Beepi and Vroom and Carvana - will they make a DENT?

[Tallcool1]

Adding to Ed's Point...

Vroom, which has raised $73 million in total equity funding since its founding in 2013 by former AutoNation execs Marshall Chesrown and Kevin Westfall, expects to generate $300 million in revenue this year.

Last year, the firm generated $100 million in revenue, and it’s on pace to increase that to $300 million this year. In May alone, the company reported $20 million in sales. And with its new round of funding — which brings its total equity funding since its founding to $73 million — the company picked up investors that have backed sites like Snapchat and Kayak.

Next month, Vroom expects to launch a complete online financing process, one that will allow site visitors to secure financing and even select from the firm’s four F&I protections. F&I and Showroom spoke with Scott Chesrown about the company’s business model and why he believes consumers will buy F&I products online.

http://www.fi-magazine.com/channel/internet-department/article/story/2015/10/vroom-service.aspx

Chris

I have a couple questions for you specifically, because you actually work in a car dealership (and I also kind of enjoy reading your posts).

When I get onto the Beepi website, this is what I see. I see a site that is very easy to navigate, and for lack of a better word it is cool. The home page is pretty simple, you either want to sell a car or you want to buy a car. Sure there is a little other stuff, but the message is clear...buy or sell. So, I want to buy...there are a bunch of cars (SRP) and some filtering options. The photos are really good, considering that they are taken where the car is and not in a sterile photo booth or staging area. There are a lot of pictures as well.

I don't know if Beepi will fly or not, and at this point who cares. Even if they are losing their ass, they are selling 300 Million worth of cars that none of us are getting to sell!

So, what is it about this business model that you believe appeals to the customers that use their service? It isn't the price because these cars are FAR from being priced at an aggressive level.

What is it that we (the other car dealers) can do with the information in this thread? What are you going to do with it in your stores?

Why have you not taken your websites more in the design direction that these sites are going?...or is it a Manufacturer thing that won't permit it?

FYI, this is a legitimate post, I am not calling you out or being a smartass. I am truly interested.

 

[Chris Leslie]

Thanks Clint, I think this is a really interesting topic and love the questions.

I'll pull in a couple of the things that their site is doing really well. .

CAR SELLING IN
THE 21ST CENTURY

• Get more than trade-in offers, guaranteed!
• Sell in 30 days, or we'll buy it from you.
• We even handle all DMV paperwork.

What this is saying is if I was selling them my car. I would get more for my car by selling here. If I question if I am getting the most for it they are stating they will beat any trade-in offer. And, if it doesn't sell I am still going to get paid no matter what and paid in real american dollars. I don't have to do anything at all. Thats powerful and allows me to just get on with my day.

CAR BUYING IN
THE 21ST CENTURY

• 10-day money back guarantee.
• 185-point Beepi certified inspection.
• Delivered straight to your driveway.

Besides the inspection I don't know of anyone offering a 10-day money back guarantee. The ability to try it before you commit is massive. We live in a world where we dont event try on clothes anymore. We just send them back if they don't fit. We as a people are afraid of commitment. Especially when it comes to a large purchase. I bet the amount of people who take advantage of that 10 day thing is so few it doesn't matter. Lastly they'll deliver it to me.

So basically I don't have to leave my house, they will bring me a car and if I don't like it I can return it within 10 days.


Here's how I see it.

I am a dude that loves cars but the thought of being an "UP" on somebodies lot is not fun. It's hard to love cars and be a window shopper. If thats how I feel I can't imagine how the general public feels. Which is why when someone comes along and says "Hey, we'll do business how you want to do business." it's a lot less stressful.

I am not convinced that it's a design thing as much as it's an offering thing.

- 10 day money back guarantees
- Delivered to your driveway
- Guaranteed Money with zero pressure to buy

Its Beepi's value propositions that separates them from us.

 

[WillMcG32]

Interesting article in the WSJ that includes some info on Beepi...

 

[Jeff Kershner]

"Indeed, companies including local-services website Thumbtack Inc. and used-car seller Beepi Inc. and e-commerce startup Jet.com Inc. have all had to scale back their ambitious valuation expectations lately.

http://www.wsj.com/articles/BL-DGB-43823

 

[joe.pistell]

For example, if Amazon were automotive, it wouldn't be on the list because it is so far in the red since inception, God knows when they will see the light of day. ... You can be disruptive, but if you don't make operating profit your days are numbered.

Your logic is all over the map. You deduce that If a biz is not making a profit, you're a fool to believe in it.
Then you say that you can't live without AMZN, but because it's never made any profits, it's gonna die soon.

Here's a dozen years of AMZN's quarterly EPS. Your kitty litter is safe.



Why do I waste my time with this dino?

 

[Cullen C]

Thanks Clint, I think this is a really interesting topic and love the questions.

I'll pull in a couple of the things that their site is doing really well. .

