OLX bets on used two-wheelers

MUMBAI: Every minute, six used bikes get listed on OLX India Pvt Ltd’s online classifieds site OLXx.in and three of them get sold. That’s the kind of traction India’s largest online classifieds site is experiencing at a time when sales of new bikes and scooters have slowed following the invalidation of high denomination notes by the government in November.

For a site that sells everything from used phones to pets and electronic appliances, scooters and motorcycles have emerged as the second largest category by volume, said Amarjit Singh Batra, country head at Olx India, in an interview on Monday.

The shrinking life-cycle of motorbikes — from three years earlier to one-and-half-years now — and robust demand from Tier 2 and Tier 3 towns, have been the main triggers, he said.

A high number of listings gives Olx an edge over its rivals such as Droom — an online market place for used automobiles, said Singh. The number of bikes listed on OLX has gone up three times over the last three years, he said.

It had more than 3.2 million listings of two-wheelers, out of which 1.56 million were sold.

Unlike in the used-car segment, where old cars outsell the new ones (for every one new car, three old cars get sold) overall volumes of used two-wheelers lag new ones.

The size of the used scooters and motorcycles market is estimated to be 12 million units per annum, compared to 16.5 million for new ones, said Singh. But with the current pace of growth over the last three years, it’s a matter of time before the pre-owned twowheelers will catch up.

“The biggest competition for us is not coming from the online space,” said Singh.

That’s so for a reason. Of the estimated 12 million used twowheelers sold every year, only a third are traded on platforms like Olx.in and Droom. “The challenge is to get people to transact online,” said Singh.

With the segment getting organised gradually but steadily, Abdul Majeed, partner at consultancy PwC, expects the market for pre-owned two-wheelers to replicate the growth seen in the sale of used cars. “One of the reasons why one has seen the segment lag is because of lack of transparency and trust in trading. Online marketplaces, to a great extent, have addressed those concerns,” he said. Over the next five years, he estimates the ratio of new to old two-wheeler sales to touch 1:3, similar to that in the used-car market.