DCBP + Adenovo
Global Auto eCommerce + Risk Management
In most developed economies, sales of second-hand cars outnumber those of new vehicles by about two to one, but the opposite is true in China. As sales of new cars decelerate considerably in the past few years, sales of used cars become a key growth driver in the future. 
This is the story of how we explored opportunities and tried to improve the used car supply chain in China.
To comply with my non-disclosure agreement, I have omitted and obfuscated confidential information in this case study. The information in this case study is my own and does not necessarily reflect the views of DCBP and Adenovo.
My Role 
I started at DCBP/Adenovo as a Senior UX & UI designer and later led the product team. I collaborated with the CEO, CTO, a graphic designer and development.
     6/2016 to 4/2017​​​​​​​

Company Entities: 
     DCBP - "德車本舖" - www.dcbp.com - is a worldwide C2C auto trading platform.
     Adenovo - "諦諾" - www.adenovo.com - is an auto financial service company that offers risk management for lenders and borrowers.

     Responsive Web App
     Mobile App

Project Overview: 
     1. Problem & Opportunity
     2. Discovery
     3. User Needs
     4. Understanding The Competition
     5. Solution & Vision
     6. How We Got There
     7. Launch & Impact
     8. Final Thoughts
     9. Related Articles
1. Problem & Opportunity
China's Car Ownership Barriers
China has the biggest passenger car market in the world. It attained that honor back in 2009 and has kept the crown since. 
But China has not been a "car country" for a very long time.
It wasn't until 1994, when the Chinese government redesigned economic policies to nurture domestic automakers and make car ownership accessible to people who half a generation ago thought themselves lucky to afford a bicycle.
Fast forward to 2016, car ownership ratio began to mature in China, and new cars no longer hold the same allure to car buyers as they used to. This change in consumer attitudes along with increasing regulatory changes, to check traffic congestion and air pollution, slowed growth in China’s vehicle market.
The Old DCBP
Before I joined, DCBP was an offline private car logistics company. Their main business was to export luxury used cars from places like Russia, Europe, Canada and the U.S. and import them for car buyers in China. 
I was tasked to explore opportunities in the rapidly growing car market in China, and help transition DCBP online.
2. Discovery
The "China Premium"
Chinese car buyers pay far much more for their exclusive rides than anyone elsewhere in the world.  
For example, in the United States, a Mercedes-Maybach S600 costs $190,275. In China the very same car goes for 2.88 million yuan, or $440,000, more than double the U.S. price. Or the Ferrari 512 Berlinetta, which costs $323,745 in the U.S., and 5.3 million yuan in China, which is $810,000, just over 2.5 times more.
The enormous difference is caused mainly by two reasons: high taxes and healthy entrepreneurship. 
A large part of the markup comes from the "China premium", where automakers charge higher prices in China because they know the eager Chinese buyers are more than willing to spend their cash on an exclusive car, especially if they can get it fast.
Consumer Distrust & Stigmas
For generations, there has been a stigma associated with buying used goods in China, where they have been synonymous with poor quality and poverty
Consumers’ lack of confidence in China’s system are due to significant incidents in the past, such as: corruption, carelessness, and lack of standard.
Variability in used-car quality can cause car buyers to spend days researching vehicles, before deciding to purchase.
For example, many of the used cars found at local dealerships are in very bad shape, and they will just get a superficial facelift with new paint to hide rust and scratches underneath.
But a bigger concern though is that a large share of the used cars have a road accident record. So to calm car buyers, the first thing many car dealers say to customers is "this car has not been in an accident" or "this one has been in an accident but is totally safe now."
Car Buyers Are Beginning to Turn Thrifty
As the automotive market matures, consumers are starting to see cars as necessities rather than as status symbols and value begin to take priority. 
Younger Chinese consumers are embracing the second-hand economy, with sales and purchases of pre-owned goods from iPads to clothes, as being fuelled by online platforms. 
New shopping habits like comparing prices and shopping online also contributed to the change in behavior. 
Used cars were a hard sell in China as owning one is associated with settling for less. But things are rapidly changing as drivers realize they can get a decent car for a reasonable price when they buy second hand.
"Most Chinese admire the American way of life, and just like Americans, they feel they want their house as well as their own car."
