New car listing site?

[DealerAdvocate]

@milehimike , if you have ever watched Shark Tank then you are already familiar with Mark Cuban.

Cuban is famous for living by the mantra "How would I kick my ass" with respect to how he would try to unseat himself if he were a competitor of himself. The extremely low barrier to entry that you described as a couple thousand dollars in order to earn a million dollar valuation should give you pause. Or, to borrow an excerpt from the Army's Infantry Field Manual "if things are going too well, you have just walked into an ambush".

However, in spite of the overwhelming opposition and total lack of support that the entire board has given you, you are to be commended for being unflappable and not getting defensive. When a reporter asked Thomas Edison how it felt to fail 300 times before he created the lightbulb he replied "I didn't fail 300 times...I succeeded 300 times in finding a way not to create a lightbulb."

 

[milehimike]

@DealerAdvocate ,

Valid points were brought up by Joe. I haven't answered the questions of "how are you going to go up against established players?", "what do you have new that is not offered already". I would like to answer those with a prototype or an actual business!

A few others also mentioned about the difficulty of the business aspect of things.

Interesting analogy there with Edison (I think the actual number was 10,000). Only, in this case the failing has already been done by others for me

I do want to point out your comment about $2000 entry point. That is true only because I am planning to develop the proposed site myself. A non technical person embarking on this journey will have to shell out at least $100K to get a half way decent product, and without a tech co-founder it could go as high as 250K.

 

[craigh]

I tried to stay away from this thread, but it just kept drawing me in.

If you're not a car guy and have never worked at a dealership, you have a large primary step ahead of you in understanding them and their industry. You need to decide if your customer is the dealership or the potential buyer - this is going to determine quite a few things in your business plan.

Don't expect your traditional VC investment for a project like this - they're more interested in the Tesla model of buying/selling a car and far less interested in supporting the traditional model of dealership sales. You can disrupt the online space all you want, but if the in-store process hasn't changed then you have failed to deliver real change or value.

IMHO of course.

 

[milehimike]

@craigh

I am definitely not a car guy. The more I read about the industry, with what is available online, I am just amazed at the amount of depth of knowledge one can acquire about the auto industry. Once I do get a prototype working (and that in itself will tell me if I am on a wild goose chase here), I plan on taking on dealer partners. Essentially a dealer (or an experienced industry veteran) who will be willing to be an equity partner, and bring his experience to the project. There is no way I am going to acquire this knowledge on my own without working in the industry for a few years, and I don't have that inclination at this time.

I don't think the traditional dealership model is at risk of disruption anytime soon. Maybe to a limited extent on new cars (But dealer margins on new cars are already wafer thin, so there may not be much more to squeeze out with an online model). Plus state laws are another backstop against any such interference. With used cars, an online disruption will be a non starter.

The idea is just to disrupt the major players in the current online space as I feel I may have something more to offer.

 

[joe.pistell]

@milehimike ...from the Army's Infantry Field Manual "if things are going too well, you have just walked into an ambush"

hahaha! Love it!

 

[skutchhenks]

Over the last 20+ years working in this industry I've seen countless attempts at making a top-tier vehicle shopping site fail. The main reason is always resources, basically not enough money.

IMO if I were to bet on any company today which had the resources of launching a top-tier shopping site it would be Dealer.com & DT. Probably some good reasons why they haven't done this already. And the market is very saturated, tell me where you can fit a used shopping site in this mix? Once a shopper hits any of the top 3 below they generally don't use or need anything else.

• Autotrader
• Cars.com
• Cargurus
• KBB
• Edmunds
  
• Craigslist
• Truecar
• Carfax listings
• ...Numerous 3rd party lead provider sites like usedcars.com (dealix)

 

[joe.pistell]

How do they get their traffic?

• Autotrader <---TV ads/SEO/PPC

• Cars.com <---NewsPapers/SEO/PPC

• Cargurus <---SEO/PPC

• KBB <---Legacy Industry Player/SEO

• Edmunds <---Legacy Industry Player/SEO

• Craigslist <---Needs no intro

• Truecar <---TV

• Carfax listings <---TV/Partnerships

• ...Numerous 3rd party lead provider sites like usedcars.com (dealix) <---SEO/PPC

 

[skutchhenks]

How do they get their traffic?

• Autotrader <---TV ads/SEO/PPC

• Cars.com <---NewsPapers/SEO/PPC

• Cargurus <---SEO/PPC

• KBB <---Legacy Industry Player/SEO

• Edmunds <---Legacy Industry Player/SEO

• Craigslist <---Needs no intro

• Truecar <---TV

• Carfax listings <---TV/Partnerships

• ...Numerous 3rd party lead provider sites like usedcars.com (dealix) <---SEO/PPC

10/4.

I'd guess if you had $2.5M per month to spend on just PPC for used cars in all major markets in the US, you would be an instant player. But how quickly can you generate the revenue to offset just your ad costs? That amount also doesn't take into account any hard costs, tech, payroll, data. etc.

 

[ed.brooks]

The two big barriers to entry are Inventory and Eyeballs.

 

[milehimike]

Ok. Point taken. A new site is not a walk in the park and will likely require investment in the millions (, in addition to a superior product) to have a shot at competing. So my first goal is to actually build a superior product. I will keep you posted on my progress and introduce the prototype as soon as it is ready.

But here's the real problem. Let's say the new site does get a reasonable number of hits, but not enough to justify a subscription like the major ones (cars.com get approximately 30 million unique visitors a month), how can leads be monetized?