CAR SELLING IN
THE 21ST CENTURY

• Get more than trade-in offers, guaranteed!
• Sell in 30 days, or we'll buy it from you.
• We even handle all DMV paperwork.

What this is saying is if I was selling them my car. I would get more for my car by selling here. If I question if I am getting the most for it they are stating they will beat any trade-in offer. And, if it doesn't sell I am still going to get paid no matter what and paid in real american dollars. I don't have to do anything at all. Thats powerful and allows me to just get on with my day.

CAR BUYING IN
THE 21ST CENTURY

• 10-day money back guarantee.
• 185-point Beepi certified inspection.
• Delivered straight to your driveway.

Besides the inspection I don't know of anyone offering a 10-day money back guarantee. The ability to try it before you commit is massive. We live in a world where we dont event try on clothes anymore. We just send them back if they don't fit. We as a people are afraid of commitment. Especially when it comes to a large purchase. I bet the amount of people who take advantage of that 10 day thing is so few it doesn't matter. Lastly they'll deliver it to me.

So basically I don't have to leave my house, they will bring me a car and if I don't like it I can return it within 10 days.


Here's how I see it.

I am a dude that loves cars but the thought of being an "UP" on somebodies lot is not fun. It's hard to love cars and be a window shopper. If thats how I feel I can't imagine how the general public feels. Which is why when someone comes along and says "Hey, we'll do business how you want to do business." it's a lot less stressful.

I am not convinced that it's a design thing as much as it's an offering thing.

- 10 day money back guarantees
- Delivered to your driveway
- Guaranteed Money with zero pressure to buy

Its Beepi's value propositions that separates them from us.

Thanks Clint, I think this is a really interesting topic and love the questions.

I'll pull in a couple of the things that their site is doing really well. .

CAR SELLING IN
THE 21ST CENTURY

• Get more than trade-in offers, guaranteed!
• Sell in 30 days, or we'll buy it from you.
• We even handle all DMV paperwork.

What this is saying is if I was selling them my car. I would get more for my car by selling here. If I question if I am getting the most for it they are stating they will beat any trade-in offer. And, if it doesn't sell I am still going to get paid no matter what and paid in real american dollars. I don't have to do anything at all. Thats powerful and allows me to just get on with my day.

CAR BUYING IN
THE 21ST CENTURY

• 10-day money back guarantee.
• 185-point Beepi certified inspection.
• Delivered straight to your driveway.

Besides the inspection I don't know of anyone offering a 10-day money back guarantee. The ability to try it before you commit is massive. We live in a world where we dont event try on clothes anymore. We just send them back if they don't fit. We as a people are afraid of commitment. Especially when it comes to a large purchase. I bet the amount of people who take advantage of that 10 day thing is so few it doesn't matter. Lastly they'll deliver it to me.

So basically I don't have to leave my house, they will bring me a car and if I don't like it I can return it within 10 days.


Here's how I see it.

I am a dude that loves cars but the thought of being an "UP" on somebodies lot is not fun. It's hard to love cars and be a window shopper. If thats how I feel I can't imagine how the general public feels. Which is why when someone comes along and says "Hey, we'll do business how you want to do business." it's a lot less stressful.

I am not convinced that it's a design thing as much as it's an offering thing.

- 10 day money back guarantees
- Delivered to your driveway
- Guaranteed Money with zero pressure to buy

Its Beepi's value propositions that separates them from us.

So, total disclosure. I work at Carvana now and prior to joining I consulted with them from the time they launched in Atlanta. Second admission, I am unbelievably competitive.

Understanding those two points should mean that whatever comes next can dismissed as biased and unreliable.

I think the Beepi model is a cool idea. I think Flexdrive is cool. I think Car2Go is cool. I think that Amazon selling i3s in Japan is cool. Allowing customers to connect in new ways with products is a fun thing to witness. Stretching the norms of customer behavior through technology and consumer offering is pretty amazing.

I think there may be a market for all of these concepts. I guess the better question is to what scale.

Looking at Beepi I think there are a few limiting factors at play. I am also positive that the people that run the company have considered the points I am going to make and have determined that they are not as significant as I think they are.

First when looking at the Beepi launch itself there are a few things that give me pause. If I were picking a pilot market I would have picked SF as well. But it may have provided a slightly unfair representation of customer appetite.
-Obviously you will get early adopters of this type of platform in SF.
-There is not a CarMax to compete with their experience offering or to compete with vehicle acquisition.
-There isn't even a very progressive(do not take offense if you work at or know a dealer in SF, I am sure they are very nice people)dealership in terms of customer offering when specifically looking at sales process.
- SF also provides a unique market dynamic of the 3rd longest commute(distance and time) in the US, so a heavy reliance on a personal vehicle with a top 5 disposable income(after paying for housing).

