CarMax Reducing Home Delivery Services Workforce

[BillKVMotorCo]

According to CDG, there is a rumor that CarMax is reducing their staff for handling home delivery. The question I have is that if behemoth like CarMax isn't seeing a future for home delivery and must be seeing a reduction in this segment, how exactly is it that Carvana seems to be pulling it off?

 

[Jon Singo]

My guess is it has less to do with there being no future for home delivery, and more to do with Carmax rolling this out poorly and expecting too much. Carmax also didn't likely take into account how much market share they already had due to their massive network of brick and mortar stores. They likely anticipated increased market share and sales using home delivery but it likely just cannibalized a small amount of their existing sales.

The question I'd be asking is how many people would buy a car from Carvana in-person vs home delivery if Carvana had a similar brick and mortar footprint to Carmax? I'm guessing it would be similar to what Carmax saw.

My take? Buying a used car sight unseen isn't preferred unless you 100% don't care about cars and need one. Most people still want to see/touch/feel before purchasing. IMO, new cars should mostly be home delivery/direct to consumer.

Carvana is pulling it off because it's the only option they offer, capturing the small % of people willing to buy a used vehicle 100% online.

I keep banging this drum and I don't know why it's so hard for people to understand but as a retailer you need to meet EVERY customer where they are. Offering a (to borrow a common phrase around here) frictionless experience in the way every consumer wants will gain you market share, while everyone else is trying to get you to buy their product their one way.

 

[BillKVMotorCo]

Carmax also didn't likely take into account how much market share they already had due to their massive network of brick and mortar stores. They likely anticipated increased market share and sales using home delivery but it likely just cannibalized a small amount of their existing sales.

You are a friggin smart dude. I think you nailed it.

I keep banging this drum and I don't know why it's so hard for people to understand but as a retailer you need to meet EVERY customer where they are.

Beat the hell out of that drum, buddy! You are absolutely right. I am right there with you.

 

[Jon Singo]

You are a friggin smart dude. I think you nailed it.

Haha, appreciate it but all that is pure speculation. Carmax is the king of process refinement and improvement but if it's not making them money or increasing market share, they'll drop it like a bad habit.

 

[Tallcool1]

My guess is it has less to do with there being no future for home delivery, and more to do with Carmax rolling this out poorly and expecting too much. Carmax also didn't likely take into account how much market share they already had due to their massive network of brick and mortar stores. They likely anticipated increased market share and sales using home delivery but it likely just cannibalized a small amount of their existing sales.

The question I'd be asking is how many people would buy a car from Carvana in-person vs home delivery if Carvana had a similar brick and mortar footprint to Carmax? I'm guessing it would be similar to what Carmax saw.

My take? Buying a used car sight unseen isn't preferred unless you 100% don't care about cars and need one. Most people still want to see/touch/feel before purchasing. IMO, new cars should mostly be home delivery/direct to consumer.

Carvana is pulling it off because it's the only option they offer, capturing the small % of people willing to buy a used vehicle 100% online.

I keep banging this drum and I don't know why it's so hard for people to understand but as a retailer you need to meet EVERY customer where they are. Offering a (to borrow a common phrase around here) frictionless experience in the way every consumer wants will gain you market share, while everyone else is trying to get you to buy their product their one way.

Damn!

This makes sense.

 

[Carsten]

Carmax is the king of process refinement and improvement but if it's not making them money or increasing market share, they'll drop it like a bad habit.

I'm thinking it's probably more related to this point. It's not making them money.

With Covid there was a huge up-tick in contactless purchasing and people were willing to try out this drop it at my home systems. So, I imagine carmax thought this was going to be a thing. I bet it could be with brand new cars but used ones?

Could it work? If each vehicle was vetted and 100% cleaned and clearly represented, I think it could have a market for those people like my mom who don't want to drive 2 hours to go look at it.

So, now that covid has passed and people are sort of back to normal, why would I order a car online?

So, like Jon said, they most likely just dumped this part of their business model since it was under performing.

 

[Ryan Everson]

Haha, appreciate it but all that is pure speculation. Carmax is the king of process refinement and improvement but if it's not making them money or increasing market share, they'll drop it like a bad habit.

*or increasing their stock price

Wall Street suddenly cares about generating returns again, and not just betting on future potential.

 

[joe.pistell]

Does It Sell Cars? Ask Singo

I keep banging this drum and I don't know why it's so hard for people to understand but as a retailer you need to meet EVERY customer where they are. Offering a (to borrow a common phrase around here) frictionless experience in the way every consumer wants will gain you market share, while everyone else is trying to get you to buy their product their one way.

#AskSingo