Marketing Analysis: Carvana

This article starts a series in which I will review the marketing and customer service of brands that I have interacted with at a deeper level than simply a purchase. This article focuses on the long and winding journey of buying a used vehicle from Carvana.

Buying a car from Carvana is a bit like what I’ve heard from women who have given birth… it can be a long journey with many unknowns and frustrating and painful experience, but in the end, you have a beautiful (new to you) car – and even given all the pain from the purchase process, when the time comes you may go back to Carvana again, regardless of the previous experience.

I believe Carvana has good intentions as a company. The brand wants to be the top facilitator for consumers looking to sell their vehicles or find the perfect used vehicle. Obvious competitors include CarMax and Vroom – both of which I will discuss briefly here, as well as local dealers and dealer networks.

Consumers have multiple methods of purchase decision-making and a plethora of reasons for buying a used car – and for determining how to buy that used vehicle -- especially in today’s tight car market.

One thing is certain. The car dealership model is seriously broken, and many consumers report NOT enjoying the car shopping/buying experience. CarMax was one of the first brands attempting to disrupt that traditional model, offering vehicles as the lowest prices – with a promise of no-haggling.

Carvana and Vroom (and the others to come, such as GM’s future CarBravo network) attempt to take this disruption even further: offering completely online searching and purchasing, with delivery directly to the consumer’s driveway. Carvana provides the consumer with great photos, a detailed inspection (and reconditioning) report, and a free CarFax report on previous owners, conditions, and maintenance. Carvana claims not to sell any vehicles that have been damaged by accidents, natural disasters, etc.

Some things remain the same… Carvana wants to finance the purchase and also offers several extended warranty options -- both big moneymakers for car dealers.

With Carvana, the consumer agrees to purchase the vehicle sight-unseen. That said, there is a 7-day period once the vehicle is delivered for the consumer to make the decision to keep the vehicle or return/exchange it, with no questions. Beyond the 7 days, there is also a longer period (100-days/4,189-miles) with a limited warranty for obtaining fixes before the consumer has to handle all costs on their own or buy into the extended warranty.

Carvana sells vehicles in all states, but some sales result in either direct deliveries (with that cool-looking Carvana truck) or consumers picking up the vehicle at a Carvana “vending-machine” hub – while others outside Carvana’s network have deliveries handled by outside vehicle-hauling companies.

There are several Facebook pages dedicated to Carvana buying experiences, and while I have seen some people who reportedly work for Carvana, I have actually never seen any official company responses. Some of these posts are crazy, accusing the company of ethical and legal violations, but most posts are simply customers venting over delays -- delays in delivery, delays in registration and title. (Some also relate to issues with Carvana’s warranty company, Silver Rock.) But where is Carvana in helping solve these issues for consumers?

Our Vehicle Buying Experience

We knew exactly what we wanted: a late model Subaru Forester with low mileage and only one previous owner. We actually started the search looking at local dealership inventories and found them lacking and/or extremely overpriced.

We then moved on to CarMax, which has a local dealership, but also a network across the country. They had one Forester that matched our interests but the sales rep at the Spokane dealership seemed completely uninterested about making a sale; perhaps a sign of the limited availability of used cars these days. After no follow-up from CarMax, we moved on with the search.

We then went online to Vroom and Carvana. Vroom had a truly limited number of Foresters, so it was on to Carvana, which had a strong selection of Foresters – though many were way above the price we were willing to pay.

We joined Carvana on October 28, 2022, and placed a deposit on a Forester that was so new to the system it was in the “inspecting and reconditioning” phase. We thought it would be a short wait for the car to move into the sale phase, but after more than TWO months of waiting and being told nothing about when the vehicle might be ready, we canceled that order on January 12, 2022. No matter how many times we called Carvana (and that is the BEST way to communicate with the company) or the people we spoke with, no one could obtain ANY information about the vehicle. Ridiculous – and a really poor business model.

