Chad. All valid points. But we come at inventory sourcing from a different angle. Dealers need to know about yours, ours and others to survive and thrive:
Sellers have Three options, not Two:
Many like yourself and others believe there are only two seller options. From there, you correctly point out how time and technology have made these two options "more convenient" for the seller. But, that is about all it gets the seller - convenience. Which means Carvana, CarMax, AutoNation, Lithia and the other "Goliaths" are putting lipstick on an old tired pig and saying, "Hey Mr. Seller, we've made it easier, faster and more convenient to low ball you out of your really nice car, so we can quickly get it ready to re-sell for thousands of dollars more on our high-tech, cost-effective, no-haggle pricing retail platform."
Don't get us wrong, its good to have choices and convenience - no single option is going to work best for all sellers - we firmly believe the more options, the better. But, the real truth (we are on a mission to scream it from the mountain tops) is there is a little-known (but growing), far more effective, smarter option for many sellers – it is called automotive retail consignment. Again, may not work for every seller based on their unique situation, vehicle, etc, but for most vehicles, it is the best of all worlds - seller gets top retail dollar for their car without the hassles and dangers of selling it privately online.
David vs Goliath:
Dealer Sourcing is now the big topic and challenge for many small-medium sized used dealers thanks to the Goliaths’ focus on dominating traditional inventory sourcing for the best cars to feed the growing beast. With their deep pockets, high retail margin model and scale, they've already pretty much taken over and "bullied" the smaller dealers at the auctions. We challenge you to take a survey of small-medium dealers and ask their opinion of the auction experience the past 3-4 years. The auctions themselves are doing an amazing job with technology, vertical integration, convenience, etc., but the prices on the best cars are too high and the buyer fees are insane thanks to the big guys. Now the Goliaths have moved on to crowd-out and dominate the next inventory source – private party cars. It is obvious from the barrage of TV ads, to the year-end Carvana statistics you quoted. And now we hear that Carvana is/was partnered with giant CarGurus to get first crack at private seller Instant Offers. Of course, Carmax and Autonation will have to counterstrike. So, dealers should expect to see the pillaging of private seller sourcing get worse, and realistically we don’t think dealers can win going head-to-head with the Goliaths. What the dealers need is to carve out sourcing areas where Goliaths aren’t paying attention.
What the used car inventory sourcing world is experiencing now is no different than the shifts we saw in the general retail sector from mom-and-pop stores to Walmart and now Amazon. Anyone shopped at a “mall” lately? Buckle-up Mr. "family owned and operated used car dealership.” Survival will come from innovating, getting creative, forming new alliances and trying new things. One of the growing trends is dealer inventory sourcing through non-traditional channels like, Consignment. We encourage you to visit www.Carlotz.com and learn about their story – In 2011, three Harvard business grads launched, “The Consignment Store for Cars” and they now own & operate 8 dealership locations (100% inventory sourced by consignment). With VC funding, they are aggressively expanding with more locations – ironically, some are calling them the Carmax of Consignment. They and the 2,413 other consignment dealers in 48 states that we have catalogued and listed at Retail My Ride are proving that consignment is a viable, profitable model and a deep, untapped inventory source (Approximately 14 million private party cars sold each year) Two of our favorite old sayings still holds true: "He who has the cars, wins the game," and "You don’t have to own it to sell it and make money.”
To come full circle with this discussion: The unique thing about consignment and what makes it a truly smarter option – is what we refer to as, the “Triple-Win” pricing strategy which is based on the underlying belief that all three parties (Seller, Buyer and Dealer) should emerge from the sale of each vehicle as winners – Seller gets more than traditional trade-in/instant cash offer, the Buyer gets a good deal from a motivated seller and the dealer earns good margins, less cost, and creates 2 happy, loyal customers.
