Beepi, Carvana Grow As They Sell Cars Online

We reported back in 2014 that Beepi and Carvana want to cut dealers out of the car business. Both companies allow consumers to purchase a vehicle online and have it delivered to their home. They get their inventory by taking trade-ins, facilitating sales from private sellers and buying cars from their customers. There is no dealership lot involved, the price and financing is agreed upon online and the consumer has a grace period of around a week after which they can return their vehicle with apparently no questions asked.

When we reported on the two companies last, they were securing funding and still relatively unknown on a national scale. The question is, what’s happened to those two companies since then? Are they beginning to fade away or is this a technology and duo that is displaying growth?

For Beepi, it’s been a story of making headlines by raising more capital. In late December of 2014, the online car sales company raised a reported $12.7 million dollars. The investors include noted Russian investor Yuri Milner and SAB Capital as well as tech industry investors via crowd funding platform AngelList. They can chalk up this $12.7 million to the $60 million of series B funding that came their way in October of last year, when their organization was valued at $200 million. One of the investors, Gil Penchina, told Re/Code, “I used to be at eBay and am well aware of how much friction there is in buying a car from eBay motors. Beepi takes that friction to zero.” Beepi is reportedly generating revenue at rate of $15 million per year.

If you look at the latest version of carvana.com, you see words that indicate that this online car transaction company doesn’t support the dealership model. Numerous times on the website, the consumer is led to believe that dealers are unnecessary and just taking your money for their own profit. The site mentions “hidden fees” and “dealer overhead.” The organization has also announced Kelly Blue Book integration. Carvana vehicles listed on their website now have a KBB value listed. According to Carvana Founder Ernie Garcia, with the KBB price on their site, “Consumers experience an honest transaction in a convenient, no-pressure online format.” Forbes reported that Carvana is generating $45 million in revenue in 2014.

As a dealer does the growth of these companies concern you? Do you think that they will continue to grow and provide a dealership alternative? What do you think of the way that companies approach the customer experience?