Droom: An Online Platform for Pre-Owned Automobiles

Droom Technology Private Limited (Droom), a used-automobile marketplace platform based in India, had identified a big-ticket item with an average selling price of ₹200,000–₹600,000 and harnessed its innovative technology to build an online ecosystem. In doing so, it had stayed clear of inventory management by following a marketplace model like that used by Flipkart Internet Private Ltd. and Amazon.com, Inc. in India, bringing all participants—including used-vehicle dealers, individual buyers and sellers, and financiers—into the online marketplace. Subsequently, Droom created functional, monetary, time, and psychic values for its customers through its various automobile inspection, valuation, records search, insurance, and other services. Droom went from having a single revenue source to having six independent revenue sources through its subsidiaries, which each offered a unique combination of values and collectively created a tough barrier for competitors to penetrate. By April 2020, the start-up had enjoyed some success, but looking to increase its growth, it faced some questions: Was it offering too much for too little? Was its pricing justified by the value offered? Were its performance metrics commensurate with the value provided? Finally, what strategy would successfully shift Droom from a hybrid to a completely online model ready for listing on the Nasdaq exchange?

This case is intended for use in graduate- and executive-level courses on e-commerce marketplaces or platform-based business models. It can also be used in a module on value creation in entrepreneurship courses. The case introduces students to the used-automobile market and elucidates how an online company identified a blue ocean in the used-car market and strived to create superior customer value by bridging the information gap in a trust-deficit market. It challenges students to analyze the financial sustainability of a start-up and to examine whether it translated its value proposition from theory to reality. After working through the case and assignment questions students will be able to do the following:<ul><li>Explore issues with scaling up and establishing unit economics and a competitive advantage for a marketplace in a high-involvement category.</li><li>Explain the concepts of perceived costs and perceived benefits in relation to the value created by a start-up.</li><li>Explain how to craft a long-term strategy for converting a hybrid business into a purely online business and identify the challenges of doing so.</li><li>Explain how technology companies create value and how they may have low current financial performance but high future market potential.</li></ul>

• marketplace, hybrid model,
• ecommerce, pure online model