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Stop the Vending Machines from Eating Your Lunch

The hammers are in full swing, hoping to wreck your used car business.

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The hammers, in this case, are vending-machine-like disruptors who’ve redefined the used car retail model.

According to its financial reporting for the third quarter of 2020, Carvana sold 64,414 retail units, an increase of 39% year over year. In that same quarter, Vroom sold 8,823 e-commerce units, up 59% year over year. Lithia’s new used car e-commerce platform, Driveway, inventoried over 20,000 used cars as of its launch last quarter. It, too, is an e-commerce purchase-and-delivery model.

These competitors are big, national marketing machines. They leverage inventory, modern reconditioning and workflow management technologies for high product visibility for their customers.

GLG Market Insights noted late last year that, “Having integrated systems is something both Vroom and Carvana have absolutely excelled in, focusing on even integrating with outside services like banks and loans, everything that it takes to be able to upload documents, move money electronically and not have to send paperwork to customers.


“That’s a huge piece that not only ties in with the buying of the vehicle but also being able to tell the customer where it is and when they’ll have it. Carvana has an app that allows customers to track the car as it’s on the way to them. People get really excited about that, and as long as a company lets customers know what’s happening, most people are forgiving. It’s when they don’t know that they get upset,” the article continues.

People like sourcing cars online, and these retailers’ home-centric vehicle pickup and delivery models work so well that traditional dealers are now providing similar conveniences.

Here’s How You Compete

You emulate these services. As we talk about the customer experience and engagement, every dealer can put in place similar competitive advantages. Consider these steps:
• Recognize that inventory is a waste unless you have processes and practices in place to maximize inventory turn and per-vehicle profits — otherwise, you’re just shuffling losses.

• Focus on your Time to Line (T2L), the critical discipline of removing every obstacle to reconditioning workflow and speed to get cars sale-ready in a couple of days, not weeks, as still happens in too many single-point and multi-point dealerships.


• Focus on a speed-to-sale strategy that provides buyers with inventory flow visibility, so they can research and buy cars within days of the vehicle’s acquisition.

• Provide your sales team members with in-their-hands, on-the-go mobile inventory intelligence to help them build value in the deal from first contact. Now, wherever they are, they’ll have instantaneous access to complete, accurate and timely details of cars in inventory, including attached VIN, inspection and history reports, repair videos and more. Salespeople can now boldly answer prospects’ questions accurately, smartly and persuasively without having to put customers on hold or leave them alone at a desk to search out answers.


• Implement automation to help you sell cars faster and recondition inventory replacements quickly, even in days of scarcity.

• Focus on sourcing and go get the cars you need. In the third quarter of 2020, Carvana’s purchase of vehicles directly from customers was up 128% year over year.

Finally, adopt workflow communications and collaboration tools to break down your information silos. Share data across departments with vendors and other suppliers with a stake in your (and their) continued success. Protect your castle by bridging moats to access and take your business directly to your marketplace. Don’t let the vending machine retailers eat your lunch.

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