The used car category is heating up.
Investors are beginning to bet big that the last major category of consumer spending is finally going to go digital and have raised nearly $6bn.
Compared with other categories, the automotive category has lagged behind other retail categories and is playing catch up. UK-based Carzoo is already forecasting revenues to grow 300% to almost $1bn
The challenge has been getting consumers comfortable with buying cars online. To do this, digital platforms such as Cazoo, Cinch and Autohero have introduced Amazon-like features, such as seven-day returns and delivery within a few days.
Big category, small digital share of transactions.
Going into the pandemic, less than 1% of all used car sales were conducted online. By contrast, digital channels account for a 1/3 of clothing sales and half of electronics retail. Often times, consumers have researched their next car purchase online for many years. But the transaction has usually been completed offline, even if it was arranged through a website.
🚗 The pandemic’s lockdowns created fertile conditions to convince more car buyers to look online for the first time, as well as for dealers to shift their focus from the car yard to the internet.