Carvana officially opened its car vending machine tower Thursday in Frisco, giving online shoppers a fun new way to pick up their vehicle.
The seven-story glass tower holds 32 vehicles that already have been purchased online. But the used-car startup actually pulls from an inventory of more than 7,400 vehicles from all around the country.
Ryan Keeton, co-founder and chief brand officer, explained the process to Dallas Innovates and gave us a tour of the new facility.
HOW IT WORKS
Cars are delivered from distribution centers where they are inspected and certified. Keeton said it’s similar to Amazon for cars.
“We’ll get the car brought here, we’ll have it up in the tower waiting for you,” Keeton said. “You walk in, we give you this commemorative coin. You find your name in the kiosk, select it, deposit the coin, and the system triggers.
At that point, it’s all automated. It goes to the seventh floor, grabs your car and deposits it in the space here. The door closes, the front door opens, you see your car, and you sign one piece of documentation, title, and registration, and at that point, your seven-day test drive begins.”
Customers can still have their Carvana vehicle delivered to their home or office if they choose.
LOCATION, LOCATION, LOCATION
The prime location, off the Sam Rayburn Tollway across the highway from Toyota’s North American headquarters, catches people’s attention and makes for a memorable experience, Keeton said.
“We wanted to create an experience that when you’re offering a pickup, it didn’t feel like you were going to a traditional dealership,” he said. “We wanted it to be fun — there’s not going to be salespeople. You’re going to want to tell people about it.”
That means there’s no haggling on the price. The sticker price on the website is the price you pay. But Keeton said their price is often lower than Kelly Blue Book.
They also don’t charge all the processing fees that traditional dealerships charge.
Keeton co-founded Carvana in 2013 as an online-only car-buying website. Currently, Carvana delivers cars to 23 markets from three large distribution centers.
ONLINE CAR BUYING WITH A TWIST
The first car vending machine opened in Nashville in 2015. The Frisco location is the fifth car vending machine tower with the others being in San Antonio, Houston, and Austin. There’s also a car lot in Atlanta.
Plenty of companies sell used cars online these days — Carvana just adds its own twist with the glass tower vending machine concept.
It’s about giving people another way to buy cars in much the same way that Tesla disrupted the car industry by selling directly to the public.
“I don’t think we’re being rebellious. I think we’re just presenting an alternative,” Keeton said. “You look at so many different industries out there moving things online, giving people more selection, and lower prices. Like the Amazons and Apples of the world.”
It’s meant to save consumers time and money by streamlining the process and giving them access to thousands of cars that they own in their network.
The majority of their vehicles are 2014s or newer. The oldest model Carvana sells is 2010, according to the website.
The cars come from trade-ins, wholesale channels, former lease vehicles, and other sources. It doesn’t sell vehicles that have been in a car accident.
If a buyer isn’t satisfied with the car after the seven-day test drive, they can return it, no questions asked.
The vehicles also come with one-year warranties.
Carvana filed for an IPO recently but the startup has also faced criticism because it has never turned a profit.
Fortune reported that Carvana lost $93.1 million in 2016 and $365.1 million in revenue. That’s three times what the company earned from vehicle sales in 2015.
Keeton declined to comment on the company’s financials but said everyone is entitled to their opinion.
“We don’t publicly comment on our growth performance or revenue,” Keeton said. “We’re a startup that’s trying to do something in a new way that’s growing really fast. That comes with expenditures. We’re a capital-intensive business.”
He also declined to comment on how much it cost to build the car vending machine in one of the hottest real estate corridors in North Texas.
Delivering what’s new and next in Dallas-Fort Worth innovation, every day. Get the Dallas Innovates e-newsletter.