A small idea that changed the car buying marketplace
Through the use of test drives delivered. CarPigeon created an efficient sales funnel and increased conversions to a market leading rate of 80%.
I saw an opportunity to bring the concepts of American car buying startups to the UK
The businesses in America were all geared towards improving the car buying experience for people in many different ways. To make it easier, faster and cheaper. I had discussions and did extensive research with an expert insider from a company called Beepi. They had raised $149M.
The plan was for me to bring their business over here. Beepi despite generating $200 million a year in revenue. Were blowing through money too quickly. Some say it was down to stupid spending (because it wasn’t really their money) and mis-management. They were “living the dream”. A false dream a staff member told me.
They spent too much money on each vehicle and tried to grow too quickly. Without hesitation I quickly shut down that path and decided to try it myself, as I had heard rumours Beepi were going bust and would be sold in parts.
There were still many advantages that these U.S startups all brought to the customer. Not every one of them actually closed down. These benefits were:
Have it delivered or pick it up at a vending machine
Every car could be delivered to people at a convenient date.
Test own period
Customers would have 7+ days to see if the car truly fitted into their life. If it didn’t, they could simply return it.
Every car would undergo a 200+ point certification check before it’s even advertised. This builds trust.
Fair pricing by eliminating fancy showrooms
Most dealerships have showrooms with big overheads. They throw these extra expenses onto the customers. The startups all aimed to pass the savings on instead.
I knew I could bring something to the market that people had never experienced before.
From my previous experience selling cars and dealing with people I could see the competition in the UK was not great. I knew I could bring something to the market that people had never experienced before. Here are all the problems UK customers faced before me.
Didn’t trust the vehicle, dealer or salesman
Lack of transparency. Dealers never had evidence of their work. No inspections recorded or uploaded online.
People had to visit the dealership themselves
Dealers would force the customer to make their own way to the dealership if they wanted to see a car. If a customer doesn’t have a car… how are they meant to be able to travel to see one? Dealers didn’t care.
Poor buying experience, no wow factor.
Most dealers take way too long. The customer messes around for hours at the showroom. They get frustrated. Feel pressured. Dealers mostly don’t go out of their way to blow the customer away either.
There were many logistical and technological problems to deal with.
If I was to make this business work and get it to grow, there were many real world logistical problems to deal with. There were also technological challenges so things would be organised and customers wouldn’t be confused.
Acquiring enough reliable vehicles
Customer returns was something I wanted to avoid. Getting enough vehicles to supply demand would be a hurdle.
Getting vehicles out the door quick enough
Delivering the car to someone’s door fast enough to live up to the marketing promise would be a challenge.
Finding reliable staff to service / repair vehicles
I would need to find staff and train them to do a better job than what the market currently did.
Selling the right volume of vehicles for a good margin
I would need fantastic marketing to get enough eyeballs, so customers would buy from me rather than the competition.
What I actually did to take action and get things done.
– Partnered with local garage for repairs.
Expanded to hiring my own employees. Worked with colleges to train and hire female mechanics too.
– Funded technical team to make tracking software.
Worked with Indian people. Allowed customers to see where their vehicle was on a map during delivery. Made ordering easier. With text notifications etc.
– Moved into bigger premises.
And installed needed equipment, so cars got turned around fast.
– Improved inspection process
All inspections recorded on video. Customers could see work carried out.
– Created test drive videos Jeremy Clarkson style.
So customers could see how the car performed over the internet through the power of as video review.
– Found source to buy cars.
Used existing auction contacts to find cars at the right price.
– Designed website and marketing.
Advertised on all motor sites, used SEO, Google adwords and social.
– Designed bow.
To surprise people, on front of car.
The main takeaway was that 8/10 people converted from a test drive into completed sales.Customers really appreciated not having to visit us. They couldn’t believe it.
Literally the first week I trialled my online sales tactics. I made £8,000. Someone even offerred to pay more money than advertised because they loved what I was doing.
Employed my own valeters, mechanics and bodyshop people. We were able to get each car in, repaired and ready for sale within one week. Getting other garages to do repairs didn’t work, as they try to cheat you and they lie.
Would get 7-10 cars a week shipped to us on a transporter. Processed them all at the same time to be re-sold in 2 weeks max.
Purchased cars from auction group for very little money. Average £700-£1500 profit. Some cars yielded £2000 profit without needing any repair work.
New startups came out in UK copying my advertising. Dealers and handful of others started offering delivery.
What I would do moving forward. The things I would change, or improve with 20-20 hindsight vision.
I discovered that most of the businesses selling used cars aren’t making much money at all. The big money is in new cars. Acquiring and building up a group of new car dealerships where you have total control of an area with any given manufacturer is the best way to go. Plus you can provide manufacturer level servicing and repairs, with income to match the quality of service.
The only people who were making big money were the auction groups and car buying groups themselves. They advertise to get vehicles directly off the public, then either re-sell in auction. Or they re-market using a car supermarket. A big retailer with thousands of cars. Average dealer profit used cars is only like £100,000 a year at most.
Things I would improve
Instead of selling cheap vehicles to people with no money, who like to penny pinch and do anything they can to get discounts and mess around. I would look to sell really high end vehicles. Find customers who appreciate customer service and saving time much more.
Selling used cars is a mugs game. Del boy stuff.
I would test out not holding my own stock. But partnering up with other high end dealers. Then say to them. I’ll sell your cars. I’ll market them. Using the sales process I have built. I’ll get you customers. In exchange for a slice of the sale price.