I agree, however, I think RocketAuto has a great chance at success.
Why?
1) Proven success with Rocket Mortage - they quickly became the #1 mortgage lender in America
2) ^ this means they have first-party data and relationships with millions of their existing customers. Data is gold in today's environment. Email will be a big (and free) traffic channel for them. People that have life events like buying a house also over-index on a vehicle purchase in the same year. Instead of would you like fries with that shake, would you like a car with that house?
3) Single-point rooftop and small dealer groups don't have the resources to create a Carvana-like solution like Lithia has done with Driveway.com, Asbury with Clicklane.com, Penske with CarShop.com, etc. Rocket provides these smaller dealers the technology and resources to be able to compete head to head with Carvana.
4) Most dealers suck at the few digital retailing leads they may get. Rocket Auto's BDC takes the burden off the dealers by following up with customers and working the deal from start to finish before handing off to the dealer to deliver.
5) If Rocket only manages to partner with 10% of dealers, they will still have far more inventory than Carvana / Vroom with no inventory or logistical overhead expenses. Customers flock to inventory selection.
6) The legacy third-party sites have to focus on both the current reality that most customers don't want to buy a car online (yet) and the near-future reality of customers wanting to buy a car online. They also have to focus on the current reality that most dealers don't believe in digital retailing (yet). It's a delicate balance for them to satisfy 2 conflicting realities. Whereas Rocket has an advantage that they don't have to serve both realities, they can focus solely on the future and not get bogged down with change-averse dealers.
7) The world is a lot different than it was when eBay Motors launched in 2000 and when Trade-in Marketplace made its debut in 2010. Carvana grew deliveries 96% YoY and jumped to the #2 used-volume leader in 2020, surpassing Autonation, Penske, Lithia, Sonic, Hendrick, Asbury, etc. This illustrates that there is a growing appetite. Sure, we're not there yet, but the tea leaves are showing more and more customers will be ready in the not too distant future.
8) Rocket founder (and billionaire), Dan Gilbert, is the 23rd richest person in the world. Enough said.
