Backing the Two-Wheeler Resurgence: Why we Invested in BeepKart
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Being the lifeline of millions of Indian households, two-wheelers in India are everywhere, with over 240 million on the roads in India today. On one hand, new two-wheeler sales alone contribute to 7% of India’s manufacturing GDP. On the other, vehicle penetration in India is still significantly lower than in developed economies. With just over 200 motor vehicles for every 1000 people in India (versus 800 motor vehicles per 1000 people in the US), there is significant headroom as the Indian economy grows.
Two-wheeler sales would arguably be one of the largest e-commerce categories if taken online. This seems plausible borrowing the observed trend from the used car market: with 2021 being the hallmark year for used car companies globally. In India, we saw an IPO, an IPO filing, and two unicorns emerging from this space. Moreover, there are typically more units of used vehicles sold than new vehicles. To illustrate, in most developed economies, there are 3+ used cars sold per new car sold – the number in India has hovered around 2 used cars/new car. Hence, we believe similar trends would be observed in the two-wheeler market too.
We’re pleased to announce our partnership with BeepKart, leading their US $9m Series A investment with participation from existing investors, Stellaris Venture Partners and Chiratae Ventures. With core customer needs becoming more prominent in such a large category, the following prompted us to back BeepKart’s journey. Let’s dive in.
A Large, Ubiquitous Market: A Lemonade-from-Lemons opportunity?
Two-wheelers in India needs no further introduction as a market; the packed roads say it all. However, used two-wheeler sales have many unique traits as a category, making this ripe for disruption.
This leaves two sub-optimal options for the customer - either find potential sellers in their social circles or check online on listing platforms, Facebook groups etc, both of which are cumbersome and unreliable.
In a broken market where there is no trust or convenience, BeepKart’s product offerings dramatically transform the buying experience. Over 250 parameters of a bike are evaluated before listing, and the customer can go through a detailed list and images.
BeepKart also specifies a selling price to the customer upfront, determined by their proprietary algorithm in the backend which takes into account several data points and benchmarks.
BeepKart offers trust at every touchpoint during the purchase journey. Consumers can now be more assured of their two-wheeler purchase, which is after all a sizeable spend of a typical Indian family’s income.
An increasingly sophisticated, digitally driven customer
A preference for personal mobility is on the rise, driven by tailwinds from the COVID pandemic as well as shared transport options not offering a reliable experience. As with most categories, the increasingly savvy Indian customer is motivated to research online before buying a two-wheeler. Interestingly, this observed behaviour is stronger across Tier 2 India. According to a survey by Google, 50% of buyers would consider buying a two-wheeler online if given an option, a number which goes up to 67% in Tier 2 cities.
An intent to sell two-wheelers online exists too. At any point in time, OLX’s marketplace alone has over 150,000 to 200,000 live listings of two-wheelers for sale. Usually, the number of listings in a non-metro city is comparable to (if not better than) that of a metro when viewed on a per-capita basis. That said, the purchase and the post-purchase journeys are still just as broken, and the quoted price for the exact vehicle with similar parameters varies considerably on listing platforms (and is open to the hassle of negotiation and vehicle transfer).
Another broadly unmet need today is financing. Most new cars are financed today, but only 20-30% of used cars are purchased with a loan. For used two-wheelers, the number is far lower, just given how unorganized the market is. BeepKart bridges this gap with financing already available on its platform, in addition to its efforts to organize the market while objectively assessing the two-wheelers.
Along with these tailwinds, recent structural changes in the two-wheeler market open up more avenues. Newly-launched BS6 emissions standards have led to a quantum jump in new two-wheeler prices. Moreover, the existing offline market has limited experience with EV two-wheelers which are rapidly growing as a new category.
BeepKart’s digital shopping experience eliminates several hassles in purchasing a used two-wheeler, by removing fragmented intermediaries and information asymmetry. This experience is supported by a scalable, technology-led operations backbone. With Hemir and Abhishek leveraging their experiences of operating sizeable businesses earlier, we’re excited to support them in this journey!
We at Vertex Ventures Southeast Asia and India are excited about the resurgence of the mobility sector post-pandemic and are actively looking at investment opportunities in the domain. We have published our thoughts on the Indian mobility landscape here. Do drop us a note if you’re building in the space in India and Southeast Asia.
Read the original article on our medium here.
*Image Credit: *YourStory
About BeepKart
BeepKart is building a buyer focused brand of used 2-wheelers. It is taking a digital-first approach to provide the trust that buyers seek in this high consideration & involvement category. BeepKart is helping write buyer-friendly rules to make the experience of buying and owning a used 2-wheeler as haggle-and-hassle free as with new 2-wheelers. The team has backgrounds in serial entrepreneurship, building category leaders, tech venture capital, mobility and in fast scaling start-up operations. For more information on BeepKart, visit https://beepkart.com/
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