Startup Of The Week: Ovoko
Startup that created a digital marketplace, which became a digital journey for used car parts so that they can be quickly and easily united with customers or be recycled. The startup that is oriented into a green economy. Meet our Startup Of The Week – Ovoko and their story, which inspires us to see things differently.
Ovoko or RRR.lt? Question which I would like to ask myself because we do not really talk about it. What is the difference between RRR and Ovoko?
First of all “Ovoko” is the name of the company. Even in our office, you are more likely to see people wearing an “Ovoko” t-shirt rather than an “RRR.lt” t-shirt.
Moreover “Ovoko” is a brand with which we are entering all foreign markets. Whereas “RRR.lt” is a local trademark that belongs to UAB “Ovoko” and it is intended to serve the Lithuanian market.
Tell us about your startup more, how does it work?
Used car parts business as such was operating while using the old methods for a very long time and it was not shifting. To find the spare part one had to phone the nearby scrapyard and ask if they have it. In the meantime most of the scrapyards were disorganized – did not have an inventory and business management system, it was hard to find needed spare parts quickly – most of the time they would not even know if they still have or where it is located. Operating in this old-school way was not convenient or efficient neither for the customer nor for the scrapyard.
One of UAB “Ovoko” | RRR.lt founders himself for quite a long time used to work in the used car parts business. Almost 5 years ago he felt the need and together with a group of like-minded people started working on an inventory and business management system which could help to operate more efficiently.
After more and more scrapyards showed their interest and what started as an individual project grew into a new business. As of today, 721 scrapyards have joined already and the number is increasing every week.
How does it work?
Scrapyards are disassembling cars, carefully selecting parts that are still in good condition, photographing them, and then entering their parameters into the system. Then the barcode is assigned to every car part which enables to locate needed car parts quickly. All the photographs and other data are uploaded to the e-shop and dedicated teams are constantly working on improving the e-shop’s technical features, advertisement, and other aspects. When the customer buys a used car part all the scrapyard has to do is to wrap it – shipping, customer support even returns are handled by “Ovoko”.
When talking about our product there are two main parts of the business: 1) inventory and business management system for the scrapyards 2) used car parts e-shop. Each of these elements has different target groups and separate teams are working on it.
What are your competitive advantages that work? What are your competitors?
We started systematically improve processes in the area where old methods used to be in place. We become partners with the scrapyards which join us – we create new tools and train them. Eventually, it becomes an inseparable part of their own business. A close relationship with our partners is what puts us apart from others.
One of our advantages is rapid product improvement. Would like to share one example when talking about improvement. We have delegated the Research and Development team which is analyzing and systematizing a huge amount of data to create a machine that would recognize car parts and that would allow even untrained scrapyard staff to quickly identify the spare part (it’s identification code, manufacturer, etc) and then upload it to the system.
What were the reasons behind coming up with this idea and launching this product?
The roots of the idea were a personal need. As previously mentioned one of the founders faced multiple problems while working in the used car parts business and started to streamline the process. Afterward, he shared his model with other scrapyards that believed in it, and then they became partners.
Over the time additional aspect has formed next to the main idea. Just last year alone more than 750 tones of used car parts have been sold and shipped to countries all around the world with the help of our e-shop. All these parts appeared in the second-hand market and are being successfully re-used. Where before quite a big amount of parts would end up in the dump. We should think about sustainability and impact on the planet on our own personal level however we also understand that as a team we can make a much bigger impact and this is what we are striving for right now.
When exactly did you launch, what were the main challenges before launching?
The first car part was digitalized in February 2016 but the company has been registered only at the end of that year. The start was long and slow. Basically, we had to re-think from scratch how should use car parts business model should operate. There is no other way but by trying and making mistakes when talking about the process of building up a company.
We have encountered trust issues as well. One should have a lot of credibilities when asking a scrapyard owner to entirely change his or her business model and implement something completely new. We had to work really hard to gain their trust.
We have two products. One of which is an inventory and business management system where the target group is people who operate in the used car parts business and another one is an online store where the target group is literally anyone who is looking to buy used car parts. Currently, more than 60% of orders placed via the system are shipped abroad. The company has a wide geographical reach – from Australia to the US, from the smallest countries in Africa to our neighboring Latvia.
What are the biggest challenges while working on this product and how are you overcoming it?
One of our colleagues who used to work for Amazon once had a very good quotation which sounded something like: we have to grow until everything falls to pieces, then we fix it and wait until everything falls into pieces again because of even bigger growth and that is an ongoing process.
We are growing at an extremely fast pace and constantly encountering problems. Anything is possible if you have a good team.
Tell us more about funding. How did you get it? Do you seek extra funding?
Yes, we have received an investment from dedicated Baltic VC “Practica Capital” with the participation of private investors. 1 Million Euros investment will further increase the company’s efforts to expand into foreign markets. Our business model has been tested and it has proofed to be working successfully.
When talking about what our next steps are or if we are planning to try to get more investment we try to be discrete at the moment. Nonetheless, our goal is to expand and that explains a lot.
Please introduce your team!
Now we have more than 40 people on our team. The demand for developers, data analytics, and e-commerce specialists is not slowing down hence our office might be too small by the end of the year.
Strong startup culture isn’t something that can be created overnight but it can be worked towards with some conscious moves. So what are your moves towards this?
When talking about a startup culture we are not trying to be better, cooler, or more perfect than anyone else. If you make a list of TOP 5 Lithuanian startups you could easily add “Ovoko” to the same list. If you visit our office you would get a similar vibe, similar working environment and we offer similar perks to our employees like any other startup. If you like startup culture there are no doubts that you would like “Ovoko” as well.
Bonus question: what’s next? Tell us about your future plans.
The near future plan is to conquer the whole of Europe.
Ovoko, thanks for sharing your story with us, it was nice to hear many great details about your startup.