Consumers are increasingly choosing to take their car buying experience online. In a recent survey, 53 percent of U.S. consumers would be either extremely or very likely to buy a car entirely online, and 59 percent said that they expect to be able to conduct purchases through dealership sites.
But that’s the missing piece Hunter Gorham saw between e-commerce marketplaces and auto dealerships — new cars.
Currently, online auto marketplaces are focused on pre-owned vehicles and usually own their own inventory, ignoring established auto dealerships in the area.
“The other digitals completely circumvent dealerships,” says Gorham. “My thought process was, in the same way that Uber doesn’t own their inventory, we could create a marketplace that embraced the right dealers and allowed us to have new vehicles. Currently, we’re the only marketplace that has new vehicles available.”
After leaving a 14-year career in auto finance at Ally Financial, Gorham followed his gut to solve the car buying experience and founded Joydrive in 2016. The e-commerce marketplace allows customers to buy both pre-owned and new vehicles online, directly from vetted dealership partners.
To find the right dealers to partner with, the team scrutinizes customer reviews, employee retention, and their openness toward a digital selling option, as well as conducts in-person interviews. Then, they bring them on board in a flat-fee, SaaS revenue model. “Many of the dealers, we have found, wanted to offer a digital experience and just didn’t have all the puzzle pieces,” says Gorham.
After beta testing the online marketplace in 2017, the Joydrive team started expanding at the beginning of this year, starting with only 500 cars. Half a year later, they have over 12,000 vehicles in five states.
Joydrive helps the dealerships with customer retention and follow-on service for their vehicles, and removes the tension often experienced on-site with pushy salespeople. Customers can shop by location, brand and price. Once they’ve decided on a car, they can see financing options available and put down a $500 refundable deposit. The dealer’s customer reviews are also shown in the listing for full transparency.
Within a day, the car is delivered for free if it’s within 100 miles. “We want one consistent experience across our marketplace, regardless of the state,” says Gorham.
“We are starting to break down these geographic constraints through our platform. We’re very high-touch with our dealers, first with the selection process and then we do hands-on training within the dealership. We will even go on deliveries with the designated dealer team to make sure that the experience is consistent with our standards.”
Gorham shares that while the quality of the partnerships are important, they’ve also closely examined customer behavior in order to refine certain features of the platform. “The customer experience is something we try to obsess over,” says Gorham.
“Customers are consuming Joydrive’s site very similarly as to how they would enjoy Netflix. The bulk of our transactions happen late at night. They log on after they put their kids to bed, but when a traditional brick-and-mortar is closed. We had to build tech to solve several friction points like trade-ins and financing.”
For example, the team noted that over 40 percent of their customers have a trade-in. The marketplace now offers a trade-in value in under three minutes. To remove the barrier of entry for customers that might be hesitant to enter their credit card number online, Joydrive added Apple Pay to its system.
Next in the product development pipeline is a new feature called Joydrive Service. “Customers want to know that six months after they buy their car, [they] have a place to go for follow-on service. Customers will call Joydrive Service and say, ‘I bought a car from a dealer in another town; can you tell me who is the local Joydrive dealer so I can go to them for service?'”
The startup has dual headquarters in Seattle and Raleigh, NC, and recently opened an office in Dallas, TX to tap into the state’s growing auto sales industry. Following a $1.05 million round last month, Joydrive is gearing up for national expansion, including Georgia, the Carolinas and across the Northeast.