Cazoo .. New kids on the block??

[umesh 336]

Zoopla founder raises £30m for new car website venture Cazoo

The serial entrepreneur behind the Zoopla house-hunting website has raised more than £30 million for his next venture, which is aimed at disrupting Britain's used car industry.

Alex Chesterman, who made a windfall selling Lovefilm, the video rental company he co-founded, to retail giant Amazon seven years ago, is to launch Cazoo, a car buying and rental website.

 

Through the Cazoo platform customers will be able to buy, finance or rent a used car online and have it delivered it their door within 48 hours.

Mr Chesterman has set his sights on the car industry following ventures in film and property.

In 2003, he launched DVD rental company ScreenSelect, which later became Lovefilm and was offloaded to Amazon for £200 million in 2011.

In 2008, he founded property platform Zoopla, which floated in 2014 and was recently sold for more than £2.2 billion to US private equity fund Silver Lake.

Cazoo is backed by seed funding from the owner of the Daily Mail newspaper, Daily Mail and General Trust (DMGT), as well as Stride Capital, Octopus Ventures, Entree Capital and others.

Mr Chesterman said: "I'm delighted to announce this investment in my latest venture, Cazoo, and am very excited by the opportunity to transform the used car buying experience, which suffers from poor satisfaction and convenience and is failing to meet the needs of consumers.

"Buying a car should be no different to buying any other product online today."

DMTG was biggest shareholder in ZPG, the company that owns Zoopla, as well as comparison websites Uswitch and Money and property website Primelocation.

Paul Zwillenberg, chief executive of DMGT, said: "We are delighted to back Alex again in his new venture. He has an unparalleled track record of identifying and capitalising on opportunities for technology to disrupt whole industries, delivering tremendous value for consumers and shareholders alike.

 

“The UK used car market is worth over £50 billion per annum and is yet to enjoy the benefits of digital transformation that Cazoo will deliver."

Cazoo said the funds will be used to expand the team, website and operations.

 

Thoughts on this guys and girls? 

Umesh 

[EPV 631]

My thoughts are is that he is probably 10 years too early with this. But he is on the right path. 

[trade vet 703]

Good luck to them but £30m ! There has been some good ones that have previously failed with something similar.Tesco,Richard Branson and a few years ago some other non trade guys who raised millions to sell on line and then self destructed after 2 years of claiming how well they were doing.

[Mojo121 229]

It should be no different to buying anything else online EXCEPT sharks swim in our waters and cars are just about the most faulty, complicated consumer products in the world with 100’s of variables!

Not to mention scratches or minor marks - you have to see the car... good luck!

[Ocsltd 133]

Just now, Mojo121 said:

It should be no different to buying anything else online EXCEPT sharks swim in our waters and cars are just about the most faulty, complicated consumer products in the world with 100’s of variables!

Not to mention scratches or minor marks - you have to see the car... good luck!

Exactly my thoughts! Buying a used car is a bit different to buying a brand new kettle....

Which is why this hasn't worked.

[BHM 994]

1 hour ago, umesh said:

"Buying a car should be no different to buying any other product online today."

You f*** ing what? Really? Perhaps in the new or nearly new market but I certainly won’t be doing any distance selling of 8yr old, 100,000 mile cars.

Tbh that one single comment shows a fundamental misunderstanding of the secondhand car market and, perhaps more importantly, of punters expectations!

[NOACROSS 414]

Absolutely- this.  I can see it working for a new car but not a used 'thing'. Although I have sold a fair few nicer bits and had them delivered and inspected/balance paid upon delivery etc.  I wouldn't want to do it all the time though.

For new yes as people just go and waste the local dealer's time to look at the new model and then go away and order online.

[MattR 177]

Its all down to the customers expectations - and as long as they expect a new car for used money (which I'm sure this website will tell them will happen) I would think its not going to work.

Interesting when you look at his previous experience of zoopla, surely people go and look at a house before buying? so they should encourage the same with a car.

And if he raised 2.2bn from the sale of zoopla, how much of that does he have left if he wants other peoples money to scratch just 30m together?

