Cars added to online product range as Covid-19 impacts traditional dealerships
PUBLISHED: 10:52 14 September 2020 | UPDATED: 10:52 14 September 2020
Cazoo has witnessed record levels of online car sales over the past few months, says finance expert Peter Sharkey.
I first heard the phrase when joining a Radio 4 podcast a few minutes late and assuming the preceding discussion referred to an impending divorce.
My presumption featured a married, grey-haired male who had been caught playing away from home, a discovery that had left his wife understandably furious. I imagined her slamming doors and storming out to engage in some serious ‘revenge buying’, the phrase that caught my attention.
But no. Turns out the revenge buying was actually her personal reward for being cooped up for six months; as far as I know, the lady buying herself some jewellery had no axe to grind with her husband….
Lockdown has cheesed most of us at some point over the past six months. A confusing spring followed by a lost summer, coupled with the prospect of a frustrating autumn has left millions of us seeking some form of reward to compensate for our growing exasperation.
Jewellery will appeal to many, but there are also tens of thousands of people embarking on a four-wheeled revenge buying spree, treating themselves by changing their car from the comfort of their living rooms.
It’s a remarkable development of which investors should take note.
There was a time when a person buying anything online was considered a tad reckless; nowadays, more than 65% of all consumer purchases involve an element online research, a percentage which has increased markedly during lockdown and there’s little sign of it being reversed.
Less than a decade ago, anyone suggesting that buying a car online would be possible by 2020 would have attracted some strange looks. How rapidly things change; today, almost 75% of US consumers say they would seriously consider buying a car online. The figure is not yet as high in the UK, although following the establishment of Cazoo, (www.cazoo.co.uk) a ‘pure’ online car seller, which owns all of the cars it sells, we can expect to see it rise significantly over the next few years.
The online car selling concept originated in the USA in 2012 when Carvana arrived on the scene with the express intention of making the process as simple as buying a book. The company understood that if it could make the customer’s car buying experience superior to buying through a traditional car dealership, the business would blossom. Investors will be interested to learn that Carvana’share price has risen by 520% in the last 18 months alone and now British drivers have the opportunity to buy their car via the internet.
Founded by Alex Chesterman, the man behind Love Film and Zoopla, Cazoo has pioneered the burgeoning shift to online car buying in the UK, a shift hastened by the pandemic.
Reconditioning its vehicles prior to offering them for delivery or collection, often in as little as 72 hours, each Cazoo car comes with a 7-day money-back guarantee and a 90-day warranty. Less than a year since it was established, Cazoo is selling thousands of cars each month as consumers increasingly embrace the convenience of buying or financing used cars entirely online.
It helps that vehicle prices are fixed which means there’s no haggling, a massive attraction for many folks as it relieves the pressure of having to negotiate with a salesman.
The company initially attracted scores of ‘early adopters’ but, as a spokesman notes, “Online shopping habits have changed significantly over the past six months with many consumers trying new digital experiences for the first time. We are seeing buyers from all parts of the country [buying] cars [priced] from £5,000 hatchbacks to £50,000 SUVs.”
Few sectors were more brutally affected by the pandemic than the car industry as activity fell dramatically at traditional, bricks-and-mortar car dealerships. By contrast, according to a company spokesman, Cazoo has “seen record levels of sales over the past few months, much like online retailers [in] other sectors.”
It would appear that this success is sustainable. Not only has online car buying proved immensely popular in the States (usually a decent guide to how products or services will fare on this side of the Atlantic), its popularity has swollen during the pandemic as public transport and ride-hailing services such as Uber have become less attractive.
Safety is another factor: the whole car-buying process is completed online, while delivery is similarly touchless. Finance and part-exchange arrangements can also be executed online.
Covid-inspired ‘revenge buying’ will continue to boost online sales activity but over the longer-term, it’s likely that the process of acquiring a used car via a laptop while enjoying a coffee in the kitchen will become as normal as buying a new book once this oppressive pandemic has passed.
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