Only a few things feel worse than buying a product and later realise that you paid far more than it was actually worth. One of them is finding out that you sold your product for much less than its value. These problems are related and occur regularly in the business world, especially for those who deal in second-hand products. Etop Ikpe always knew this problem existed. As a matter of fact, it was his desire to proffer a solution that made him co-found Cars45, an auto-trading platform.
Another problem in the Nigerian automobile industry which Etop wanted to solve was that of time. Car dealers often have the problem of waiting for days, sometimes even weeks or months, before they can get a buyer. Etop wanted to fast-track this time-frame. And that is one of the core aspects of Cars45’s business model.
On this week’s Nairametrics founders’ profile, we examine how the Cars45 model works by focusing on the man that has made it all possible. Get to know Etop Ikpe, the Co-founder and Chief Executive Officer of Cars45.
His school days and early career
Etop had an educational background that gave him an edge in mathematics. Therefore, he dreamed of becoming an engineer. To him, this was the best way to put his mathematical skills into good use. However, fate had other plans for him as he ended up studying Actuarial Science at the University of Lagos. He would later describe this course as “a combination of mathematics and business”. He graduated in 2004.
He took his first shot at entrepreneurship as a student, when he co-founded clickmobile; an IT solution for companies to build business apps based on htmls. ClickMobile was intended to aid field users to access critical information, view their tasks, shifts, report their attendance and access customer information among others. The idea occurred to him at the time he was working as the manager of a cinema in Benin city. His lecture schedules usually left his Fridays free, so he spent his weekends in Benin working. As a manager of the cinema, Etop reasoned that there had to be a way of getting the organization to function seamlessly.
“For me, it has always been about using technology to solve problems” he later said.
3stitches – a business of love
This is another business by Etop which he would always remember fondly because it was instrumental to him meeting his wife. As a cloth dealer, Etop’s then-to-be-wife always had a challenge – debtors. The pileup of debtors made it very difficult for her to effectively run her business. So together with Etop, they came up with 3Stitches, an online platform that would allow people shop for clothes and pay for them almost immediately. However, even though this was a cheaper option instead of getting a physical store, Etop would later recall that it was difficult to even get a dispatch rider in the initial months.
“I spoke with about 50 people before one man agreed to work with us. Nobody understood what we wanted to do. So, starting out was tough.”
Over the next two years, the duo succeeded in expanding gradually without losing focus of their main goal of providing customers with quality products at affordable prices. By the third year, there were more entrants into the e-commerce industry and competition had become quite tough. So, the couple decided to sell out.
Etop is one businessman that likes to consider deals based on how strategic they appear in relation to his goals, as well as the market realities. Explaining his decision to sell 3stitches, he said:
“For me, selling 3Stitches wasn’t about the money even though I made a good deal from it. I knew that the landscape was changing and people with more money were coming into the market.
“Life is a learning curve. I saw that the online store business was becoming highly competitive and I wanted to learn too. Serious money was being invested in it and I was running a small business; so, I decided to do what I believed was right.”
While running 3Stitches, this serial entrepreneur started the Tinker and Bell Media Limited, and independently produced several programmes. One of these programmes is “We Run the Game”, a syndicated sports show that was broadcast across 12 terrestrial broadcast networks.
Following the divestment from 3Stitches, he moved on to work for Dealdey.com as the Vice President of Operations. In less than two years, he had become co-MD at Dealdey. The online platform offered juicy deals at discounted prices.
When Dealdey was later acquired by Konga, the new owners saw the need to retain Etop Ikpe, seeing as he was a critical staff. Consequently, the made him the Director of Marketplace Operations. But he wasn’t going to stay at Konga for the rest of his career. The man had plans of his own.
After eight months in Konga, Etop felt an itch to leave. He had always thought of technology for solving critical life problems and at this point in his life, he had spotted another which he needed to address. His personal experiences while trying to sell or buy a car had exposed him to two of the biggest problems of car dealers. Not only was it difficult to sell a car at a good price, the car sometimes developed more problems just sitting in the garage and waiting for a buyer. “Time na money” is a song we all grew up singing, but no one understands the importance of time like a businessman.
