AURORA: Why are auto classified portals so popular even though half the transaction is conducted offline?

MUHAMMAD RAZA SAEED: The internet is a great equaliser – it makes information universally accessible and easy for people to find what they are looking for. Newspaper classifieds require people to look at all the ads, shortlist, call and ask about the car and then go look at the car. Additionally, all newspapers’ ads look the same because of the word limit and the absence of pictures, and the life of the ad is one day. Online classifieds are a great innovation; there is no word limit, you can add eight to 10 pictures and the ad stays on the site until the seller decides to remove it. The search process is simplified because you can apply a number of filters – colour, engine size, make, model, etc. – to narrow it down to the car you are interested in. The pictures also give a fair idea of what the car will be like, so by the time you look at the car you know what to expect. There are three important aspects to buying a car: the widest selection of cars to choose from, making sure you are buying a good car that is not a lemon, and figuring out how much to pay for it. Many international auto portals have started answering all these questions and PakWheels is working on this.

A: When was PakWheels established and how has it grown since then?

MRS: PakWheels was started in 2003 by Hanif Bhatti; the goal was to set up a page to talk about his own car, find out what everyone else was driving and create a community of auto enthusiasts. Classifieds were started in 2005 but they were just car listings. In 2010 we added bike and auto accessories. Now you can go to the site and buy anything auto related from a car to an alloy rim to a stereo and everything in between. That is our motto: we want to be anything and everything related to wheels. I became involved with PakWheels in 2008 and have been running the site ever since. According to a tool called Similarweb, we are the largest indigenous Pakistani website after the newspaper sites. We are larger than all the other verticals, including Rozee and Zameen. The only site that is neither a news or media site and is above ours is OLX, because of the extensive ad spend but in terms of verticals we are a very clear leader.

A: Why did you start online classifieds in 2005 when no one else was doing this?

MRS: We had plenty of auto enthusiasts hanging out on our forums (which have almost four million posts and 15,000 new ones are added every week) and our blog was very popular in terms of latest news, opinion and articles, so it made sense to let these enthusiasts transact as well. As internet adoption increases (there are currently 30 million internet users and this is expected to increase to 100 million mobile users by 2019), all the people we want to target will be online.

A: What percentage of auto classifieds is currently online in Pakistan?

MRS: This is a tricky question to answer. About two million car transfers take place in Punjab every year. Based on this, we extrapolated some figures and we believe that about 15 to 20% of the auto market is online. This is not an exact number and it has to be made more precise by getting more information from the relevant government departments; however we have triangulated this data in multiple ways and think this is correct and there is still significant room for it to grow.

The idea is that anyone who plans to, or owns a vehicle should have a reason to come to PakWheels

A: Can you give me a sense of how people use the PakWheels site?

MRS: Most people come for our classifieds. However, the forums are still our differentiating factor and remain popular for a number of reasons. Firstly, Pakistan is a very used car centric market and so you see different variants of cars every day. Also, given that there is no original manufacturing in Pakistan, there are bound to be problems that are unsolved or unheard of, and such people visit our forums in the hope of finding solutions. Secondly, people also make a lot of trips to remote areas and this is a very popular topic on our forums. We also like to interact with our visitors and one way in which we merge online and offline is by holding auto shows every year (we recently did our fourth). We usually have a turnout of 30,000 to 40,000 people at these shows. This reinforces our community roots, although the majority of the traffic coming to the site is for the classifieds. We get 1,000 cars listed every day and they are all organic listings; on a monthly basis we get 2.5 million visitors with over 25 million page views.

In the last 12 months, over 40% of Pakistan’s population has visited PakWheels. About 60% of this traffic is coming to our used cars classified, which makes it a very significant marketplace. In the auto verticals we are even bigger than OLX in terms of transactions.

A: How do you benefit from these transactions?

MRS: Typically auto portals have a couple of revenue streams, one of which is advertising, but the bulk of revenue comes from the classifieds and more specifically from the dealerships, because they are the ones who make money by selling these cars. It is always challenging to monetise individuals; one way is to sell featured ads, so what people do is they pay Rs 1,000 rupees and their ad is featured on our website for seven days. What this means is that your ad will randomly appear on our homepage, in search results and on our apps; our goal is to give lots of coverage to our featured ads. On average, our featured ads get 10 times more response than normal listings.

A: How do you monetise dealerships?

