Covid 19 and Carvana

Did Covid 19 just hit Carvana on the chin?

Carvana and entrants like them exist because customers have asked for something different. Something that mainstream automotive retail has not yet delivered. Otherwise, there wouldn’t be room for new retailers that have sold several hundred thousand vehicles and have their targets set on millions.

They are building their business on transparency and convenience, with a little venture capital and some flash (have you seen the vending machines at night?) Essentially, they offer the ability to shop, finance and buy online and the choice between picking your car up at the aforementioned vending machine or having it dropped at your door.

Pretty cool, right? Here is the hit on the chin part.

At this moment, customers will not come to your stores; they are concerned, rightly so. It will be sometime before they are back in volume. But if we are honest with ourselves, they have been dropping by less and less over the past few years. The truth is, much if not all, their shopping has been taking place online, and decisions are made before reaching the showroom. The great news is that many still love the idea of finishing that final decision with someone who can help reaffirm their choice and add value to their purchase journey. For others, the ability to just hit the buy button and have it show up is more compelling. This is one space where Carvana held an advantage. No more.

Look online at your competition, offers of home-based test drives, digital transactions, and home delivery abound. It seems Covid 19 has done something Carvana couldn’t do. It has caused all (okay, perhaps many more) Dealers to rapidly develop and deploy home-based services that were as recently as a few weeks ago too expensive or too niche for them. Here is the thing, everyone did this to address a virus scare, but in the future, everyone will do it because the expectation has been set.

If I am Carvana, I just took a hit on the chin.

Not only are Dealers almost instantly better prepared, Customers are meeting service departments and the people who are not only selling their vehicles but who will be caring for them as well. Carvana can’t do that.

Finally, it doesn’t matter why it happened, it did. Moving forward, a rethink of the way you do business is a requirement. Some will nail it, and others will struggle. My best advice has always been to think like a customer, not for a customer. Watch what your competition is doing and know that imitation is the finest form of flattery, and if they are doing something great, you do it too.

This moment won’t last forever. It’s impact will.

Best to all,

Paul