A new startup called Vroom wants to sell cars the way Zappos sells shoes: with a slick website, free delivery, and a return guarantee.
That sounds great—Hurrah, let’s never again set foot inside of a car dealership!—until you remember how you feel about used car salesmen. Even in an age where people order everything from toilet paper to lunch using their phones, selling cars online, to people who haven’t seen them, involves overcoming some serious trust issues.
“You’re a dealer until proven innocent,” says Vroom CEO Allon Bloch. “The one way we can’t build trust is to say ‘Trust us.’ Because that’s how a car dealership does it.“
Bloch joined the company in November 2014, back when it was called AutoAmerica. The company’s founders had built up an inventory of used cars in a lot outside of Dallas that it refurbished and sold through sites like eBay Motors and Cars.com.
When Bloch, the former co-CEO of Wix.com, joined the company, he did so with plans to turn the business into a nationwide used car brand. What he had in mind was a marketplace for used cars like the ones that AutoAmerica participated in in, but a trusted brand name that sold its own inventory of cars. He and his team rebranded the company “Vroom,” and on Monday, the startup announced that it has raised $54 million in Series B funding, bringing its total equity funding to date to $73 million.
Having procured new money and a new brand, the biggest task ahead of the company is dissociating itself from the sleazy car salesman.
Eliminating haggling, Bloch says, is the first step. “We won’t negotiate even $1,” he says. “It’s a waste of time.” Instead, he wants to create a reputation for starting at a fair price. “You don’t go to Amazon and say, ‘I can find it somewhere else for 50 cents cheaper.’”
The anti-haggling policy starts when people sell their cars to Vroom. In order to get a quote, they take eight photos and submit the car’s VIN number. Vroom responds within minutes with an offer of what it deduces it could get for the car at an auction. It’s good for seven days, which gives the customer time to comparison shop. If she accepts the offer, Vroom sends a truck to pick the car up for free.
Vroom plans to buy even cars that it won’t be able to sell at a profit, because buying cars is one of its strategy for selling cars. Once customers have a good experience selling, the hope is that they’ll trust the company when it comes time to buy a car, too.
Another trust-building strategy is a seven-day money-back guarantee. You can buy a car, try it out for seven days, and if you don’t like it, Vroom will pick it up and give you a refund. Bloch says the company sees few returns, but the option makes people feel more comfortable making the purchase.
People are already buying cars from Vroom, which says it does about $20 million in sales per month, and the company partners with banks to offer a marketplace of financing options so that they can do so.
It’s a business model that makes sense: Because it does not spend hours selling to customers, maintaining brick-and-mortar stores, or paying commissions, Vroom can run more efficiently than a traditional dealership (the last step is moving transactions completely online instead of relying on a call center, but plans are in place to do so). And if it can win over customers’ trust—no easy feat—it will have at least one advantage over even Zappos: Shoe shopping in a physical store is, on occasion, enjoyable.