MRS: We have different offerings for dealerships, which include payment packages based on the number of listings, a product offering where we set up their Facebook page, the website and the complete social media offering integrated with PakWheels. We are slowly starting this and as we grow we will monetise this further. In previous years the goal was gaining critical mass – usually marketplaces have a network effect; if you have enough buyers and sellers you create a very defensible business model. If you are able to do this, then the market starts to roll out because it is very difficult for other websites to easily replicate the model. It is actually the snowball effect: the more buyers we get the more sellers we will get, and vice versa. Although we feel we have reached that stage, the majority of internet users will come in the years ahead – about three-fourths of internet users are not online yet (based on previous figures). We need to ensure that while we are a leader in the current situation, we also continue to dominate the space in the next few years, which will be a super explosive time for the internet.

A: There are a lot of other auto verticals out there right now.

MRS: There are loads of new websites but the challenge is not setting up a website or a marketplace, rather it is to reach that truly critical mass of buyers and sellers. Some of these sites are just going to the power sellers (the dealerships) to accumulate listings but that doesn’t help. You cannot have sellers without buyers, because eventually the sellers will stop coming to your site. Rozee tried to set up Gari.pk, there is ApniGari, Carmudi, Autotrader, etc., but we are light years ahead of them. The real competition is from the horizontal classifieds like OLX and that is an area we are focusing on.

A: What are you doing in this area?

MRS: As an individual you don’t buy a car every day, you buy one and then you come back after three years. So how do we retain you? We offer an area for maintenance history which will remind you about oil changes, etc. This feature is built into our apps – we have two Android apps, one for our marketplace and the other for our forums and blog; the same goes for iOS. Additionally, we have blogs and plenty of content in our new car section to help people with buying decisions. The more choices you have the more it becomes necessary to research and we are trying to cater to this at every phase: research, transaction, maintenance and sales. In maintenance we have launched another feature in trial mode where we have a road runner service which picks up your road tax documents and does the filing for you. The idea is that anyone who plans to, or owns a vehicle should have a reason to come to PakWheels.

A: Trust is a major issue in online classifieds. How do you check listings?

MRS: Every live listing is verified by SMS, which means that when you post a listing you receive an SMS code that you have to enter on the site to activate the listing. If you do not do it, we will call you and verify the details and then list the car. Then we have a report abuses section (we have lots of those every day). We have a team of 10 people in customer support and their goal is make sure that the data is clean and fresh and the listings are of a high quality. Compared to horizontal classifieds where anyone can post anything and people can use another phone number, you cannot do this on our site. Secondly, if you have used Facebook Connect, the system will tell the buyer and seller if they have any common friends and that is something we have adopted from marketplaces in the West. This is a good measure of trust. With regard to dealerships, we have introduced a review and ratings system, so you can see a dealer’s rating before buying from him, so we are bringing in a lot of trust-based measures in the market. But we know this is just a start and it needs to evolve quite a lot.

A: Are websites like PakWheels having an impact on the auto industry?

MRS: When internet selling was not popular, all the dealers from Punjab would go to Karachi to buy their cars because it was thought that cars were cheaper in Karachi. Because of PakWheels this does not need to happen – anyone can buy a car from anywhere. The other thing is that despite being an imported used car centric market, the import process used to be a very grey area and there were very high premiums because people didn’t understand the system very well. Now the process has been demystified and thanks to PakWheels, you can find a person who can take the car from an auction in Japan and help with clearing and transportation. The big margins have gone down for the dealers. The difference between a big dealer and a small one has also been reduced; before, the dealers with the larger showrooms would have a bigger footfall, but now a smaller dealer can earn more money by selling more inventory online. The forums are also helping people in terms of figuring out what to buy, the right price and the problems they can anticipate.

A: Is the sale of used cars increasing as a result of the proliferation of auto verticals?

MRS: The sale of used cars is dependant more on the economic situation of the country and buying power, rather than on the availability. People who wanted a used car used to buy it through traditional means by visiting a dealership, now they are buying it online. However, it would be fair to say that we have made the process a lot simpler and transparent. The information is easily available so the decision making is easier, simpler and faster. The variety of cars available is also huge.

A: You recently conducted an online survey (Automobile Industry Survey 2014). What was the purpose?

MRS: This is the second time we have done this and over 10,000 people completed it. (The first one was done in 2013 in collaboration with UGov which is a pioneer in surveys and it was filled out by 6000 people.) We wanted to figure out the trends in the market, what people consider when buying cars, what choices they make, what are the most popular lubricants, insurance, car tracker services, etc. For example, we discovered among other things that 76% of the cars in Pakistan are not insured and very few cars have a tracker system.

A: What will auto verticals look like in the future?

MRS: Worldwide, print classifieds will be a thing of the past. Online auto classifieds will be the only way for people to discover and buy cars in the future. Once mobile and internet proliferation increases, everyone will have a marketplace in their hands. The future will look very different; it will be about a simplified experience for users. At the moment the model has simply changed from offline to online, there is a lot of room for innovation to improve the experience.

Muhammad Raza Saeed was in conversation with Marylou Andrew.
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