Starting out - Eye on the web pays off for car auctions
Nothing Amin Saleem learnt in his varied and technology-focused career was wasted when it came to setting up his own business. As early as 1998, when he was working for global IT consultant CapGemini, he had the idea of putting together an online marketplace.
His first attempt clashed with the bursting of the dotcom bubble and never made it off the ground but it taught him a great deal – about what to do and what not to do – which has served him well in his subsequent venture.
But not before he had learnt a lot more about running an internet business by working for all sorts of companies from an online advertising agency to an Indian outsourcing firm.
Every move was designed to gain an understanding of how an online business worked and, when Saleem settled on cars as the commodity he would centre his business around, he set about finding out more about that business as well. "For three years, when exchange rates were in our favour, I ran a car import business from Europe part-time and that was very successful," he says.
His technology skills meant that he was able to build most of his website himself and he knew just how to get the heavy stuff that was beyond his own reach done for the least possible outlay: he outsourced it to India.
So, with start-up costs of just £2,000, AutoeBid.com was launched in 2003. Saleem estimates that the work he put in combined with the outsourced element might normally have cost more than £25,000. "It was a soft launch to start with, with just a few key dealers on board, and in those days the website was more like an online brochure," he explains.
Introducing clients and dealers to the concept was the main challenge. AutoeBid is a reverse auction. Instead of a traditional auction, where a buyer offers goods for sale and customers outbid each other, here buyers state what they want to buy and it is the sellers who compete against each other to win the business, in the process driving down the price.
Customers must agree to buy a specific car at a reserve price (which may well be driven far lower in the auction), and are charged a commission depending on the saving. Saleem says buyers can expect to save, on average, £3,300.
As revenues began rolling in, the marketing expenditure grew and by 2006 the company was spending around £30,000 a year on pay-per-click advertising. But Saleem is doubtful that today such a strategy could be relied upon to drive traffic to a site. "Pay-per-click has really gone mad now and people get carried away with their expenditure because they are all competing against each other."
Now, with much greater confidence among the site’s users – the great majority now come from personal recommendation – around 70pc of transactions are completed without any personal contact with anyone from AutoeBid. Last year, the business turned over £170,000, which is derived exclusively from the commission it charges.
Over the past 18 months, advertising has been put on hold, as Saleem has spent his time – as well as a £150,000 loan from the DTI -focusing on how to move the business to the next stage, and a rebranding and relaunch of the site are imminent. "We see ourselves as cutting edge and aim to change the way that people buy cars," he says.
Do: Research, research, research. Doing background research does not mean looking up a few key words on Google. Contact trade bodies and publications and ask those experienced trade professionals their opinion and who they would benchmark you to. A fantastic resource is the “webarchive”, a copy of every website that has ever existed.
Don’t: Get the bank or professional investors involved if you like to keep in control. Before you know it you will be working for the bank and not yourself.