Is The Car Market Ready For Carvana?

Carvana is an online business that reflects a solid online marketing concept. The site deals with buying and selling cars. Although the need to purchase vehicles is embodied by millions of customers, the number of online hubs for buying and selling cars is hardly crowded.

Maybe the reason it is not crowded is because the interest level in this type of business model is low. Carvana has suffered a huge loss after debuting as an IPO. Carvana lost a massive 26% of its stock value on its very first day. The IPO opened at $15 per share and ended up being worth only $11.10 when the trading day closed. Yes, this is only the first day but it was a pretty bad first day.

Carvana’s concept is relatively simple. Buyers can purchase a used vehicle online without ever having to go to a lot or dealing with sales personnel. Better yet, Carvana promotes door-to-door delivery. The car is dropped off at the buyer’s residence. The buyer also gains a week worth of test driving to make sure he/she is happy with the purchase.

The cars are not junkers either. Rental fleets comprise a significant number of vehicles, which indicates they have low mileage and are in good shape.

Sellers also get a nice benefit from the business concept. Simply listing the vehicle online removes a number of unwanted or cumbersome steps.

A brutal first day on a public stock exchange does not automatically mean Carvana is doomed to failure, but there is something about Carvana that may undermine its prognosis for success. People to like to check out a car in person before making a buy. Ordering a book online is no-risk. Buying a car online, well, this is a little trickier. Carvana may not be able to overcome this hurdle.

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