Zoomcar, the Bangalore based self drive car company, recently raised funding worth $11 million from Sequoia Capital, Empire Angels and NGP. In May, it also launched operations in Hyderabad with ~30 cars at 6 different locations. We caught up with Greg Moran, co-founder and CEO of Zoomcar to understand their expansion plans, user base and competition among other things. This is part one of the two part interview. You can read the second part here.
MediaNama: What is the demographic of your users by cities?
Greg Moran: There isn’t a whole lot of differentiation by cities. We’re in 6 cities today: Bangalore, Pune, Mumbai, Delhi NCR, Chennai, Hyderabad. We’ll be launching in Calcutta later this year. But these 6 larger, Tier I cities, they all share a lot of pretty common demographic characteristics: all the cities have strong, well educated bases with folks who come from out of the cities, mostly from engineering backgrounds or other backgrounds. They’re working in large MNCs and tech companies etc. Each of the cities have some micro characteristics to them, but on the whole, it’s actually pretty similar. The vast majority of our customers are under 30. The sweet spot really for us is that 18-30 (age group). We do have some customers over that but in terms of day in day out, the majority and the most active users tend to be in their 20s. That’s the same as any ecommerce company, any startup in India.
MediaNama: Where do you plan to expand to this year and the coming year?
Greg Moran: The way we see it is that every Tier 1, Tier 2 and Tier 3 city share a Zoomcar. So for us right now, we’re in the big Tier ones except for Calcutta. Our next launch will certainly be in Calcutta. But I also think that the really stiller Tier 2 cities are up next. If you look at cities like Indore, Coimbatore, Bhopal, Chandigarh, Goa, Ahmedabad, Surat, Baroda, Lucknow, all these cities will be very very strong markets of visits for us.
In our business, what’s really important is the idea the network affects and continues to build a presence. It is a little bit better to have a very deep presence in fewer cities as opposed to having 10 cars in 50 cities. That won’t make as much sense. Not that we’d do that, but the idea’s that the more and more cars we have, the better it ends up being for the customer.
In that sense, it’s a little like Uber and Ola because if you have 10,000 cabs in Bangalore, obviously, the chances of you getting a cab in 2 minutes are much better. Same thing with our business, particularly when there is already an urban market awareness in Bangalore and Delhi, it’s really about just broadening the reach in that city and then deepening the overall footprint.
MediaNama: On what basis do you choose Tier 2 and 3 cities to expand into?
Greg Moran: There’s a little bit of science, but also there’s kind of art. Its something that, really all the cities you look out for have ideally, a young working and professional population, strong university base, people who are more of a migrant community. If it has some exposure internationally, that also helps. Cities like Bhopal are a little more conservative than say Chandigarh in that respect. All of them have their own positive characteristics so over time you launch in more cities.
MediaNama: How many people use the Zoomcar app against those who book on the web?
Greg Moran: The app has been picking up like anything over the last couple months, particularly in the last couple of weeks. We’re well over 50% app penetration so that’s something I’d expect that probably, at the end of the year, it’d be 80% plus. It has picked up because we’ve really just kicked off our refreshed mobile app from the beginning of this year. We had an app in the second half of last year but we started making a lot of overhauls and promoting it more at the beginning of this year. So that, for us, has seen some exponential growth month on month as we released the app. This is something that you see across the entire ecommerce community, the startup community in India right now: this shift to the app and it’s no different for us. We’re seeing very similar trend lines and that’s where most of our engineering focus, product focus, the overall denominator of the business will focus more and centre more on the app going forward.
MediaNama: Do you plan to go app only sometime in the future?
Greg Moran: Certainly at some point, yeah, I mean not today, not right now, not in the new term I think obviously. Certain businesses are more conducive to going app only, like a taxi hailing company like Ola, that makes more sense for them, I mean if you look at the use cases in customer journey, again, its about empathising with the customer and understanding the psychology of the customer. People who are making a Zoom booking are spending 4,000-5,000 bucks at a shot and they’re comparing multiple things. They’re also looking out at hotels and saying, they’re looking at different destinations and activities etc. So they’re kinda cruising multiple spaces and a lot of times, it’s still easier to do that on a laptop so yeah I think because of that, the web still has some prominence there. Let’s see.. preferences change.
MediaNama: Who owns the chunk of vehicles on Zoomcar?
Greg Moran: A majority of them are owned by us, some we attach from local operators but the majority, we actually own them. Right now, the whole idea of a peer marketplace is not legal in our space and there’s a lot of regulatory restrictions and constraints around it. That potentially could change in the future, but right now that’s sort of a ground reality, so we actually finance all of our cars and we have a lot of strong partners, in the bank debt side and the leasing side that help us, too.
MediaNama: How do you decide the price of the rental cars?
Greg Moran: That’s actually an interesting question. We don’t get that too often. There’s a lot of factors… And this is true for any company. When you’re determining pricing, you take 15-16 considerations and not just 1 or 2. Obviously on one side, you have to look at how much the car costs for us. There are some fixed costs associated with the car: certain payments you do have to make every month so you wanna make sure that pricing makes sense from that perspective. Because its scaling you need to run, so its something where you obviously compare it out to other options, other alternatives in the market to get a feel. I think the important thing for pricing perspective is always to have empathy for your customers and understand their psychology and how they perceive your product and how they perceive the services. So factoring that in as well is also quite critical and we do a combination of the two.
MediaNama: Do you face any particular competition from cab companies?
Greg Moran: Not at all actually. Our service, our category or product as such is totally 100% independent and different. We’re creating a new asset class as such in India, I mean the idea is they’re in fact are very complementary because all of our customers use Ola and Uber. Uber and Ola are going from Point A to Point B, its an average 25-30 minute journey. Lot of times it can be a 10-15 minute journey. Our customers are booking for a day, 2 days, sometimes they book during the day, during the weekdays, at times they take a 5-6-7-8 hour journey but again, that’s obviously something you’re not gonna do with Ola or Uber. So the two don’t actually play off.
MediaNama: In which city do you see the highest response for Zoomcar? How many cars do you have in each city?
Greg Moran: Largest cities are Bangalore and Delhi in terms of number of cars, but demand is really strong across all cities. There’s not one city that’s necessarily going crazy, we’re covering all of them and doing really well. For the number of cars, sorry, I can’t share the exact details but Bangalore and Delhi are our largest cities.
MediaNama: How do you decide which cars to you provide on your platform?
Greg Moran: It’s certainly a bit of science. The idea is that we look at our demand patterns and we have a lot of really visual sets from our data. We have over 2 years of operating data, with our customers and thus we have a good sense of preference in historical usage patterns, particularly as it relates to the seasons. So you kind of plot that out and it’s the data that gives you most of the insights.
*Note that this interview was conducted before Zoomcar raised funding. Responses have been edited for brevity.