BREAKING news! Carvana & Vroom is bleeding cash. Is Ecommerce in auto DOA?

[JamieS]

Clients care about buying a car with transparency and freedom. With real support and the ability to consider their decision before they make it.

Technology doesn't solve the problem.

Amen!

 

[Matt Lasher]

Nobody cares about buying a car from a vending machine or buying a car online.

Clients care about buying a car with transparency and freedom. With real support and the ability to consider their decision before they make it.

Technology doesn't solve the problem.

#truth

The parallels I’ve been using lately are Panera vs McDonalds. Both taking a multi-prong technology approach to connecting digital dots to instore dots (app, in store kiosks, online ordering, curbside) Panera adding delivery as well.

One - Panera - is leveraging tech to successfully improve a pain point in their operation (long slow lines inside store). The other - mcd’s - in my opinion is using shiny widgets to keep up with Jones’s (they basically already solved for speed with process (assembly and drivethru) so nobody cares about their ‘vending machine’ so to speak...

so each business has different problems to what appears to be same consumer need (hungry and impatient). But watch a 70 y/o fumble in the kiosk at mcds to see if this hi-tech plan is working for them...

People and process over tech anyday imho.

 

[Carluminati]

But the owners have $1 billion in their own Banks. I think there's still plenty of gimmicky ideas like this that'll come up people will make a fortune and will go away. I hope I'm one of the lucky f****** that makes one of those up.

 

[Alex Snyder]

One - Panera - is leveraging tech to successfully improve a pain point in their operation (long slow lines inside store). The other - mcd’s - in my opinion is using shiny widgets to keep up with Jones’s (they basically already solved for speed with process (assembly and drivethru) so nobody cares about their ‘vending machine’ so to speak...

There is no doubt 90% of people will always need a psychological pat on the butt when it comes to buying a car. There has always been a small 1% that will drive to another state or buy a sight-unseen car from eBay. There is probably a group of 10% that will try to buy sight-unseen and I think Carvana is tapping into it. Judging by the reviews they're probably not going to do that again.

Now that we've established people buy from people, in this thread about a company who doesn't seem to get that, can we turn your examples into an automotive simile @Matt Lasher?

There are two pain points we have not solved for on the showroom floor:

1. The negotiation process. Negotiating is fine and fun. The process of the sales agent walking away to talk to some mysterious figure in a back office erodes trust.
2. The wait for contracting. With the trust crushed, by the negotiation process, it is time to reinforce just how much one does not like a car salesman by pitting us together in an awkward 30 minutes to 4 hours of small talk.

After 100 years of this process I have a hard time believing a dealer is going to fix it. And I'm 100% positive the Digital Retailing nonsense is not going to appeal to most customers. Hell, those things even forgot a dealer needs to be involved

All the "fixes" are too extreme. We're all saying that people need to be involved with people, so how can we fix point #2. I think that's the critical element. If you fix #2 you fix #1 too. But if you fix #1 then #2 isn't an issue.... oh no, I've gone cross-eyed.

 

[JamieS]

All the "fixes" are too extreme. We're all saying that people need to be involved with people,

That's it. For us we're a one price store, no negotiating. Praise Odin, I am finally starting to get the point across that we don't necessarily need people that have been in the business before. That know how to close (at least in the traditional sense), that can four-square, etc. If there's no negotiating, then it's simply knowing the process (training), and providing sound customer service (training plus hiring for personality). See attached for Carvana's Management Objectives from the letter to shareholders. This is where any dealership can play, if they choose to.

 

[Cullen C]

Replying to @Stauning 's quotes here... "Carvana, to be clear, is not even CarMax. Carvana must - for the rest of their existence - spend heavily to attract customers and vehicles. Without the physical locations that CarMax enjoys on "auto row," Carvana has to keep reminding car buyers that they're here and ready to help.

Traditional new car dealers also have advantages that Carvana cannot overcome IMO: Their database of customers; their service business; their access to late-model trades (when selling a new car); and their access to closed auctions."

