With used car purchases surging in recent years, Vroom is well positioned to expand into the fragmented market, introducing not only ecommerce but also valued services.
Vroom’s business model to revolutionize used car purchasing
- Buying a new car is often considered to be an incredibly stressful experience, with used car purchases only compounding upon that stress with uncertainty of the cars actually value and consideration due to the additional factors second hand use brings
- Vroom promises to change that by taking the process online, thus providing greater transparency to customers through easy price comparisons and simplifying the process by taking away the negotiation aspect
Used cars have a large market but small profit margins
- Despite an expanding market, consolidation had not achieved the profit margins Vroom had hoped for, causing its profit margins to shrink as it expanded into new markets and provided new products.
- However, Vroom seems to have found a potential solution through its valued-adding products such as insurance and financing which have high margins and provide over 50 percent per car margins.