iCar net loss widens, remains optimistic on long-term goals

• Loss of A$6mil, says on track to breaking even
• Aims to be clear No 1 player in Thailand within 12mths

DESPITE iCar Asia Ltd’s widening net losses, its chief executive officer Damon Rielly remains calm and confident, and is not about to hit the panic button.
 
For the first half ended June 30, 2014, the Catcha Group portfolio company registered a net loss of A$6.04 million, versus an A$2.78 million net loss in the first half a year ago. [A$1 = US$0.87]
 
The widened loss was mainly driven by higher expenses, including those on marketing activities and recruiting talent, the company said.
 
While profitability took a beating, its revenue doubled to A$1.1 million, mainly driven by its Malaysian market where it has successfully monetised its classifieds business.
 
“In the global … online classified business model, the break-even point is typically about five years,” Rielly told Digital News Asia (DNA) in an interview in Kuala Lumpur recently.
 
“We are two years into that period. I still feel comfortable that between now and three years from now, we can reach the break-even point,” he added.
 
Rielly said that the break-even goal would be achieved only if iCar Asia did not enter into new geographies or make a huge investments.
 
“If business remains the way it is – only in these three countries and only in online classifieds – I believe the break-even point will arrive within the next three years,” he declared.
 
Although there are companies and shareholders that are more focused on a company’s profitability, Rielly said iCar Asia’s main focus now is to build value and market share. He believes that the money and profits will come eventually, once it is able to build leadership in its markets.
 
iCar Asia owns and operates a network of online automotive classified sites in three South-East Asian countries: Indonesia, Malaysia and Thailand.
 
In Malaysia, it operates Carlist.my (an automotive classifieds website) and Live Life Drive (a buying research tool for new car buyers).
 
Rielly claimed that Carlist is the largest automotive classifieds website in Malaysia with more than 1.58 million unique visitors and 21 million pageviews per month.
 
In Indonesia, iCar Asia operates mobil123.com, the largest automotive classifieds website in that country with more than one million unique visitors and over 8.8 million pageviews per month, and over 200,000 automotive listings.
 
In Thailand, it operates ThaiCar.com and AutoSpinn. The former is an automotive classifieds website while the latter is an automotive content website. ThaiCar.com has more than 715,000 unique visitors and over 9.4 million pageviews per month.
 
Although ThaiCar.com can claim the title of ‘No 1’ automotive classifieds website by number of listings, Rielly isn’t satisfied.
 
It is believed that in terms of audience (unique visitors per month), it is still behind rival One2Car.

“Our aim is to be the clear No 1 automotive classifieds website in Thailand over the next 12 months. Based on the traction and momentum we have, we are confident we would be able to achieve it,” he said.
 
Strong momentum

iCar Asia claimed that its other two markets, namely Malaysia and Indonesia, are also growing.

In Malaysia, the number of listings and its unique visitors per month have grown by 40% and 113% respectively between June 30, 2013 and June 30, 2014. During the period, the number of sales leads it generated increased by 118% to over 300,000.
 
In Indonesia, listings and unique visitors per month have grown by 29% and 221%, respectively, while number of leads have jumped 153% to more than 100,000.
 
Rielly (pic) attributed the strong growth to the ‘quality’ of the listings. “The reality is that the automotive industry in any country around the world is not the most trusted industry.
 
“We see ourselves being in that opportunity – we need to provide an environment where people can trust the information and content,” he said. “Trust is really an important thing for us.”
 
So in Malaysia for example, Carlist staff will go through listing details before publishing it online.
 
“Price is the No 1 consideration when people are looking to buy a car. We have come across dealers who will place a very low price so that people will call them.
 
“We make sure we understand what the price range is for cars from their age and make. If the dealer lists the price well below the price range, we will call them to verify of that price,” Rielly said.
 
He said the company would take out any such “misleading” advertisements when necessary.
 
As the verification process is currently done manually, iCar Asia needs to find a way to ensure that this does not create a bottleneck.
 
One of the ways is through a ‘Trusted Dealer’ badge, Rielly said. Such ‘trusted dealers’ who have consistently advertised with the right information, will be able see their advertisements go live immediately.
 
For dealers who have yet to earn that badge, their advertisements will go through the moderation queue.
 
Importance of achieving leadership

For Rielly and his team at iCar Asia, it is crucial that the company secures a leadership position in markets it is operating in.
 
This is because part of the company’s strategy is that it will start to consider charging users listing fees only upon securing this leadership position. In other words, the sooner it becomes No 1, the quicker monetisation starts.
 
“Of course, the other area of consideration is whether or not the market is mature enough,” said Rielly.
 
In Malaysia, it has started charging dealers a fee for listing. Dealers can opt for a monthly subscription model, where they can post an unlimited number of listings for a fixed fee. The Malaysian operation also makes money from display advertisements.
 
In Thailand, ThaiCar has yet to charge car dealers for listing fees. However, it is generating revenue by way of display advertisements.

“Of the display ad revenue we receive, 80% is from Malaysia. So you can see the growth potential of this segment once Indonesia and Thailand come in a bigger way,” said Rielly.
 
The situation is a bit different in Indonesia. Although it has established a leadership position there, the company has yet to start charging car dealers any fees.

The main reason is that other players in the online classifieds space have yet to do so either. Although not direct competitors to iCar Asia, online classified portals such as OLX and Berniaga are forces to be reckoned with.
 
The concern is that iCar Asia may lose its momentum in Indonesia should it implement listing fees too early. It is an area Rielly said he is closely monitoring.
 
“In Indonesia, our focus now is more on educating the market and the car dealers on the benefits of our services, and how our online classifieds website can benefit their business,” he said.
 
“Nevertheless, we are very optimistic about Indonesia and believe that it has huge potential ahead,” he added.

Other revenue streams

Besides listing fees and display advertising, Rielly said that there are other areas where iCar Asia can further grow its revenue.
 
“There are so many potentially new revenue streams. For example, we can help the dealers do premium photography, or maybe build their website.
 
“There are no immediate plans to go there – we will monitor this space closely. We want to remain focused,” he said.
 
One of the reason why it wants to remain focused on its existing playbook is that there is a huge potential just in doing what it is currently doing.
 
Take Malaysia for example. It now has signed up 1,400 used car dealers. Rielly said that there are some 4,000 used car dealers in the country and about 3,000 of them are an addressable market.
 
On top of that, there are 1,500 new car dealers – a segment it has yet to penetrate.
 
One revenue opportunity it has no plans to go into is charging transactional fees, that is, getting a commission for each sale.
 
“The worse thing a company can do is to cut out its customers. We will always be mindful of that,” said Rielly.
 
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