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It comes down to Cost of Acquisition. These companies forgot they are a two headed COA monster eating up money like an Excursion consumes gas. Dealers have a number of advantages; (1) Brand/Certified Used (can't buy a new Honda at a Lexus dealership; consumers are seeing higher incentives on new vehicles so why would they buy a used one?), (2) Service (customers keep coming back making it easier to communicate Value Propositions) and (3) Trade-Ins (new vehicle sales brings in used inventory) and there are more...Beepi,Carvana, Vroom have to deal with COA across (1) Acquiring Inventory and (2) Acquiring a Buyer. Both are extremely expensive. Add to it a multiplier because they are relatively unknown to the general public which means their marketing has to be increased. NabThat started 4 years ago as a TrueCar like platform (in many different ways) and one of the issues we faced before pivoting the company to help dealers with technology platforms and consumer products was the Cost of Acquisition - It is damn expensive Without looking at their financials, I assume they are paying well over $500 per acquisition (totaling more than $1,000 in marketing costs per buy/sell of a single vehicle). We are not evening addressing how they are purchasing vehicles (continually decreasing assets). This is a volume game and getting to the volume and making it potentially sustainable would take Billions of $$$$.Sounds like "Dead man walking"....
It comes down to Cost of Acquisition.
These companies forgot they are a two headed COA monster eating up money like an Excursion consumes gas. Dealers have a number of advantages; (1) Brand/Certified Used (can't buy a new Honda at a Lexus dealership; consumers are seeing higher incentives on new vehicles so why would they buy a used one?), (2) Service (customers keep coming back making it easier to communicate Value Propositions) and (3) Trade-Ins (new vehicle sales brings in used inventory) and there are more...
Beepi,Carvana, Vroom have to deal with COA across (1) Acquiring Inventory and (2) Acquiring a Buyer. Both are extremely expensive. Add to it a multiplier because they are relatively unknown to the general public which means their marketing has to be increased.
NabThat started 4 years ago as a TrueCar like platform (in many different ways) and one of the issues we faced before pivoting the company to help dealers with technology platforms and consumer products was the Cost of Acquisition - It is damn expensive
Without looking at their financials, I assume they are paying well over $500 per acquisition (totaling more than $1,000 in marketing costs per buy/sell of a single vehicle). We are not evening addressing how they are purchasing vehicles (continually decreasing assets). This is a volume game and getting to the volume and making it potentially sustainable would take Billions of $$$$.
Sounds like "Dead man walking"....
