“What If” Acquisitions – Future of Auto Buying/Selling

I think many of us dream about getting a new car; we listen to the radio and will pay attention to the deals and see both the national and regional advertisements. The problem with this is that I believe most people do not buy a car on impulse. It’s great knowing that such and such dealer is having a 48-hour sale, but that will only lure the person in the buying moment. It won’t lure the rest of the people who might even be within 60 days of buying. This approach is more like bobbing for apples; you might get someone, but you will end up wasting so much of that airtime on those you cannot impact.

At the very least someone should create a site that maps the specials by region. Let someone put in their city and they can see a dealer by dealer plot showing their historical sales in order to help people proactively plan the process. Make it collaborative so that others can contribute when they see a deal, and of course allow dealers and auto makers to enter their own. It’s a coupon site for cars, and it’s not too different than an idea that has lurked inside my head for more than a year. I named it CarMaps.net, and I conceptualize it is a meta-search engine for cars that takes in data from local and national sources, from individual sites and from aggregators; then displays it visually.

In some ways, that makes CarMaps.net a quasi-Google mashup like HousingMaps.com. It has also been my opinion that people don’t just search for cars by brand; they search for brand and convenience. Being able to see what is near, to see and feel the landscape would make for a more efficient car buying experience. Coincidentally, it also makes for a rather effective site to monetize. The data could come simply by mining it, and revenue could come without a sales force. People buying a car will invariably want to receive a quote, find out about insurance, and financing. All of these can be readily found in the performance marketing space today. But as much as I like that idea, it’s small change and a mere set up for the idea of this “What If?”

For as much as I like cars, I do not particularly enjoy the car buying experience. For the past four and a half years, I have not had to think about it. I have been happily engaged in my almost paid off automobile that takes me from A to B and makes the weekend trips to C, D, E, and F pleasant. That changed July 4 when I was rear-ended on my way home from watching fireworks, and it was bad enough that the insurance without my influence declared the car a total loss. (To those who are asking in their heads if I am alright, thank you. I walked away.).

With my car gone, I have to look for new transportation. I would enjoy this, except I do not want a payment, which is why I kept and planned on keeping my car. So, for the past several days, I have been immersed in the auto buying experience. Most of my time has been spent on sites like autotrader.com, leasetrader.com, cars.com, along with local dealer listings. For the fist time, I spent some significant time on eBay Motors.

As is the case with other parts of eBay, both private sellers and full-timers, be it individuals or companies, can, and do, leverage the marketplace that eBay provides. Surprisingly, even large ticket items such as cars, nice ones too, get sold every day via the marketplace. I know one guy in the office who has purchased several cars off of it, and I remember from several years ago hearing that smaller car places, especially the used-car, corner lot ones, found it a good way to sell. The auction model can lead to high prices, and that car prices are inherently impossible to fully estimate and often subjective (not like a pound of strawberries) has them sharing necessary qualities with other items that do well.

What the cars section (not parts) does not have are two things. The first is the equivalent of a sales assistant, the way other parts of eBay can leverage third-party sites like “I sold it on eBay!” and Auction Drop. Having places like that could help insure consistency of the product, much like when by focusing on items with SKU’s, Half.com found itself creating a billion dollar gap in eBay. A service like this alone I think would do very well as it increases the selection of items available. With more product, we get more people and together we get a more liquid and efficient marketplace. It’s the next logical step and a bigger purchase price. It also means that the places do not need to carry inventory, which they do today.

A listing service for eBay Motors solves an essential piece, but it does not provide a complete solution. In addition to finding the car, seeing the car, and reading about it in detail, potential buyers want security. This is what makes sellers such as autoworldofspringfield such a success. They provide all of this. The downside to them is that they are but one store. They operate more efficiently than most, but they themselves do not scale easily. What if there was a way to cover 80% of what they offer in scale? I think there is, and it’s called CarMax.

In many ways CarMax and eBay Motors compete. Each tries to be a marketplace for automobiles and offers among the best reach of any other sellers. Separately, they are limited, and CarMax either does not, or is prohibited from bidding on eBay. But, CarMax offers something that eBay itself can’t, and that is certainty. They have developed not only a liquidity model for cars owners looking to sell but a standardization process for car buyers, which provides a feeling of uniformity across a wide range of inventory.

With a combined CarMax/eBay Motors, you have a place where in major markets sellers of cars can drop them off, receive either payment in advance (a reverse buy it now) or have the car on auction and receive an amount less CarMax’s fees, which could be a percentage or flat rate. For buyers, it would mean the greatest selection of cars, and in some markets, local pickup. The major change I would make to the two is to move all buying online so that CarMax interacts with people in one piece of the process, not both. They become the Netflix warehouse in a way, not the Blockbuster store. Like eBay, CarMax deals with physical goods and in a more marketplace like dynamic than any other place. Best yet, at $3.6 billion, they are affordable, for eBay… or maybe for Yahoo. It’s a slightly different paradigm than spending $4 billion for a little piece of chat software.