are seeing that a lot of customers who wanted to buy new bikes are now coming to our platform and buying second-hand bikes. Such customers account for eight per cent of transactions for us,” Mr Chhazed said.
CredR is also planning to launch a recommendation system for bikes and also piloting loan products for buying used bikes. The firm has sold over 10,000 bikes to date and is adding 150 fresh used bikes to its inventory on a daily basis. The firm received a funding of $15 million in Series A funding from Fidelity’s Proprietary investment arm recently. It plans to do 1,000 transactions a day during its first full year of operation and expand into 10 more cities.
Analysts are of the opinion that CredR’s model has promise. “In the car segment, the emergence of Mahindra First Choice and Maruti’s True Value has changed the way people bought used cars,” said Bhairav Kothari, managing director, SuperCFO, a firm which helps startups manage finances. “CredR’s business model looks interesting. The key would be how well they execute their plans.”
The business model for the second-hand two wheeler market is likely to evolve, added Kumar Kandaswami, senior director, Deloitte in India. “The model can be either company-owned used bikes promoted by OEMS or as independent, multi-brand players.”