Thanks to the rise of e-commerce, buying a car on the internet has become as easy as ordering food or booking a hotel. Seattle startup Joydrive is riding this trend and just raised more cash to grow its online vehicle marketplace.
The 15-person startup, co-headquartered in Seattle and Raleigh, N.C., has agreements with 140-plus traditional dealerships who use Joydrive to sell their cars online.
After launching in 2016, Joydrive is now live in 14 states and has 30,000 new and used cars on its marketplace. That’s up from just 3,000 cars and two states a year ago.
The company has also reeled in an additional $5.7 million since February, including a $1.1 million round last month. Total funding to date now at $10 million.
That fresh cash isn’t coming from traditional venture capitalists. Rather, it’s physical car dealerships that have a front-seat view of what Joydrive is doing.
“These strategic dealers are industry influencers uniting together to lead the change in auto sales,” said Joydrive CEO Hunter Gorham.
Joydrive lets consumers shop from the comfort of their home and avoid what can be a stressful experience at a dealership. Its marketplace provides options from various dealers at the same time.
The company’s traction and interest from dealerships comes amid a rapidly-changing car industry. Other startups such as Seattle’s Tred, Carvana, Vroom, and Shift — which reported $135 million in revenue last year — are also building online dealerships. Tesla sells directly to consumers while BMW and Mercedes are rolling out subscription options.
Tech giant Amazon has inked partnerships with manufacturers including Fiat Chrysler and Hyundai for test drives and online-buying; CEO Jeff Bezos recently said he’s “very excited” about the technological revolution happening in the auto business.
Meanwhile, some are questioning the existence of private car ownership given the proliferation of Uber and Lyft, along with other new mobility options such as bike-share, car-share, and scooter-share. “We believe that the world is at the beginning of a shift away from car ownership to Transportation-as-a-Service,” Lyft wrote in its IPO documents.
But for now, Americans are still buying cars, and Joydrive is enabling a new way to do it.
The company bills itself as the nation’s largest online marketplace for new and used cars. Its business model is similar to Uber and Airbnb, given that it doesn’t own any inventory.
“As Uber and Airbnb own no cars or homes, Joydrive’s asset-light model leverages existing inventory and infrastructure of its select partners,” Gorham said. “Thus, Joydrive requires dramatically less capital than online used-car only dealers that own their inventory.”
Joydrive does not charge fees to individual customers, who can use the company’s built-in financing and trade-in services within the platform. It makes money by collecting a monthly subscription fee from dealerships.
The company offers home delivery in as fast as one day and uses a five-day or 250-mile return period; less than one percent of its transactions have been returned.
Joydrive also recently launched a “Sell My Car” feature that lets people sell their vehicles to local dealers without the purchase of a new car.
Gorham previously spent 14 years working at Ally Financial, the largest U.S. automotive finance company. He founded the startup in part to help people like his mom navigate a process that has historically lacked transparency and felt fraught for consumers.
“I couldn’t send my own mom in to buy a car unless I went and protected and guarded her every step of the way,” he told GeekWire last year. Joydrive hopes to change that.
Source: Geek Wire