[trade vet 703]

2 minutes ago, NOACROSS said:

Absolutely- this.  I can see it working for a new car but not a used 'thing'. Although I have sold a fair few nicer bits and had them delivered and inspected/balance paid upon delivery etc.  I wouldn't want to do it all the time though.

For new yes as people just go and waste the local dealer's time to look at the new model and then go away and order online.

When you look at the bicycle business.That is supposed to be doing well but I understand that many long established retailers are  shutting down for that very reason.Younger people have no fear of the internet,a friend of my daughter bought and paid for a £20k SLK online and had it delivered despite our advice to wait for a cheaper one from us.Look at all these online ‘crap clothing companies’ who are doing really well.You would think people would want to feel the quality of the material before buying.

Someone will get national online used car retailing write at some stage but I tend to agree with James (EPV)

[RhinoHorn 7]

Depends how well you prep the cars. 

We source cars and deliver to our customers when they haven;t even seen it before. Only photos. Never had an issue with a customer not accepting delivery. And we've never had a car returned to us...

It can work. If you do it right. We've been doing it for over 10 years now. 

 

[David Horgan 564]

House hunting , Video sales , DVD sales /rentals and now he chooses USED Car sales mmmmm and finance sales 

Rentals/New sales  may work with this type of platform but even that has competition doesn't it  .

Used Sales , How used ? 1 month exec models or 7 year old used cars with 70k on the clock? .

I've just had two customers in to look at two different Cars so I shown both this Post , They both Laughed at the prospect of buying online without seeing the car .

Both customers are looking at different price range cars , 1 Looking at £8,495----- 2nd one looking at £3795 both said they would want to see the cars first and they don't see how that can change , because they have both seen junk for sale on their searches . Both guys were mid 20's too so not the old fashioned groups . 

looks like another interference in the job till its goes belly up like the rest of the trials that we've seen come and go .

Wonder if they think you just pick the phone up and order used cars from wholesaler then resell them   

Best of luck I reckon 

[RhinoHorn 7]

We delivered a 5 year old Auris with 80k on the clock to a customer. They hadn't seen the car. 

On Fri we delivered a 6 year old Focus to a customer. They hadn't seen the car. 

We delivered a £40k Range to a customer. He hadn't seen the car. 

It may not be for everyone but our customers trust us. We have a good reputation and we don't advertise because we get so many recommends and repeat business. 

 

[umesh 336]

Sold many cars unseen but customers have collected from me , delivered quiet a few but don't make a habit or promote delivery,  everyone thrilled and never had any issues- ranging from 3 - 6 year old cars, this is becasue we're doiing it on a smaller scale and more personal to us smaller dealers, we take pride in what we're selling, but to scale it up to the volumes they need thats a different story, unless they are going to try just the late used market ( which is no guarantee but better than maybe older cars) 

[Mark101 536]

Haven't seen a Jam Jar advert for a long time.

I too have sold and bought many cars unseen - it is the exception though, not the rule IMO

[Ocsltd 133]

8 minutes ago, umesh said:

Sold many cars unseen but customers have collected from me , delivered quiet a few but don't make a habit or promote delivery,  everyone thrilled and never had any issues- ranging from 3 - 6 year old cars, this is becasue we're doiing it on a smaller scale and more personal to us smaller dealers, we take pride in what we're selling, but to scale it up to the volumes they need thats a different story, unless they are going to try just the late used market ( which is no guarantee but better than maybe older cars) 

Like

8 minutes ago, Mark101 said:

Haven't seen a Jam Jar advert for a long time.

I too have sold and bought many cars unseen - it is the exception though, not the rule IMO

Like

[CCC 31]

A few thoughts.

• If he really believed in it, he'd be staking 100% of his own money, instead it's a leveraged play with a lot of others money. My limited experience of these things is that there is more cash than opportunities now, so it's not hard to raise money, especially if you've got a track record of delivering value to the original investors (I have my suspicions on Zoopla long term but that's not the original investors problem). 
   
• Will people buy cars unseen - yes, as long as the seller has a 5* reputation (feedback counts) and the car is as described and video'd. We do shed loads of photos and the odd video, plus prep, so in theory when the buyer arrives they've already "bought" the car in their heads, it's just confirming what they've seen and giving us payment.
   
