Carvana, Vroom & Other Companies That Are Changing the Way We Shop for Cars

Online car sales have become a major growth category since the pandemic, though the seeds of change had already been planted before COVID-19. Disruptive e-commerce companies specializing in pre-owned automotive sales have been debuting up all over the world in recent years. The mantra of meeting customers where they are (online) is a crucial strategy for these startups

For these 100% online car sellers, the COVID-19 pandemic has been like putting premium fuel into their engines. With dealership lots unable to welcome customers on-site and strict lockdowns in effect, more and more buyers turn to online sales; not just out of necessity, but also because of the value being offered – an efficient way to buy cars, convenient home delivery, easy return policies, fewer fees, and more.

What’s driving the online car shopping revolution?

It might not come as a big surprise, but the car sales industry has a notoriously high dissatisfaction rate for consumers. It also has one of the lowest levels of penetration for e-commerce (around 0.9%). According to our own survey (see above), a major factor in customer dissatisfaction is the buying experience with salespeople; the daunting stage of negotiating price or feeling pressured into a sale. The general dynamic and power imbalance of the transaction leaves many wanting an alternative.

A recent consumer study by J.D. Power, an American data analytics and consumer intelligence company, showed several reasons why consumer satisfaction is now trending up for car sales, thanks to activity moving increasingly online.

1. Avoiding face-to-face interaction with dealership salespeople and the usual haggling experience leads to increased post-sale satisfaction.
2. Customers prefer doing their paperwork, such as financing, in the comfort of their home; not confined in someone’s office. 
3. Customers are more likely to purchase add-ons like warranty and pre-paid maintenance when they can shop at their own pace and not under pressure during a face-to-face sale.

Another survey from CarGurus reinforced the notion that more drivers are comfortable with the online car buying experience, from choosing a vehicle from a large online selection to working out the financing and insurance remotely. Prior to the pandemic, 35% said they were open to buying online. That number has now ballooned to 60%. And 41% now say they prefer buying online, marking a huge jump from only 19% who preferred buying online prior to the pandemic.

The online car companies making inroads

The online car sales world, much like the non-online dealership space, is regional by nature. For all kinds of logistical and regulated reasons, we buy our vehicles locally, which is why these companies are specific to their countries of origin. Here’s a global overview of all the online car sales companies putting customers behind the wheel in a digital way.  

Carvana

Headquarters: United States 

Arizona-based Carvana is the largest e-commerce-only platform for buying and selling used cars in the U.S. Founded in 2012, Carvana allows you to research and identify vehicles to buy, inspect with 360-degree technology, buy or finance, add warranty protection, and schedule delivery or pick-up all from your desktop or mobile device.

Available in Canada? No 

CarMax

Headquarters: United States 

Founded in 1993, CarMax is a used vehicle retailer with a strong online presence, but it’s not online-only. This omnichannel company has over 200 stores across 41 states and 25,000 employees. With over 45,000 CarMax-certified vehicles, every make, model, and vehicle type is accommodated. CarMax offers its customers a 30-day moneyback guarantee, 24-hour test drives, and home delivery service with curbside pickup.

Available in Canada? No

Vroom

Headquarters: United States 

As the second biggest e-commerce platform for buying and selling new and used cars in the United States, Vroom competes aggressively with Carvana. The New York-based company made headlines in June 2020 when it went public and was valued at over two billion dollars. You can buy cars online anywhere in the country using Vroom, finding the best deal possible, but you will be charged a $599 home delivery fee for that service.

Available in Canada? No

Shift

Headquarters: United States 

A smaller player in the online cars sales industry, Shift competes by leveraging its relationship to Lithia Motors, the third-largest dealership network in the U.S. This allows Shift to offer cars for retail and wholesale purchase. Similar to its competitors, you can search cars online, schedule on-demand test drives, and purchase from your home or at your preferred test drive site.  

Available in Canada? No

Cazoo

Headquarters: United Kingdom

This British online car vendor claims to be “transforming” the car-buying experience across the UK and Europe. The company’s mission is to create a model where consumers can simply and seamlessly buy and finance a car entirely online and have it delivered in as little as 72 hours. Cazoo will be familiar to fans of English soccer. Its logo can be found on the jerseys for English Premier League teams Aston Villa and Everton. 

Available in Canada? No

Cinch

Headquarters: United Kingdom

This UK online car seller is a relative baby compared to others (it launched in late 2020), but it has deep pockets. It’s owned by Constellation Automotive, the largest digital used car marketplace in Europe, providing service that involves 11 million different vehicles each year. Cinch offers plenty of benefits, including a “faff-free” buying experience (no hassle), with plenty of selection and free home delivery.

Available in Canada? No

Kavak

Headquarters: Mexico

Founded in 2016, this Mexican startup is out to bring more transparency, security, and access to financing in the used car market in Mexico and Argentina. According to the company, 90% of used car transactions in Latin America are informal (private sales), which leads to a 40% fraud rate. Kavak buys used cars from individuals, refurbishes them for sale and also offers warranties – all online. They plan to expand to the Brazilian market and beyond. 

Available in Canada? No

LatAm

Headquarters: Mexico

A little different from its peers, LatAm Autos is out to create better online classified listings for auto sales. LatAm participates in the transaction by offering products like financing, insurance, and warranties. This should reduce the common frauds and rip-offs that happen in the world of private car sales.

Available in Canada? No

Canada Drives

Headquarters: Canada

Founded in 2010, Canada Drives’ mission is to be the easiest place to buy and sell your car in Canada. Combining cutting-edge technology and exceptional customer service, Canadians can shop, finance, purchase, and even trade in their current vehicle completely online. The online-only model means less overhead and no dealer fees, and those savings get passed on to the customer in the form of lower prices.

Here are just a few things you can expect when shopping for your next car with Canada Drives:

• Hundreds of certified used vehicles to choose from, including over 35 makes and 170 models
• Competitive pricing on low mileage trucks, SUVs, minivans and passenger cars – all of which have been put through a rigorous 150-point inspection
• Free CARFAX vehicle history and inspection reports on every vehicle description page 
• Ability to complete all necessary paperwork from the comfort of your home 
• Home delivery of vehicles as-soon-as the same day; at time and place of your choosing
• Seven days to test-own your car and return it if you change your mind
• Vehicles covered under a no-charge 30 Day / 1,500 km warranty
• Flexible payment and financing options, including a quick pre-approval

Can I buy a car online in Canada?

Looking to buy a car online in Canada? Visit Canada Drives today, the easiest place to buy a car in the True North!