Carvana: Disrupting The Industry One Car Vending Machine At A Time

I was recently in the market to buy a used car.  I was not particularly looking forward to this as the process in buying a car is relatively painful.  You figure out what type of car you want, find that particular car or a similar one at a local dealership, go visit that car, get harassed by the car salesperson, take a test drive, and then haggle on a price for the car and then sit in a cubicle to do all of the paperwork.  It’s not a fun process. Typically you leave the car dealership with feelings of regret. I was dragging my feet in purchasing a car until I heard of a company disrupting the industry called Carvana.

Carvana developed a completely different way to purchase a vehicle. They only sell used cars which have one owner and no accident history. They certify the used vehicle, and then put a complete 360-degree view online highlighting both the features of the car and any cosmetic issues with the car.  They work similarly to CarMax in that you do not haggle on the price. Once you have chosen the car you want you purchase it online, complete with financing options, and it is delivered to your doorstep a week or two later. Once you get the car, you get a week to drive the car around and determine if you want it or not. If you decide you don’t want it, Carvana will take it back and you can choose another car.  Carvana does not have typical car dealerships around the country. Instead they have a few car “vending machines” in select locations that holds their car stock that can be delivered across the country.

Being an early adopter of technology, and using new and disruptive forces, I was excited to give this a try.  I had done my research online and wanted to purchase a Nissan Rogue. I went on to Carvana’s website and selected to view Nissan Rogues with less than 50,000 miles and less than $18,000 in price. I also chose a few features that I wanted in the car. Carvana showed which cars they had available that fit my parameters, and from there I could view each car and determine which of the Nissan Rogues that I wanted.  I then found the car that fit the parameters I liked the most and got ready to purchase the vehicle. This is where Carvana really shines. Instead of wasting my day at a dealership going through the purchase process, I was able to purchase the car in a matter of ten minutes, including all of the financing paperwork. Ten minutes. Their system had me fill out some paperwork, select the terms of our loan, sign electronically, scan my driver’s license and I was done.  I did not have to haggle. I did not have to wait in the finance office. I did not have to wait for the temporary license. I did not have to physically sign a bunch of paperwork. That was amazing.
The Rogue was dropped off 10 days later.  I got to inspect the car and test drive it for a week.  There was one issue with a headlight that Carvana said they would replace at no cost to us. They made the whole process in purchasing a vehicle painless and easy, which is completely different than the usual car buying process.

So what does Carvana show us in disrupting an industry or running a business?  They took the most painful part of the existing process and made it the complete opposite.  The disrupting force is really driven by changing the customer experience. Where the customer has friction in the processes we design is where there is a prime place for change and disruption. Amazon was disruptive to the retail industry because no longer did we have to go to a few different stores to purchase all the items we needed.  We had the ability to make those purchasing decisions on our own time and have what we needed delivered to us. Netflix was disruptive to the video rental store industry because they allowed us to select the movies we wanted and have them delivered right to our homes. We did not need to worry about late return fees or going to the rental store and not having the movie we wanted.
The question to business owners is where in your customer process is there the most friction or pain points for the customer? And what can you change in that process to improve the experience for your customers?