• It's an odd time to be investing in this market. The future 10 yrs hence is predicted to be self-driving ubers with ageing pensioners unable to drive, and youngsters more interested in spending on a phone, so the used car market faces a gradual decline. So by the time their finally dominating the market it will have gone.
   
• How does it solve the "disatisfaction" problem mentioned? Buying online isn't going to improve prep on it's own, that's going to be down to dealers having no choice other than using his platform?
   
• There is a good reason Amazon have stated they aren't going near used cars for a long time.
   
• The manufacturers will be going to an online model over the next decade, is that a competitor to him or channel for them?
   
• Whilst Lovefilm was a good concept at the right time, I'm not convinced Zoopla has any great market changing dynamic. Rightmove yes, Zoopla?

The above may be wrong/right or complete bollocks, but my tuppence worth.

Edited December 4, 2018 by CCC

[Tony F 38]

4 hours ago, umesh said:

Mr Chesterman said: "I'm delighted to announce this investment in my latest venture, Cazoo, and am very excited by the opportunity to transform the used car buying experience, which suffers from poor satisfaction and convenience and is failing to meet the needs of consumers.

"Buying a car should be no different to buying any other product online today."

I think his comments ' which suffers from poor satisfaction and convenience' are insulting to the motor trade, who on the whole do our best in a market full of variables. Mr Chesterman does not appear to have ever had to sell used cars, and have to deal with price led car buyers, whose unrealistic expectations generally lead them to look at the worst cars first, being sold by the worst types, before realising you generally get what you pay for.

Lets hope its a success, but it will take a lot of convincing us car dealers to part with extra advertising money, having seen many of these ventures come and go over the years. I know what I wouldn't do with 30+ mill.

4 hours ago, umesh said:

"Buying a car should be no different to buying any other product online today."

Unfortunately...it is!

[Tim H 16]

I may be wrong here and not fully understood the concept, but all I see is he's trying to do is muscle in on Autotrader's platform dominance with a new platform and a headline grabber..?.

The supplier/ Dealer will still have all the responsibility of product, price,prep,warranty, delivery CRA etc...

Autotrader can head him off at the pass by adding a "Home Delivery" tick box in the search options, and charge the dealer for the pleasure of inclusion.

[David Ayers 171]

70% of my Car Finance 247 customers commit to buying a vehicle at a ridiculous Apr without seeing it. The latest based on only 4 photos.

Simon sells all his cars by video.

They are offering 7 days return. Not sure how this is relevant with the distance selling regs.

Just wondering where they will get their stock. Rental or lease companies?

[JimmyGlen 13]

9 hours ago, BHM said:

You f*** ing what? Really? Perhaps in the new or nearly new market but I certainly won’t be doing any distance selling of 8yr old, 100,000 mile cars.

Tbh that one single comment shows a fundamental misunderstanding of the secondhand car market and, perhaps more importantly, of punters expectations!

 BHM, word for word what I wrote on the IMDA post! Literally a carbon copy!

[have a word with the wife 299]

tesco couldnt get stock [ the RIGHT stock] and they had clubcard !

virgin cars had the hippies face sorry, i mean branson face [ never trust a hippy] and that failed.

who is this face and whats the usp? who is achoo? [ bless you] i mean cazoo?

bottom line , you cant get the stock................not the RIGHT stock 

[It's me 615]

9 minutes ago, have a word with the wife said:

tesco couldnt get stock [ the RIGHT stock] and they had clubcard !

virgin cars had the hippies face sorry, i mean branson face [ never trust a hippy] and that failed.

who is this face and whats the usp? who is achoo? [ bless you] i mean cazoo?

bottom line , you cant get the stock................not the RIGHT stock 

all those posts and you nailed it

[ExCouncilJobsworth 27]

It will work 100%

He's looking to create an All in One platform unlike AT eBay etc.

There's currently little sites out there that offer private rentals to people. He will include this in his site aka the big fish the big daddy!

In terms of sales he will have a rating system. As most of you have pointed out AD sells by videos. Exactly that. 

5* seller will provide endless photos a video and will have 99% positive feedback. 

