INTERVIEW: ERWIN SIKMA
The online way of physical vehicle trading
It’s not every day that a Pakistani journalist gets to interview a Dutchman – in Lahore – who founded a company in Germany, which grew to 18 countries in six months. The founder, rather co-founder, is Erwin Sikma and the company is Carmudi. For the uninitiated, like myself, it’s more an internet thing than a company, an “online vehicle marketplace”, as he calls it, where car trade takes place in a more controlled environment than in the physical market.
He was in Lahore because Pakistan is one of the 18 countries where his product has found an exciting market. He’s come right in the middle of rainy season, so reaching him at the office of Rocket Internet at Arfa Software Technology Park is no easy feat. Rocket Internet is the company under whose umbrella Carmudi was created, and calls itself the latter’s ‘incubator’. But the interview reveals a dimension of business in the internet era that is still not understood well in Pakistan. The company started here in January. Other countries where it is active are Bangladesh, Cameroon, Congo, Ghana, Indonesia, Ivory Coast, Mexico, Myanmar (that’s where he’s based nowadays), Nigeria, Philippines, Qatar, Saudi Arabia, Senegal, Sri Lanka, Tanzania, UAE and Vietnam.
They target emerging economies, even though hardly any of these fit the Wall Street description of emerging markets, but the point is well taken. The idea is simple – facilitating vehicle trade across the country through an online mechanism.
Not grade-A markets by any stretch of the imagination, but that’s the point. They target emerging economies, even though hardly any of these fit the Wall Street description of emerging markets, but the point is well taken. The idea is simple – facilitating vehicle trade across the country through an online mechanism. Their portal collects buyers, sellers and car dealers on an ideal cyberspace marketplace, and they can trade cars, motorcycles and commercial vehicles from all ranges of brands to choose from.
But can you really build a business, in a dozen-and-a-half countries, just by getting car buyers and sellers together? How does the feasibility work?
“It’s a pretty straight forward idea if you look at it”, he says. “The online medium collects market players and removes asymmetries found in physical markets”.
That much makes economic sense. When demand and supply are located in the same place, he implies, you can come as close as possible to achieving perfect competition. The information will be latest. “We make sure we are up to date”, he adds. “The point where an advertisement is outdated will be rare”. One owner cannot fiddle with price unduly; buyers will know because other sellers, offering more rational prices for similar products, are available at the same place, or site as in this case.
When demand and supply are located in the same place, he implies, you can come as close as possible to achieving perfect competition. The information will be latest. “We make sure we are up to date”.
So how has the Pakistani market reacted to this innovation? We all know the craze people have for buying and selling cars.
“Oh it’s been among the best”, he points out, which is encouraging. “Already we have built a team of 50-plus with more than 30,000 listings”.
The company’s managing director, Ali Izhar Ahmed, is with him (Erwin is the global managing director in addition to being the co-founder). He jumps in at the mention of the team. Probably because he handles them, being the man in charge here.
“These are not your average sales people”, he points out. “We have executives who come from the best universities”. Among other top names, he mentions LUMS, following up later that he’s from the same university.
The car trade has been impressive, and Pakistan is doing well for the new company that has been a good sell in similar markets. They are due in Faisalabad shortly, and if the Dutchman is not already briefed about the car craze in that town, he’ll find it a revelation.
The car trade has been impressive, and Pakistan is doing well for the new company that has been a good sell in similar markets. They are due in Faisalabad shortly, and if the Dutchman is not already briefed about the car craze in that town, he’ll find it a revelation.
But, again, why restrict the business to cars? There are examples, especially in Dubai, where online platforms cater to a wide range of services. And trends have shown, time and again, that where the car trade excels, so do others; real estate, for example.
“We are more interactive, product specific and definitely a lot more up to date than those platforms”, Erwin says. The idea, as I could understand it, is to build a niche, nurture it, and in the words of their other co-founder, “be a one-stop shop for all car related topics, be it car reviews, news, tips or simple advice”.
“This is a different working model than the platform offering a wider variety”, adds Ali. “Rather than be the jack of all, we’d like to position ourselves as the master of one”.
The traditional physical market, too, seems to like the idea. For the first time, show rooms littered across the country are now connected. Buyers are less exploited and sellers are finding it increasingly easier to find clients. It’s a new form of the old ‘double coincidence of wants’ principle.
Interestingly, in addition to car dealers and connoisseurs, they are also interacting with university students. The idea is to bounce the idea off an intellectual class that is entering a market increasingly oriented towards the online way of doing business.
Interestingly, in addition to car dealers and connoisseurs, they are also interacting with university students. The idea is to bounce the idea off an intellectual class that is entering a market increasingly oriented towards the online way of doing business.
But isn’t that contrary to standard business practice? Isn’t it better to keep your business methodology to yourself, especially if your company has grown to 18 countries in six months?
“If interaction with students takes us down that road, it’s actually better for us”, they say. Apparently, more competition is good because it will push them not only to be on their toes, but also to diversify and improvise all the time.
It’s a simple model at the end of the day, they explain. And it won’t take long before others come waltzing along. So the benchmark of success as time rolls on and the idea finds familiarity will be how the model evolves, and how its originators innovate and structure it to suit an increasingly integrated market.
But for now, just like the online advertising industry swept through the country not long ago, Carmudi is the agent of an interesting change. And that it finds a vibrant audience in Pakistan is indicative of the progressive potential of the local marketplace. Whether or not they will look to become masters of more trades remains to be seen, though there is little to suggest it at this point. Perhaps there will be such innovation if the growth trajectory sustains in the middle to long term.