Inadequate Financing Hinders Affordability
Unlike older Chinese consumers who prefer to pay in full with Cash on Delivery (COD), millennials need help with financing. As they gradually become core car buyers, financing services can help them make purchases earlier than they might otherwise do if they were paying in full, like their parents. 
This is why auto financing is more acceptable among Chinese born after 1980.
Some of the existing challenges are: 
     •   Down payment requirement of more than 50%
     •   High credit requirement, some banks require house property as collateral or other high-ticket tangible assets
     •   Strict restriction on vehicle location, age, condition, mileage, assessed value and brands
     •   Slow in approval and loan lending
Lenders Find Auto Financing 'Too Risky'
Although the demand for low down payment and low interest finance products have increased, auto financing is still in early development phases due to policies, financing channels, scale, and commercialization.
Most lenders still find it difficult to control the risk of default on auto loans, because there is no reliable credit rating system for individuals comparable to the U.S. And cost to recover loans once a default happens is extremely high. 
The reliance on third party's assessment on vehicles' residual value is another risk, as there are often false assessment or overvaluation, which expose them to more risk. 
'"Trade or Sell" Dilemma 
Car owners universally dread the selling process. 
Trade-ins are easy and painless, but ehiclev values are often much lower than selling it privately. 
Selling privately can yield the best deal in some cases, but it’s also time-consuming and a hassle. 
Many sellers go through the process of a private sale, only to end up trading it in at the dealership after they realize they don't want to deal with all the potential buyers. 
It’s often a matter of trading price for convenience. That means that if they're in a hurry to sell, or they are looking for the easiest way to sell, they should expect to get less money. But if time and convenience are not overriding concerns, they can get the best price for the car.
3. User Needs
Car Buyer
     •   access to a large selection of quality car source
     •    more affordability
     •    trustworthy information and transparency on car value, history and condition
Car Seller
     •   easily advertise their cars for sale 
     •   quickly finding the right buyer
     •   to negotiate the best price at the cost of convenience
     •   trustworthy assessment and valuation of used cars
     •   to closely monitor and manage their assets
     •   cost efficient way for repossession
4. Understanding The Competition
The Used Car Fast Lane
Taking a closer look at the current used car sales, franchised dealerships account for only about 5% and fewer than 10% of dealerships have their own-brand used-car sales operations. Independent dealers account for the majority of used-car sales in China, and C2C transactions, some conducted online, account for 15%.
While more than half of the consumers aspire to upgrade to a better brand when they buy their next car, problems like price markups, poor vehicle conditions, unavailability of financing and insurance continue to be problematic, and consequently, opportunistic for us to explore. 
5. Solution & Vision
Level The Playing Field To Create Fairness
In order to drive the market to be standardized and fair, we created a Global Auto eCommerce Platform that connects car buyers in China with sellers around the world.  
By sourcing our own cars, we get to combat the lack of transparency regarding vehicle condition and price, and buyers get access to great deals found outside of China
Logistic has been the core strength of DCBP, so we are confident that by leveraging a global market we're able to remove price markups by the middlemen, and arbitrage deals that allow everyone to profit from the massive price differences.
6. How We Got There
3 Separate Products For Clarity
In order to execute and communicate the business effectively, we created 3 product segments: 
     •   Car Buyer
     •   Car Seller 
     •   Lender​​​​​​​
6-1. Car Buyer
World's Best Deals All In One Place
Chinese car buyers have a very limited access to great deals when it comes to used cars. Much like going on a treasure hunt, they often have to spend days visiting different local car lots before finding a suitable deal. 
So to help reduce their efforts, we scour the world and put all the treasures we found in one place at - DCBP.
Popular used cars, anywhere from 1 to 8 year-old, in pristine conditions are sourced from our partners located in the U.S., Canada, Russia, and Europe. 
We work with local certified mechanics to add customer confidence, and demonstrate that a digital player can take care of all their needs, end to end, just as a traditional dealer can.
360° Inspection Diagnosis + Report
To ensure absolute qualify for our customers, every car we sourced is diagnosed with a full 360° Inspection and comes with a diagnostic report showing 156 detailed items checked by certified mechanics. 
Along with high resolution photos and video that reveal physical dents, dings, scratches or any imperfections.
