Hot takes on online dealers

The real Flippening no one is talking about:

Carvana has nearly as many cars available online as Cargurus in some major markets.

A few years ago this would have been unimaginable. Check this out...

If you search from a Miami zipcode (33101):

Carvana: 41,310 units avail Cargurus: 46,242 units avail (within 100 miles)

Cargurus' most powerful moat - having the largest selection of cars - is diminishing.

OF COURSE Carvana is displaying nationwide inventory whereas Cargurus is only within 100 miles...

But guess what?

Consumers don't give a flying fajool.

Consumers want options.

I feel bad for the employees.

I really do.

But Vroom is a dead company

The only way they survive,

And potentially even thrive..

Is if they vertically-integrate Ditch the flashy Superbowl commercials

Just OWN the end-to-end customer experience

And improve your unit economics.

Management needs to wake up FAST (no pun intended)

Because right now, it’s a ticking time bomb…

Ditch the flashy Superbowl commercials,

Just OWN the end-to-end customer experience...

And improve your unit economics.

Carvana’s acquisition of ADESA proves something VERY important:

Vertically-integrate — or die.

Your move, Vroom.

I wouldn't touch the stock of ANY 3rd-party listing site. Here's why:

  1. They're losing relevance: Big dealer groups are growing their inventory.
  2. Weak economics: All they do is provide leads.
  3. Heavily dependent on Google Search: Just look what Apple did to Facebook...

The industry is maturing.

Big players are vertically-integrating.

Carvana and other big dogs are aggregating as much demand as 3rd-party listing sites.

In some markets, Carvana has even more web traffic than 3rd-party listing sites.

This is unprecedented. To elaborate:

Third-party marketplaces will begin vertically-integrating and become FIRST-PARTY retailers.

That’s why.

ACV Auctions...

Biggest hurdle for long-term growth:

Growing supply without significantly compromising margins.

Love the product. Hate the stock.

Vroom is the worst of all online auto dealers.


They outsource too much.

No control over experience and the lowest margins.

I’m not a fan.

First, let me start by saying that:

Only thing keeping Carvana from 90% market penetration by 2030 is access to supply.

They’ll figure out the operational issues.

But OEMs give their dealers ROFR on all the good supply.

That’s Carvana’s biggest barrier to growth.

Carvana has built a great experience.

But it’s not perfect.

Few downsides:

  • No service facilities. Buy the car and you’re on your own.
  • Massive operation. You’re a name and a number.
  • Growing pains. Most customer complaints are related to delayed vehicle registrations.

Welcome to the Car Buyer Cheatsheet
Welcome to the Car Buyer Cheatsheet