Carama out to build trust between car owners and mechanics
By Karamjit Singh November 27, 2014
- 87% of Malaysians not happy with quality of car care
- Malaysia at tipping point for e-commerce, says exec
CARAMA, a play on the words ‘car’ and ‘karma,’ is a total anomaly in the startup space in Malaysia. You would think that an obvious consumer pain point – that is, finding a reliable and honest car workshop – would have been long identified and attempted to be solved by an entrepreneur.
Instead, Carama is a fascinating global pilot launched by oil and gas giant BP’s consumer lubricants business, Castrol. If the pilot shows enough promise, BP will give the green light to scale it globally. That decision could come as soon as January.
But it will be tough, as while Castrol has adopted elements of Eric Ries’ Lean Startup methodology to Carama, there are still strong elements of the creature comforts of being part of a billion-dollar corporate entity.
The seven-person Carama ‘startup team’ comes to work at a five-star corporate office; no one had to take a pay-cut or ever worry about their salary not coming in; and as for funding, while they decline to disclose the amount committed, it certainly is in the seven-figure range, with an executive acknowledging “we are spending a lot of money to create awareness.”
In such circumstances, you have to wonder how hungry they will be to make this work and how hard they will apply themselves.
One glaring reality is this – that after 15 months going live, the site is still marked as being in ‘beta.’ And while they have 239 workshops currently listed, of which 111 are certified as having gone through its rigorous 40-point quality check, they can certainly be called out on their speed in execution.
But Sumeet Wadhwa, general manager of Carama, was unfazed by my question, “Doesn’t the fact that you and your team did not take pay-cuts, nor have to worry about next month’s salary, means that you will naturally not have the drive nor hunger to do whatever it takes to make carama.com work?”
“I won’t argue with you about that (taking pay-cuts), but I would say that while we are not a startup, neither are we pure corporate,” he says.
Aware of its corporate roots, the team that is building Carama deliberately chose to adopt the Lean Startup methodology, and Sumeet has to present a quarterly progress report to a board and convince them to give him venture funding – which he has to earn every six months.
“I have to secure the funding based on meeting certain KPIs (key performance indicators), and the mechanism to measure that Carama is progressing as expected is pretty well defined,” he says, acknowledging that while he won’t be losing a night’s sleep, the situation is not as rosy many would believe.
“There is a healthy tension between that need to create value, solve the consumer problem we see, and the realisation that funding is no guarantee if we can’t demonstrate value to the market,” he adds.
The opportunity to create value in the car service market is certainly there, judging by the fact that 87% of respondents in a recent Carama survey wished they could get better quality service from workshops, while 75% wanted trustworthy mechanics (click infographic on the right to enlarge).
Hence Carama making it its mission to help consumers and workshops rebuild trust between each other. It is doing this by getting workshops certified, wuth a stringent quality check done by a third party to ensure Carama is neutral. For those who shy away or are wary of its motives, Carama allows them to start by listing first.
Neither party is charged any fee to list or make their service bookings online. In fact, consumers are being given discounts at present.
The goal is to just drive increased users to the site, monetisation will happen later. Giving Sumeet confidence about the monetisation strategy is the fact that apparently quality trumps price any day, with Malaysian consumers.
“This has come as a very big surprise to us,” he admits. Apparently, research carried out by Carama reveals that most Malaysians will fork out more money for their auto repairs simply because the car is so central to their daily lives and they need peace of mind that it will not break down.
But for monetisation to happen, Sumeet also needs a lot more users to share their experience at the mechanic’s. “It is like a TripAdvisor service, but for car repair,” he declares.
First organic investment by corporate VC arm
BP is no stranger to being a corporate investor, having created a venture arm called Castrol InnoVentures in 2011 with an aim to grow the materials business beyond lubricants through a combination of venture investing and organic growth.
Carama, launched in August 2013, is the first organic play funded by Castrol InnoVentures. Among its venture capital investments was RepairPal.com in the United States, in which it invested US$15 million in February 2013, together with Cars.com as co-investor.
The roots for Carama took hold during a series of high-level brainstorming sessions in 2012 Castrol had with both inhouse and external parties to get a better feel for how technology was going to change the way business and consumers behave, and how Castrol could adapt.
Malaysia was chosen for the pilot principally because BP has an over 100-year history in the country, and because its digital economy exhibits characteristics of both a developed and a developing nation.
For instance, while Malaysia is still an emerging economy, its citizens demonstrate a digital behaviour that is more on par with developed nations when it comes to their proclivity to consume content over the Internet. “Malaysians have very strong browsing and social behaviour,” is how Sumeet (pic) describes it.
Malaysia’s e-commerce adoption, meanwhile, has proven to be disappointing in 2014, with Sumeet sharing some data from Yahoo research that showed most of Malaysians still lack trust when making online payments.
“But I personally believe that Malaysia is at a tipping point for e-commerce,” he declares, highlighting the fact that the presence of retail e-commerce site Zalora and even Tesco.com will make more Malaysians comfortable shopping online.
“We need industry pioneers to help shape consumer thinking about e-commerce, and I like to think that we are playing our role in Malaysia,” he says.
If indeed Carama can prove successful in Malaysia, it will have become the springboard for a similar business to launch in other countries by Castrol.
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