The higher your rating the more chances punters picking your cars over a little jobsworth like me with 2*

Again, those of us with stock that sits there for months on end may think "hmm why not put this out on a rental?" and you might well be TEMPTED too if the car has been sitting for months and it didnt cost you much of course. (You might disagree now... But people change views over time AND when the offer is there and it's tempting you will give it a shot. How many times have we done this? Remember who trusted internet banking at first?)

This guy has a point - retail is closing down and closing down fast. People have become lazy (and fat) and shop online. 

Just look on facebook guys - people put comments up in market place and groups "want car for £2000 what can i get?" this is another sign of laziness....in fact these people want free delivery and the car to come to them....exactly what this chappie is offering.

This Mr Jobsworth has studied business studies as well as planning... And in business there is something called market manipulator... He will manipulate the market.

Another MM is Mike Ashley. He has proposed a 20% tax on sales made online to encourage retailers to retain outlets and save the retail world (instead of shops closing down). Its a bloody well thought idea!

[trade vet 703]

6 hours ago, ExCouncilJobsworth said:

It will work 100%

He's looking to create an All in One platform unlike AT eBay etc.

There's currently little sites out there that offer private rentals to people. He will include this in his site aka the big fish the big daddy!

In terms of sales he will have a rating system. As most of you have pointed out AD sells by videos. Exactly that. 

5* seller will provide endless photos a video and will have 99% positive feedback. 

The higher your rating the more chances punters picking your cars over a little jobsworth like me with 2*

Again, those of us with stock that sits there for months on end may think "hmm why not put this out on a rental?" and you might well be TEMPTED too if the car has been sitting for months and it didnt cost you much of course. (You might disagree now... But people change views over time AND when the offer is there and it's tempting you will give it a shot. How many times have we done this? Remember who trusted internet banking at first?)

This guy has a point - retail is closing down and closing down fast. People have become lazy (and fat) and shop online. 

Just look on facebook guys - people put comments up in market place and groups "want car for £2000 what can i get?" this is another sign of laziness....in fact these people want free delivery and the car to come to them....exactly what this chappie is offering.

This Mr Jobsworth has studied business studies as well as planning... And in business there is something called market manipulator... He will manipulate the market.

Another MM is Mike Ashley. He has proposed a 20% tax on sales made online to encourage retailers to retain outlets and save the retail world (instead of shops closing down). Its a bloody well thought idea!

You might be right,although I don’t think there will be a trend starting for dealers to rent out old stock ( third party cover).When you get it back,it then has to be sold as an ex rental car or you could incur a big fine.I was watching Mike Ashley running rings round the MPs and like you I did think his idea of an online sales tax was a good idea.However that would probably mean costs for us at BCA and AT and the others going up again.

[ExCouncilJobsworth 27]

23 minutes ago, trade vet said:

You might be right,although I don’t think there will be a trend starting for dealers to rent out old stock ( third party cover).When you get it back,it then has to be sold as an ex rental car or you could incur a big fine.I was watching Mike Ashley running rings round the MPs and like you I did think his idea of an online sales tax was a good idea.However that would probably mean costs for us at BCA and AT and the others going up again.

He might strike a deal with BCA.

He may even get independent engineers to do your PDIs and photos.. (Get BCA to redo photos for you if you got this Cazoo Elite account) In essence you become a middle man the car gets delivered directly to the customer from BCA site (if it sells that quick) thus reducing your stock / space at your premises = lower costs for you + time saved

So on Mon you won an Audi A3 at auction you got 3 days to pay then 3 days to collect on a Gold card (more days if you got black and platinum).

So rather than arrange delivery or collect from BCA - later on Mon or early Tues BCA send you photos. You do the Cazoo ad on Tues. (You still got your 3+ days collection but you haven't "lost" your 3+ days of payment because Mr Cazoo has got a deal in place to favour dealers) so you got 6+ working days from Tues.

If it sells then you can get it delivered...directly from BCA to customer. Of course there will be the moaners and rejecters but the AD system works. 

In the meantime you save on PDI collect prep times etc. Of course this will apply for somewhat decent motors with an AA report or cazoo equivalent. 

If that makes sense? 

(I might be losing the plot)