A hybrid success of our startup in the Philippines

The destiny brought us to the Philippines accidentally. It happened when my partner and friend Diego Alonso van Camp mentioned that his brother has a family there, and it would be great for him to give some business opportunity for his brother. Suchwise in March 2011 we had launched the project in the Philippines, despite my statements about the madness of such adventures…

It took us 3 years, to get all car dealers in Namibia which has population only 2,300,000 people. And I was trying to imagine how long it would take to get in all car dealers with population more than 90,000,000 people. If we would have the same scenario like in Namibia, we would need:

90,000,000/2,300,000 =

= 39 Years to reach the same popularity and same quantity of vehicles proportionally to Namibia.

It were really not good numbers, but my “mad” friend Diego decided to go ahead and I did not have a much choice and had to follow him and support as a friend.

A particularity of Asian vehicle market was very surprising, and did not look like anything else, that we met in Africa. It turned out that the main transport in the Philippines are motorcycles and scooters, and automobile segment of the market applies more to Luxurious instead of middle-class market.

There were many car yards with hundreds of used cars in it, but the business model of Auto Exchanges was creating conflict of interest with any kind of publicity. Because for any Auto Exchange which makes their income by renting a space and charging for it on a daily basis - any vehicle publicity was giving them an economical damage and profit lost.

Of course there were exceptions and we met "advanced" owners of Auto Exchanges, who was not considering a vehicle advertising as a threat for their business, but in most cases they were not so happy to see us, and we had to deal directly with owners of the cars - a decision makes. And a real "Hell" was about to come, when were trying to get hold of all those guys who was owning 3-5-10 cars and close the deal with them.

You are coming to a car yard, and you see not a car owner, but “a car taker”, who is not authorised to make any decision, and his job is to keep car nice and clean, and open car doors for any potential customer, who is instructed do not give a contact number to anybody unless its a buyer.

Just imagine how long it would take to get 200 cars online from guys who owns no more 3-5-10 cars - you need to convince 30-50 people in order to get it done. And then compare with an effort to close the deal with a manager of a used car dealership yard, where only one person can make a decision to get all his 200 cars online.

There are some "normal" car dealerships as well, but not much and mainly a used car market represented by Auto Exchanges, and the effort to get them is just incomparable to anything which we had to deal with in the past. In most cases, working with a small car holders - is the work for the sake of work, and if we manage to reach an agreement and, in the long term it becomes very rare.

However, after 5 years on the market, our project became a leading source of customers for car sellers in the Philippines. Even No 1 online classified in the country - generates less “leads” then our network.

How do we know it?

We posted the same amount of cars to No 1 online classified in the Philippines, and the same amount of cars to our network. After one month of advertising we got from classifieds only a spam such as newsletters, but from our network it was dozens of 100 % of pure vehicle enquiries.

Thus, we have proved the ineffectiveness of advertising on the general classifieds. It looks like none goes to search for a car to a general classified, and every one prefer classifieds, which are focusing purely on a vehicle sales. Yes, they might have more traffic, much more, but I can assure you - we are selling more cars then any general classified in the country despite their top popularity.

One thing is to make it popular, and other to monetize it. We crossed the line, where our project stopped “eating” our money, and at least its paying for it self, but we are still struggling to make some profit out of our enterprise.

We have denied however a proposal of $600,000 USD from one of our competitors to leave the Philippine market.

Lets see……

Andriy Bondar

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