By Thad Moore [email protected] Feb 7, 2018
The online auto dealer Carvana is rolling into the Charleston area, offering next-day delivery in a bid to change the way the Lowcountry buys cars.
Carvana’s arrival in the Lowcountry on Wednesday comes in the midst of a growth spurt for the Arizona-based startup, which now operates vehicle lots in four dozen cities. That’s roughly double its footprint this time last year.
Unlike other used-car lots, there’s no reason to visit Carvana’s local facility, because it’s a stopping point between big vehicle distribution centers in cities like Atlanta and customers’ homes.
Instead, the car-buying process happens offsite. Sales and financing offers are only made online, and cars are delivered straight to buyers. Trade-ins are picked up, too. Test drives are replaced by a weeklong trial period.
Carvana’s model is relatively unique in the auto dealing business. Unlike most websites, it owns its inventory, and unlike most dealerships, its business exists mostly online.
Its workforce will be uniquely slim, too: The company will have a staff of about five in Charleston, said Ryan Keeton, the company’s chief brand officer. They’ll primarily handle deliveries, detailing and paperwork.
Keeton likens the distribution system as a blend of Amazon’s network of warehouses and the hub-and-spoke model adopted by airlines, which partly explains why the company has focused its growth in cities like Charleston around the Southeast. It makes more sense to cluster around hubs like Atlanta rather than scatter around the country.
Sales have expanded quickly as the company has reached more cities, running at a clip of about 40,000 cars a year in the second half of 2017.
“We want to grow really, really fast, as you can see, but we want to do it diligently throughout our network,” Keeton said.
Carvana’s roughly 10,000 vehicle offerings run from about $6,000 to $50,000, but the typical sale lands around $18,000, according to corporate filings with the U.S. Securities and Exchange Commission.
But breaking through in new markets is challenging, Keeton says. E-commerce counterparts like Amazon have built empires selling items like books and sundries, but cars take far more confidence. Few online retailers have price points in the thousands, after all.
“We realize that we have to build trust and legitimacy in the market,” Keeton says. “Every market that we enter we’re kind of climbing that hill again.”