GoZoomo (previously known as Zoomo), the Bangalore-based used car P2P marketplace, has shut down, reports Tech in Asia. GoZoomo’s founder Arnav Kumar confirmed to MediaNama that they had indeed shut down the company and have decided to return the money that they have left over back to their VCs.
It is unclear how much money GoZoomo used to date and how much it has returned to its investors. Currently, the GoZoomo website is also live, although we expect that the company will phase it out soon.
Kumar told Tech in Asia that the unit economics of the business did not add up despite changing the business model several times (like charging for inspections and value added services) and that it would be better to return the money that the company raised as opposed to use it till it lasted. It also cited Kumar as saying that building a sustainable company was hard. According to the report, all 65 GoZoomo employees will get 7 weeks severance pay and assistance with finding new jobs.
A year ago, the company raised $5 million in funding from SAIF Partners to add to its operations, technology and leadership team. In December 2014, it raised $1 million in seed funding from SAIF. GoZoomo was present in Bangalore, Mumbai, Delhi, Chennai and Pune and was founded by Arnav Kumar, Himangshu Hazarika and Aniket Behera in July 2014.
Standardising used car prices a problem
Kumar told the publication that the company had had 3,000 users who bought vehicles from the platform at an average ticket size of $7,500, but that it was unable to standardise a price for the cars being sold on the platform due to its peer to peer nature. This also caused a lot of revisions to the price between the seller and the buyer. Kumar said that the conversion rate from the listing to transaction was low at 20%, and unsustainable for the company’s business model.
In December 2015, the company apparently laid off 130 employees from its call centre operations and on field operations through 1-2 months notice periods. The Tech in Asia report states that these employees were also given 7 weeks severance pay and job finding assistance. Note that MediaNama has not been able to independently verify this.
Developments in the online car marketplaces domain:
– Yesterday, Zoomcar, the self drive car rental company, raised $24 million in Series B funding led by Ford Smart Mobility LLC and Sequoia Capital, Nokia Growth Partners and Empire Angels.
– Earlier this week, CarDekho, a platform for buying used and new cars, launched a digital loan platform tying up with HDFC Bank, Axis Bank, Tata Capital and Mahindra Finance. In March, Girnar Software, the parent company of CarDekho, Gaadi and Zigwheels, raised an undisclosed amount of funding from Google Capital and participation from existing investor Hillhouse Capital.
– In January this year, CarTrade, the Mumbai-based auto classifieds website, raised $145 million in a round of funding from Temasek Holdings, March Capital and existing investor Warburg Pincus.
– In August 2015, Quikr launched QuikrCars where users could search for and buy new and used cars, bikes and other vehicles like trucks by budget.
– In July 2015, Prashan Agarwal launched a peer-to-peer transaction marketplace called 19miles for buying and selling used cars and raised Rs 2.5 crore in funding.
Our automobiles coverage.