HOW TO COMPARE WELL ONLINE
IN TARGETING THE MARKET FOR CAR LOANS, ROLAND BLEYER HOPES TO BUILD ON AUSTRALIA’S STRONG RECORD OF DIGITAL DISRUPTION.
CONVENTIONAL WISDOM SAYS that in order to beat your competitors, you need to one-up them. If they have five features, you need six (or 10). If they have 20 staff, you need 50. If they’re spending $500,000 on marketing, you need to fork out $1 million.
But entrepreneur Roland Bleyer argues that this never-ending battle will simply soak up massive amounts of money, time and drive. “It forces you to be on the defensive,” he says. “It’s better to be early in themarket.”
Bleyer has launched his “umpteenth” business – carloanworld.com – to help consumers. And his start-up is providing jobs for Australians. “We have hired and are hiring more people to help on sales and content.”
He believes it’s unrealistic to build a website business and then outsource every second bit of it to low- cost providers in Pakistan or Romania. “In a flat world, you can get things done very quickly and cost- effectively, but reliability and accuracy are not always there. We are consumerfacing and we need to tie in commercial arrangements with our partners, so our staff are invaluable. I wanted to put locals into the business.”
Australia has some savvy online entrepreneurs, including 99Designs, Kaggle, Freelancer, Atlassian, Campaign Monitor, Bigcommerce and, more recently, textbook rental start-up Zookal. Founded by five students from the University of Technology, Sydney, Zookal has raised $ 1.2 million from Silicon Valley private equity firm Filtro Investments. Another Sydney-based start-up, Canva, a collaborative design platform, raised $3 million from investors last year.
When you drill down into these success stories, youmostly find people who have “been there and done that”, rather than start-up naifs. “[They] are proving you can launch a truly global company from Australia,” Bleyer says. And he believes the key is ensuring the business case is bulletproof. “A common mistake by start-ups is not checking the basics, such as operating costs.”
In one of his earlier online businesses, Bleyer ran a credit- card comparison site. He says the car-loan sector is ready for similar disruption. “It’s ripe for a comparison-style website. In effect, we supply leads to the finance originators. Our job is to grow the traffic, to get known as a resource for new car buyers.”
The market for car loans is becoming more discerning. As with home mortgages, people are comparing offerings online. With less appetite for debt since the global financial crisis, buyers no longer accept the “zero finance” option from a dealer.
Also, setting up a website and the associated infrastructure has become much cheaper. “It cost about $ 5000 to build the site, but it’s the business model that needs to prove itself.”
Zenith Financemanaging director Richard Korda says the “zero finance” headline offer can be a trap. “In most cases, there are conditions attached, such as paying the full list price. It can thus negate the benefits of a discount. If you can get 10 to 20 per cent off the list price, is it better to pay 6 per cent interest on a loan? They can be seductive, saying things like ‘sign up today and you can take delivery of the car tomorrow’, but you need to read the terms and conditions.”
Korda says websites must enable consumers to compare like with like. “Someone applying for a car loan should note that most loans are written with a fixed term and flat interest rate. So a 4 per cent flat rate might compare to, say, a 7 per cent reducible loan. A consumer needs to be able to trust the information on a website. Anyone can compare rates today simply by going to one of the bank websites and using their calculators.”
Bleyer has international expansion plans. “As you get better and better, you can lift your sights. One reason some start-ups get investment interest from US investors is that, from a global perspective, we’re a great test market. When proof of concept is achieved down here, it can be scalable into much bigger markets.”
Roland Bleyer says start- ups often fail to check the basics, such as operating costs.