Personalized Financing 
To relieve the huge burden of laying out a large sum of cash, we added simplified financing process to improve customer satisfaction. 
The flexibility of personalizable financing amount, down payment, term length, monthly payment, and APR will help turn financing from an afterthought into a key part of the overall customer experience.
7-Day Return Policy
All customers get a 7-day test-drive period, where they can take the time to inspect the quality of the cars for themselves in-person, before making a decision. 
Painless returns are available in the form of a simple phone call for pickup. With demand being in our favor, cars will then get processed and go straight to the next buyer in line for the same model. 
6-2. Car Seller
Sell Your Car In 90 Seconds
We learned that privately selling a used car can be quite tedious for many individual car sellers, but for us, it is a major resource.
Instead of selling cars the traditional way, where sellers have to do things like pricing the car competitively, run classified ads, list it online, field phone calls and have strangers come to their home for test drives, which can be hectic or even traumatizing for many people, we designed a mobile app for sellers to easily post their cars and get matched with a buyer in less than 90 seconds, all done on their smartphones.
The idea is that by simplifying the strenuous selling process and cutting total time spent, we hope to not only source more cars, but to also shorten the average ownership period of our users, and gradually re-vitalize the car market. 
To alleviate the agonizing process of price negotiation. We replaced it entirely with a haggle-free pricing structure that matches the urgency of the sale. 
The faster you wish to sell, the lower the price, and vice versa.
The idea is to shorten the selling period by reducing all decisions a seller has to make down to one simple multiple choice input, showing transparent pricing that are 15% higher than any local dealership trade-ins, and gradually make negotiation an afterthought.
One of the things we learned that dreads most sellers is what happens after the sale. Buyers will sometimes have new concerns, complaints, or even remorse. This is one of the main reasons sellers choose trade-in. 
To relieve our sellers of these concerns, we decided to takeover full custody and ownership of the car once the sale is completed.
Once an offer has been accepted, a local vendor will be sent to complete diagnostics, paperwork, finalize the payment and pickup. Sellers are paid in full on the spot, and they will never have to interact with buyers, or answer indefinite emails. 
6-3. Lender
Adenovo: Accurate Credit Ratings, Reliable Risk Management
In order to combat the lack of reliable credit rating system in China, we created our own risk management system by tracking personal patterns to prevent delinquencies and defaults.
The idea is to standardize risk management so anyone with capital can become a lender, and to provide "inclusive financing" to as many borrowers as possible.
To help us reduce marketing nightmare, the financial arm of DCBP is under a separate entity called Adenovo. This separation added clarity and reduced marketing complications, not to mention risk management may be a standalone business for us, and the cost structure can be very different.
Internet Of Vehicles 
In order to accurately track borrowers' personal patterns, spot irregularities and intercept defaults with precision, we require two procedures from borrowers up front:
•   Integrate with their financial institutions - to monitor their income and spending habit
•   Equip their cars with tracking sensors - to analyze driving pattern such as: car location, driving speed, harsh braking, rapid acceleration, etc, to predict risk and help with repossession. We lovingly call these modified vehicles the I.o.V.s (Internet-of-Vehicles).​​​​​​​
7. Launch & Funding
Successful Funding Round From Alibaba
On September 12th, 2016, we had a soft launch for DCBP at TechCrunch Disrupt in San Francisco. It was a fantastic experience. We accrued a ton of interest, even though we did not get to participate in Startup Battlefield on stage. 
And on November 7th, 2016, our team pitched Adenovo at Web Summit in Altice Arena, Lisbon, Portugal. 
All the accrued interest paid off in 2017, when we raised one of the most successful Series A fundings, as a startup in Taipei, from Alibaba Entrepreneurs Fund, a subsidiary of Alibaba Group
For confidentiality reasons, funding amount have been omitted.
8. Final Thoughts
Pursuing Is Achieving
In many ways, the journey was as rewarding, if not more, as achieving a milestone or a destination. From humble beginnings, we built and proved the worthiness of our models and products. And somewhere along the way, we found validation even with odds stacked against us. This was one the most rewarding milestones of my career
There is still an entire empire waiting to be built for DCBP & Adenovo, and I'm grateful to have been a part of the beginning. 

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