Second, some of the operational challenges.
-From what I gather only 1 of 4 vehicles pass the Beepi certification. So, in 3 of 4 trips there is no chance to grow financially as a company. Seems like a difficult model to scale in terms of resource allocation.
-The reason that 3 of 4 do not get passed to the peer to peer market place is because Beepi doesn't recondition vehicles. This leads to what I think will be some significant customer concerns, I noticed this tonight on Twitter, this customer bought a car and the check engine light popped on shortly after delivery.



Beepi is expanding quickly and some of these items will be proven one way or another fairly soon as they launch into very diverse markets.

So biased or not these are my thoughts. I will also offer that I know everyone has holes in their game, I am sure that folks on this forum can look at the Carvana model and chip away at perceived deficiencies. I welcome the comments.

 

[Chris Leslie]

Ive been wondering how man cars they accept vs. reject. You're right it's hard to scale if you're turning business away like that.

It's great to see someone from carvana on here. I've been really interested in what you guys are doing.

 

[Cullen C]

Ive been wondering how man cars they accept vs. reject. You're right it's hard to scale if you're turning business away like that.

It's great to see someone from carvana on here. I've been really interested in what you guys are doing.

Thanks Chris. They could always decide to get more invested in the wholesale business as a way to make those other trips fruitful. They would need to add infrastructure to support remarketing as well as think through the implications of carrying a lot more inventory (not particularly sexy to VCs).

 

[Tallcool1]

I think there may be a market for all of these concepts. I guess the better question is to what scale.

First when looking at the Beepi launch itself there are a few things that give me pause. If I were picking a pilot market I would have picked SF as well. But it may have provided a slightly unfair representation of customer appetite.
-Obviously you will get early adopters of this type of platform in SF.
-There is not a CarMax to compete with their experience offering or to compete with vehicle acquisition.
-There isn't even a very progressive(do not take offense if you work at or know a dealer in SF, I am sure they are very nice people)dealership in terms of customer offering when specifically looking at sales process.
- SF also provides a unique market dynamic of the 3rd longest commute(distance and time) in the US, so a heavy reliance on a personal vehicle with a top 5 disposable income(after paying for housing).

As a car dealer, my first instinct is to absolutely resist the temptation to tell myself things like "this won't work in my market". That type of thinking is a direct route to failure, and before I know it the industry has grown right past me. I try to ask myself HOW can I make this work in my market.

With that said, I have looked at the Carvana website with more jealousy than anyone could even imagine. While I don't know if I would take the photos in a booth like Carvana has, I am in awe of the way the website works, the simplicity, the hovering and zooming on the photos, hands down my favorite. I just love the feel of the site. The business model......there are a LOT of people in Atlanta. Huge market. If 1% of the in market shoppers will buy a car within the parameters of the business model, it is sustainable.

@Cullen C , your reference to the SF market being the type that would adopt the Beepi model......I believe you have done your homework and understand why they may be gaining traction there.

Your notes about Beepi not reconditioning vehicles are good points. I currently sell a few consignment vehicles, and this is a legitimate issue. When the check engine light comes on after I have sold that consignment, I am stuck. I fix it, period. Sure it was a consignment, but the person that purchased that consignment is now MY customer and this check engine light is causing heartburn to MY reputation and MY customer's ownership experience. We just make it right and go on.

So, I am left with the challenge of trying to pick out bits and pieces of these websites that I believe my customers would like, or use......things that I believe would give me a competitive edge.

I have not yet figured out how to turn the business model into something sustainable....YET.

As @Chris Leslie said, it is good to hear from someone at Carvana.

 

[Cullen C]

As a car dealer, my first instinct is to absolutely resist the temptation to tell myself things like "this won't work in my market". That type of thinking is a direct route to failure, and before I know it the industry has grown right past me. I try to ask myself HOW can I make this work in my market.

With that said, I have looked at the Carvana website with more jealousy than anyone could even imagine. While I don't know if I would take the photos in a booth like Carvana has, I am in awe of the way the website works, the simplicity, the hovering and zooming on the photos, hands down my favorite. I just love the feel of the site. The business model......there are a LOT of people in Atlanta. Huge market. If 1% of the in market shoppers will buy a car within the parameters of the business model, it is sustainable.

@Cullen C , your reference to the SF market being the type that would adopt the Beepi model......I believe you have done your homework and understand why they may be gaining traction there.

Your notes about Beepi not reconditioning vehicles are good points. I currently sell a few consignment vehicles, and this is a legitimate issue. When the check engine light comes on after I have sold that consignment, I am stuck. I fix it, period. Sure it was a consignment, but the person that purchased that consignment is now MY customer and this check engine light is causing heartburn to MY reputation and MY customer's ownership experience. We just make it right and go on.

So, I am left with the challenge of trying to pick out bits and pieces of these websites that I believe my customers would like, or use......things that I believe would give me a competitive edge.

I have not yet figured out how to turn the business model into something sustainable....YET.

As @Chris Leslie said, it is good to hear from someone at Carvana.

@Tallcool1 thanks for the kind words about our site. Not quite 1% yet, but close....