Carvana is a startup offering point-and-click car buying with speedy delivery.

Carvana deals exclusively in used cars, the general idea is straight out of the e-commerce playbook: Cut out the middleman. Without a showroom, bad coffee, or a squad of salesmen, Carvana claims to sell cars for a lot less than old-fashioned dealerships.

The buyer saves about four hours of time and $1,500 in value

"The buyer saves about four hours of time and $1,500 in value," Chief Executive Officer Ernie Garcia says. "I’m convinced dealerships aren’t purposefully creating bad experiences—they just have huge cost structures they have to support."

Carvana


Once shoppers find a ride they like, they can take a virtual tour online, where any dings, scuffs, or scratches are helpfully flagged. Clicking through, they can finance the car through Carvana, tack on a warranty, and schedule a delivery time.

The fastest purchase recorded by Carvana so far took just 11 minutes, start to finish. The startup’s legions of rivals, including Edmunds.com and TrueCar, mostly seek to cut out the haggling, not necessarily the trip to the dealership.

Carvana


Instead of test drives, Carvana offers a seven-day return window in which there is no penalty for sending back the car. About 2 percent of buyers back out during that time, Garcia says, but half of those customers simply buy a different vehicle from Carvana.

Getting inventory isn’t a problem. The company buys from individual owners, rental-car fleets, and auctions. Pricing isn’t an issue, either, given the highly fluid state of the used-car market.

Carvana


The biggest challenge, according to Garcia, is convincing people it’s a good idea to order a car sight unseen. Carvana’s ability to court used-car buyers depends on just how effectively it can explain the advantages of its unusual sales model. "It takes some time for people to get comfortable with it," Garcia admits. "But everyone who does it helps spread the word."

Source: bloomberg.com