Etop realised that there was a need to build a platform that would connect car buyers and sellers in the shortest possible time, as well as enable them to conclude a satisfactory deal. This is how Cars45 came to the rescue, with the mission to sell every vehicle within 45 minutes after inspection. Etop Ikpe came together with co-founders, Iyamu Mohammed, Sujay Tyle, and Peter Lindholm, and Cars45 was established in 2016.
“The number 45 first came because we wanted something catchy, something that would be easy to remember. But then we also intend to sell the car within 45 minutes, from the point inspection is done” he explained.
Navigating the business terrain
The car dealership business in Nigeria had a problem of integrity and trust. Prospective buyers always had some sour experience which made them really wary and skeptical about seller’s claims.
Resolving this required an independent but reliable expert to serve as a middle-man. The cars45 business model solved this problem with its 200-point inspection unit where the vehicle is assessed and valued before offering a deal to the seller. This assessment gives the condition of all parts of the vehicle, noting what parts are faulty and what it would likely cost to fix it. All of these affect the final selling value placed on the car.
READ MORE: Cars45 sets up Academy for Car Dealers
“Anyone coming to do business with us is rest-assured about our transparency on the condition of the vehicle,” Etop later told CNBC Africa.
At the moment, the company has over 60 retail inspection centres across Lagos, PortHarcourt, Abuja, Ibadan, Kano, and Benin, and some other 200 locations in cities across the country. The adoption of online auctions has helped to digitize the process so that all transactions could be concluded online.
Dealing with the initial hiccups
Verifying the source of the vehicles was one of the initial challenges Cars45 had to deal with, as they did not want to unwittingly deal in stolen vehicles. This would have come with grave consequences, especially since the company was just trying to gain trust in an industry that was bereft of it.
“The verification of cars wasn’t easy at the inception and it was very fundamental to what we were doing. We have a lot of fragmented databases in Nigeria and it was rigorous trying to get relevant agencies to take us seriously” Etop explained.
Differentiating serious sellers from people who wanted to test the waters was also another challenge. Convincing sellers to bring their cars to the inspection centre was also a challenge at first, and to keep business going, the company had to go to their houses to conduct inspections.
It was a rough first year, as Etop recalled, and the company was unable to secure an inspection location within the first five months of its establishment. Property owners were skeptical about allowing car dealers to use their property for such business, given the fraudulent nature of the industry. Rough as thing became, Etop recalled that giving up was never an option.
“Our goal was basically transparency and trust. The market was a lucrative one, but we needed to gain trust, so we set up a customer-focused strategy”.
Each service in this strategy, when implemented naturally raked in more income for the company.
When the company started the “refer 5 used cars to us, and get N100,000”, sales rocketed in no time, directly translating to increased revenue for the company and more satisfaction for the referrers.
Some milestones actualised
Within the first year of operation, the business recorded a high success rate, earning millions of dollars in profit. Also, Cars45 raised $5 million Series A round in funding from Frontier Cars Group within one year of its establishment. The capital raised was channeled into scaling the business in Nigeria, improving the online platform, and building other revenue sources within the used-cars market, including the used-vehicle space.
Cars45 also effected its international expansion plans in 2019, widening its operations to include Ghana and Kenya, after the Frontiers Car Group raised $400 million in a Series D funding round.
Etop Ikpe insists that the easiest path to success is focusing on the customers. After its commencement of operation, Cars45 did not just focus on making profit but on building customer trust through transparency. This is because Etop understood that business could not thrive where customers do not trust the dealer.
“If you are too desperate to make money and take your market share, you will end up doing things that will make it difficult for you to ever earn money. Focus on amazing service delivery and be as transparent as possible” he advises.
Being very strict on budget management is also another factor he considered key to the success of Cars45, especially since the profits did not start rolling in immediately.
Etop hails from Akwa Ibom State and is the third of four children. He is married with a child, and leisure time for him is spent with family, reading biographies, or watching documentaries.