CarMax recently opened it's 192nd location, which allowed them to serve around 70% of the population of the country, Carvana after this years expansion will be able to serve around 80%. Physical locations, while necessary to execute a balanced inventory acquisition strategy are not essential to "remind car buyers they're here". If you haven't noticed CarMax and basically anyone trying to sell anything use a variety of messaging, building facilities are typically solely done as a part of a marketing strategy. Even Carvana, with as much buzz as they have received with the vending machine concept has started to enter smaller markets with their curbside model. Physical locations are about providing efficient fulfillment and a place a customer can sell their car to you.

As far as the the other points you mention - Database of customers - CarMax, just this last year, after 25 years in business announced the release of a full blown, internally built CRM. Carvana, I assure you is already building their own and they are already doing quite well with repeat customers.

Service Business - Unarguable strength for dealers here versus Carvana and even CarMax for the time being but this has been an eroding area of revenue for almost all dealers over the last decade. Independents have been stealing service business from dealers for some time. The Carvana revenue model will be more similar to CarMax than any franchise dealer.

Access to Inventory- While dealers have certain upstream advantages for lease returns they will never be able to absorb the onslaught of inventory coming back into the market. They may get first choice but every OEM is creating private remarketing solutions to serve large independent buyers. Closed sales offer slight benefits but again the amount of inventory available at closed sales is never fully absorbed by franchise stores. They certainly can access and purchase the best available 1-2 year old inventory but that advantage is marginal.

 

[joe.pistell]

Clients care about buying a car with transparency and freedom.

People and process over tech anyday imho.

Amen! In our space, THE PROCESS IS KING, TECH IS IT'S SERVANT.

 

[joe.pistell]

THE PROCESS IS KING, TECH IS IT'S SERVANT.
This is why...

• Fail: Digital Retailing... car shoppers can't use a shopping cart when they have sooo many unanswered questions.
• Fail: Analytics Dashboards and Attribution models... dealers can't see anything relevant that's actionable
• Win: vAuto Dale tied vAuto to Velocity (product tied to process)

Existing processes or people cause obstructions to consumption. Innovation that truly disrupts, removes this blockage. This is why soooo many incredibly smart technology ppl fail to create disruptive products in our space. Amazing vendors, from day 1, have Big, Hairy Audacious Goals (BHAGs), but, if they've undervalued the importance of deeply knowing their customer(s) workflow they'll build a product that brings little value to its users.


p.s. If I was a CEO of a Big, Hairy Audacious Vendor, I'd bring smart car dealers into my org AND send my brightest tech minds into car dealers for several months (& send them back again and again)

 

[Cullen C]

"Judging by the reviews they're probably not going to do that again."




I have heard there are some really bad reviews on some smaller sites but they have almost 20,000 on their own website and have a 4.7 rating. Sure they have bad reviews. Selling 100k cars a year will do that to you.


"After 100 years of this process I have a hard time believing a dealer is going to fix it. And I'm 100% positive the Digital Retailing nonsense is not going to appeal to most customers. Hell, those things even forgot a dealer needs to be involved

All the "fixes" are too extreme. We're all saying that people need to be involved with people, so how can we fix point #2. I think that's the critical element. If you fix #2 you fix #1 too. But if you fix #1 then #2 isn't an issue.... oh no, I've gone cross-eyed.

As far as thoughts on who will fix what pain points for customers you only have to look back at dealers attitudes toward CarMax to understand how they are approaching the latest threat in Carvana.

This is a quote from Tom Webb, then the economist for NADA, in a Washington Post article from 1995..."We still have a large number of dealers who think they can do anything that CarMax can do. But there's no question that CarMax is having an influence" on how some dealers are beginning to look at their business, Webb said.

https://www.washingtonpost.com/arch...c7a-a6c2-f9409b7f532c/?utm_term=.2bd553bdb0ac


Can dealers adjust and create better experiences, of course and some have. Will they do it in mass, I doubt it.

 

[Alex Snyder]

p.s. If I was a CEO of a Big, Hairy Audacious Vendor, I'd bring smart car dealers into my org AND send my brightest tech minds into car dealers for several months (& send them back again and again)

This would require a few things:

1. Someone who can translate "dealer speak" to technologists
2. The advice of the dealer needs to be heeded
3. The vendor's employees need to actually like dealers
4. The technologists would need to stop being "wounded" customers in their own heads
5. Someone needs to switch the echo chamber, within every company, from the bureaucratic yells to repeating what the dealers said

You and I have a lot of experience with this. We also know why it didn't work out.