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Hi everyone, just to let you all know this may be a bit of a long post, but I hope you appreciate the extent I feel I should go to address this topic. I've been lurking around a little on here the past couple of weeks after seeing Autotrader's profit margin and deciding to learn a little more how the dealer world works. From going through the forum I can see this question comes up a lot, many people here are really not a fan of Autotrader's fees, but the competitors are struggling to disrupt them. Some have given it a fair try, one 'nxtcar' even posting on here looking for feedback a while ago, but these new entrants evidently didn't get going. As some context I'm a software developer, coming to the end of a project for a client in the next couple of weeks. I have been looking for a while for something to work on myself after this project is completed, but would like to target a market that is a bit of a challenge, and ideally one that has an opportunity for disruption (which judging by the frustration of many dealers on here, this is one). I'd like to lay out my assumptions as to why competitors like carguru and motors have failed to disrupt AT to a significant degree, and the way I would approach this. I would be very grateful for your advice as a community, and your personal opinions on whether this would be something you believe I should try to get running. - The problem with competitors The overbearing problem in competitors I see is that they are too broad. Almost all of the competitor sites that have popped up have come with the mentality 'dealers don't like how expensive AT is - I'll just make AT but cheaper'. This is the first mistake. Most of how i would build the site revolves around what is called a disruptive innovation model, I did initially include a picture but it posted far too big and detracted from the text. Almost all startups that disrupt an entrenched competitor (particularly a marketplace) follow this model. In simple terms it states a new entrant must segregate the market they intend to disrupt, focusing first on a niche, low profitability area and getting that right before expanding.The monopolist (Autotrader) naturally over time will overshoot the requirements of middle and low-end customers in chase of higher profits, failing to keep them on-side and leaving an entrance for new competitors. Autotrader have done this already, the constant price increases on dealers who are their raison d-etre has squeezed the community, and many would say there is growing disconnect between AT and dealers. Potential competitors to AT have completely ignored this model, instead trying to combat AT as a whole on a very broad scale - a model I feel is doomed to fail. If you asked people on the street where to buy a used car, I guarantee 90% of them will say autotrader. Almost none will say carguru, motors, 'insert competitor here...' etc. The reason for this is is AT has been around for a while, and was pretty much the first mover in the online used car market. It is much easier to form a new habit in someone's mind (used cars = autotrader) than to change an existing one, especially if your site/product is effectively the same. You can spend multiple times more on ads than AT but the damage is already done, there must be something other than higher ad spend to differentiate yourself (I'm looking at you carguru) To challenge such strong, broad network effects you *must* start niche, ask any one of the swathes of companies that have disrupted craigslist which is the same model I would follow. So it should come as no surprise the competitors don't do well. *An added point here is some competitors have tried to offer a better consumer service by showing info such as price changes, how long a car has been listed etc. These tactics I do not believe benefit dealers and are putting the 'demand' side of the marketplace first, when it should be the other way round. A very similar market to this is property, where rightmove is the incumbent and zoopla is disrupting. Zoopla have done well without helping one side at the expense of the other by offering third party services (crime maps, mortgage calculator etc, estate agent software) Autotrader begun by only making money when they made you guys do well, you were a team. Now however, especially with the steady rise of private sellers, believe me when I say AT would throw you all under the bus if it meant more profit. They have forgotten why they exist. AT can charge individual private sellers a higher amount for single car listings, and a move to more private sellers and less dealers benefits them. -My approach Not surprisingly I would start by segmenting the used car market. It appears a minority of cars are <£3000 (many people seem to also struggle with where to advertise low value cars, Facebook, Gumtree etc) and I'm sure a minority of buyers are young first time buyers. My initial target would be lower cost cars, with a site designed for first time buyers (potentially targeting a single area like london/manchester first too). Here are the reasons this would be my target: This price point is full of time-wasters, people haggling, no repliers etc. Introducing just a few steps such as personal emails only (no auto generated emails like carguru), prompt towards ringing dealers rather than messaging (people who aren't serious don't tend to ring as much) etc will hopefully help what is a general problem for dealers anyway, and I'm sure most here would value quality over quantity. Can also flag people to dealers who make appointments but don't show etc. Appreciate your thoughts here. Channels for marketing are much easier and cost effective. b2b marketing is easier than b2c, and this opens up marketing through driving instructors and the like (who's clients may be looking at buying a used car soon and are obviously first time buyers) and finding first time buyers is easier than marketing to the general population. This will help restrict necessary ad spend and enable a very low cost launch, ideally free for dealers to list and I can absorb the small running cost initially. Allows avenues for offering a unique service. We can build a more specialised marketplace when targeting this demographic than the general population, we can make a 'first time buyers guide' forefront etc, have advice columns on what to look for when buying your first car, finding first time driver insurance etc. Again your ideas appreciated. Partnerships. There are plenty of insurers who specialise in first time drivers, they understand the value of stickiness. If someone uses them the first time they're highly likely to stick with them later. If we have an audience of first time buyers, I feel an enormous amount of leverage could rest on us negotiating a discount with an insurer as long as people use our site. E.g. 10% off first 6 months at adrian flux when you contact and buy a car from a dealer through us. Even if we're not the first thought for these people, that's a big value proposition, and word like that spreads fast. Finally, product stickiness. If people use our product they're highly likely to come back. First time buyers will never have used AT or anyone else before, which enables us to form a relationship with them first. I feel this rests almost entirely on negotiating a discount with an insurer which could make this or break it. I would appreciate all your thoughts on all this, and if you believe in my approach. If it seems there is a positive feeling, my first port of call would be to gather emails/signatures from dealers proving intent to use this product if it was built. I would then make contact with insurers specialising in young peoples insurance to negotiate a discount which I feel would be such a vital part of this, and they will take it more seriously if there are a few hundred dealers already in support. I am also more than happy to have phone calls with individuals to share your thoughts/discuss the market and idea which is always helpful, and far easier than typing all this out! Therefore feel free to PM me if you want to chat. Let me know what you think!