"The end of haggling with a used-car salesman" ?

[kevinon]

www.cazoo.co.uk - an online used car service has become UK's faster ever 'Unicorn' - i.e. worth $1 billion.

Pro's - the actual process looks great and they really push peace of mind. They quote the Daily Mail; "The end of trekking round vehicle lots and haggling with a used-car salesman"

Con's - limited brands and poor on 'older' used cars. But beyond that I'm struggling to see too many disadvantages. I think they will make life increasingly difficult for the traditional dealerships who handle new-ish mass market cars. But I wonder how cazoo would encroach on the 'expert' or niche players. They are not the answer to my prayers at the moment.

Discuss!

[kevinon]

[quote=untakenname]Don't see how they can be worth $1 Billion when they don't yet have many cars on the books or turnover.

Perhaps they may spend some of their funding undercutting the competition in a bid to gain dominance in the sector?

Guessing that they get the investment capital due to the finance they offer which imo seems pretty steep.

You're right - finance does look high. Maybe no profit on the cars ?

The founder has previous; he started LoveFilm and Zoopla. So the bet is he will grow this too. For contrast Lookers dealership business, with £4 billion revenue is valued at around a tenth of cazoo.

[kevinon]

Let's see how customers gain confidence in online.
Covid will have played a part.

What surprises me is how successful de beers is - personally I cannot imagine buying high-end jewellery online

[kevinon]

Mexman said:

Totally different to a mechanically complicated, used item such as a car, that sits outside in hostile conditions, heat, cold, snow, rain etc.
The 7 day, no quibble returns policy with Cazoo will be their downfall.
The costs involved in preparing the car, delivering it, collecting it back, re prepping it etc, will be a disaster.
These are used cars, give a member of the public an inch and they will take a mile.

Yes, reverse logistics cost would be a disaster. 7 days no-quibble is fool-hardy, unless they plan to describe stock fairly and match market rates to minimise returns.

If they do act transparently wouldn't this solve the problem?
Or would Joe Public would still be difficult to deal with ?

[kevinon]

sebdangerfield said:

Whichever way you buy a diamond there's a very good chance it's been explored, mined, refined or sold by De Beers. You know selling online's only a very small part of De Beers right?

Sure - my surprise is that buyers even contemplate online for diamonds, rather than the theatre of real-life retail.

[kevinon]

The 'WeWork' fiasco is an interesting one to compare.
They were the second-biggest landlord in London! They would lease a building for a long term, and then rent parcels at short term. So, massively exposed.



If you want to read more about Cazoo - https://sifted.eu/articles/cazoo-unicorn/

I can see that they will need to get niche, get huge, or get out. Let's see!

[kevinon]

Andrew[MG] said:

Some interesting reviews in here https://uk.trustpilot.com/review/cazoo.co.uk?langu...

Wow - the ones that go wrong and post reviews are pretty shocking. That's about 1 a week.


1% give average, 4 % give poor or bad. 95% are excellent or great; https://uk.trustpilot.com/review/cazoo.co.uk?langu...

On balance, if I were looking for reassurance , I'd say that it is pretty reassuring.

[kevinon]

Deep Thought said:

Good to see their investing their seed money wisely.

Whilst we're waiting for the money to run out (wont take long at that rate).

Heres an article from 2009 hailing Auto Quake as the Next Big Thing for providing internet sales of used cars, with a No Quibble 7 day cooling off period.

https://www.theguardian.com/money/2009/jun/27/used...

And heres a story of them folding 2 years later..

https://www.which.co.uk/news/2011/03/massive-onlin...

Good examples of the past failures - but 10 years ago is a long time in tech.

In a new sector all startups fail, until one doesn't; it thrives. It needs to have seen failed attempts, (and learned). It needs users to embrace new ways of thinking, and it needs enough money in the bank to make mistakes, learn, improve till it breaks through. (and it needs luck too; so much can go wrong).

The Telegraph article has a reader comment which I think shows the preference for transparent pricing for *some people*

"When I bought my last car, there was a discount of £500, another discount of £750 for having a test drive, another £750 for taking a finance deal which you could get out of within 14 days but keep the discount. These were clearly made up “Discounts” to encourage you to think you were getting a good deal. Why not simply reduce the retail price to something sensible - on balance the dealer may have sold more cars"


That's an interesting point - would a car sales business achieve *more* units or higher *total revenue* if there was no haggling? I don't know, but sure as eggs are eggs someone will give the answer !