Thursday, 23 February 2012

It’s full speed ahead for sgCarMart

Online car portal sgCarMart’s annual turnover is some $5m with over 10,000 listings on its site


Guanyu 道 said...

It’s full speed ahead for sgCarMart

Online car portal sgCarMart’s annual turnover is some $5m with over 10,000 listings on its site

22 February 2012

Thirty-year-old Vincent Tan Boon Kiat’s experience is best epitomised by this line from Robert Frost’s famous poem - he took the one less travelled and that has made all the difference. He took a step off the conventional path during his university days to develop local online car advertising and resource portal ‘Everyone during my time was doing engineering; about 80 per cent of the guys were doing engineering because it’s safe. It’s safe but didn’t have good prospects,’ says Vincent, who graduated from the National University of Singapore (NUS) in mechanical engineering. ‘For my partners and I, our courses in university have always been Plan B. Plan A was to do something else but we had to figure out what it was going to be,’ he adds.

Incorporated in June 2004, sgCarMart was born out of an idea that Vincent and his partners, Henry Seah and Tan Jing Lun, had when they were students at NUS. During their first summer holidays, Vincent and Henry were tossing up between giving tuition and starting their own business. After evaluating their opportunity cost and career prospects, they decided to go with the latter. ‘Our opportunity cost was very low. It was just forsaking tuition. We thought the prospects of being an engineer were also not very good,’ Vincent says.

The astute entrepreneur subsequently came up with the idea of an online car portal as he found there were no big players in the market then. ‘There were many small players but no one visible,’ Vincent adds.

From there, he roped in his close friends, Henry and Jing Lun, and they took on different roles in the business based on their strengths. Vincent was the brains behind the operation and focused on developing the business strategy. Henry, who was in the school’s chemical engineering course, was stronger at marketing and public relations, while Jing Lun was the architect for the website with his background in IT.

In the beginning, sgCarMart acted as a platform for car owners and businesses to list their cars for sale. It also offered car buyers a consolidated source of information to help in their car-buying decisions. The journey was a rough one. Vincent recalls having to make endless cold calls and run around car dealerships to offer them their services.

He explains that it was not easy to get sales for such high-involvement products, as dealers were depending mainly on print advertising then and were not receptive to online advertising. ‘Even when we offered our services for free, people didn’t want it. They didn’t know anything about it and felt it was a waste of time because they wouldn’t get anything out of it,’ he says.

If things then looked bad on the business end, Vincent did not find it any easier dealing with family. His father, who is also a car dealer, was sceptical of his son’s business model, deeming it not feasible. The support extended to helping the fledging business along was to allow Vincent the use of the family car to get around to meet clients. Eventually, his father softened his stance and agreed to lend his son a helping hand by introducing business partners and industry contacts.

Their perseverance eventually paid off in 2007, when they were about to graduate. The trio never expected that one day this would be their full-time profession, earning them much more than just pocket money.

Guanyu 道 said...

As Vincent puts it, the three of them finally saw light at the end of the tunnel when car dealers became more receptive to technology and started to list their cars online. ‘In 2007, we finally reached the critical mass (that we needed). When we graduated, the company could break even by paying our salary - but it was at a ‘pay-cut’,’ he said. While they could have been earning about $2,800 a month as engineers upon graduation, they could only afford to draw a salary of less than $2,000 a month from the business.

Looking back, Vincent says he has no regrets. Had he not taken his chances then, he reckons that he would now perhaps be a senior engineer awaiting his next promotion scaling the corporate ladder. ‘I don’t even know if there’s such a post as senior engineer!’ he quips. Not that it matters now. Today, sgCarMart’s annual turnover is some $5 million with over 10,000 listings on its site. Its stellar report card earned it a place on the list of Singapore’s top 1,000 small and medium enterprises.

The bulk of sgCarMart’s revenue comes from car listings while labour makes up the bulk of his operating cost. The once three-man outfit is now a bustling office with 40 staff under the different arms of the business.

The services offered are: used car classified system, new car listings, motor directory listing (which includes repair services and car-grooming workshops), editorial content, and a car forum which sgCarMart bought in 2007 as a discussion platform for customers.

With so many listings, Vincent says the company is able to keep track and update the listings because they charge for them. A listing on sgCarMart will cost $38 to run for six weeks. ‘All listings are updated within the last 30 days. We call (our customers) to update the listings regularly - this is a service we provide because it’s a paid listing,’ he says, adding that the firm takes pride in the accuracy of its listing.

Since its inception, the firm has seen a constantly growing market as the listing rate has outstripped dropout rates. ‘We have not hit any plateau so far. Business has always been going up; it’s only a matter of how fast the rate of increase is,’ Vincent says. Even the financial crisis in 2009 did little to dampen the company’s growth, he adds.

Earlier this year, the firm unveiled the launch of a new one-stop online car transaction service, sgCarMart Connect, to assist motor vehicle buyers and sellers in their transaction process. Its services include listings, insurance sourcing, car loans, ‘Buyer Protected’ vehicle ownership transfer, and legal documentation.

With sgCarMart Connect, the firm says it not only covers the information gap, but it also covers the transactional gap. ‘Even if you can find a buyer, there’s nobody there to do the transaction like loan insurance, paperwork, and ownership transfer. SgCarMart is set up to overcome this transactional gap, to encourage more transactions between direct buyers and sellers,’ Vincent says.

The company is exploring opportunities in Indonesia and has received a $100,000 grant from IE Singapore. Its latest grant is from the Infocomm Development Authority of Singapore of between $30,000 and $100,000. ‘Indonesia is our first step forward; it’s sort of a testing bed for us. If it’s successful, we may expand into other countries in the region,’ Vincent says.

Currently, the business in Jakarta offers three products: new car listings, after-market products directory, and editorial content. Vincent says the firm is looking to grow the number of products offered there.

When he first started out, Vincent says he knew ‘nuts about cars’. Today, he tells a different story. ‘After being in the car industry for so long, I can name you any car on the road so long as I see the profile of the car,’ he says.