We decided to stick with Carvana because of its large inventory and this time picked a Forester that was ready to go – and the sale was “approved” on January 13, 2022. Approved is a funny word because we were paying cash for the Forester, so no need to wait for financing approval. The Forester was supposed to be delivered in early February, but the original transport company had a truck breakdown and Carvana claimed it “had to wait” until another transport company accepted the delivery. Finally, more than a month after our purchase, on February 19, 2022, our Forester was delivered – not to our door, as the commercials show, but to a parking lot one town away because we are not in the Carvana “network,” so an external delivery company had to make the drop. The Forester arrived dirty and with an empty gas tank, but when I mentioned that to Carvana, they quickly offered a credit for the inconvenience.

We had the Forester inspected by a Subaru mechanic during the 7-day trial and found it was in good shape – and it should have been since it only had about 15,000 miles on it. The Forester did have the original tires, now 6 years old, and Carvana agreed to cover the replacement of all 4 tires through its warranty company, Silver Rock.

One final note about our purchase: after working with countless customer service advocates for weeks, I finally went to the source via LinkedIn and other social media and finally got the attention of the “executive resolutions team” who then worked with me very closely in getting the Forester delivered… but why should any consumer have to go to such lengths just to get decent customer service?

By the way, we are still waiting on registration and plates – which I think is a combination of Carvana’s slow processes and state DMVs being behind because of the pandemic and license plate shortages.

Carvana Pros and Cons

From both a marketing and consumer perspective, here’s a list of pros and cons.

Pros: Ease in shopping via website or app; no-haggle pricing or hidden fees; expanding network of distribution centers (“car vending machines”); strong inventory of vehicles at many different price points; free delivery in network (and a small delivery fee outside of network); friendly (if not the most efficient or effective) customer service “advocates.”

Cons: Lack of transparency; lack of information/updates; weak website and text-chat features (even as the company claims 24/7 availability); lack of communications within Carvana and with its customers; poorly trained customer service advocates who appear to have very little power to help customers; weak logistics in moving/delivering vehicles.

Final Thoughts on Carvana

As mentioned at the beginning of this article, the Carvana (and Vroom) model of car sales is exciting and rewarding for the vast number of us who despise the traditional car-buying experience. In fact, it is the ability to shop in peace (in your bathrobe if you so please) and have your car delivered to your driveway that makes this model so appealing to consumers.

I could share so many emails and chats I had with Carvana reps during this whole buying process… most of them friendly and attempting to be helpful… but Carvana management needs to do a better job of both training their customer advocates while also giving them more power to actually help customers rather than simply trying to placate them.

My senior team resolution manager claims Carvana does not have any kind of logistics problems, but my entire experience goes directly against that view. Carvana needs to invest in logistics.

Carvana also needs to do a better job in managing customer expectations – including that all purchases will not be as perfect as seen in its advertising. Yes, some people might get their purchase the same week they order it, but most will have a longer process. Related to this issue, Carvana should also institute a better communications system so that consumers are not just left wondering if they will ever see their purchase.

Finally, there seems to be some debate about how much “reconditioning” Carvana does these days now that it has been flooded with inventory. If Carvana’s “hubs” are too overwhelmed with vehicles to inspect and recondition, perhaps it should enlist some of its network of repair facilities associated with Silver Rock to do some of this work – to take the burden of repairs OFF the consumer.

Note: In the end, I do love that we purchased the exact vehicle we wanted, with the right mileage we sought, at a decent price… but the delivery… that part definitely needs work.

See also this article: https://motorask.com/carvana/

Dr. Randall S. Hansen is an educator, author, and advocate, as well as founder and CEO of??EmpoweringSites.com,?a network of empowering and transformative websites, including?EmpoweringAdvice.com. Dr. Hansen’s latest book, Triumph Over Trauma, is available in paperback and ebook versions. Dr. Hansen has been helping empower people to achieving wellness and success his entire adult life.?He is also founder of EmpoweringRetreat.com.?He is a published author, with several books, chapters in books, and hundreds?of articles. Dr. Hansen is also an educator, teaching business?and marketing at the college level for more than 25 years. Learn more by visiting his personal Website,?RandallSHansen.com.