Innovative Retailer: Cazoo

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Name: Cazoo

The Place: Billed as the new disruptor on the block of one of the last consumer markets not yet transformed by digital commerce – yes, it’s used cars.

The Story: It’s very early days for Cazoo. Seriously, this thing launched just as Covid-19 was getting going in China, which may have been the luckiest business timing ever. But it’s too early to say. What you can say is that with Alex Chesterman behind it the project has impeccable digital credentials and investors are queuing up to throw their money at it.

So when I think of used cars I think of big yards where every price ends in lots of 9’s with men in shiny suits: Yes, well. Most people do, that’s the opportunity that Chesterman sees. The sheer amount of time people spend looking around the dealerships and the generally bad reputation of the sales people seem out of place in these online times.

But wait, who is this Chesterman character and why do investors love him so much? Simples. What he is trying to do here with cars, he has already done twice over. Count it – twice.

Impressive: First in the DVD rental and streaming market he rolls up with LoveFilm, which quickly became the biggest UK operator and was snaffled up by Amazon in 2011. And because once is never enough he only goes and upends the estate agency industry too.

Go on then, which one? Zoopla. Sold to an American PE firm in 2018 for $2.2 billion. In fact, such a serial entrepreneur is he that in 2016 HM the Queen awarded him an OBE for services to digital entrepreneurship.

So far so good. And how is Cazoo going to shake up the car sales business then? For a start it’s all online. They are banking on the fact that people don’t have the time or inclination to do a lot of physical browsing in outdoor yards and that looking at very good images is going to be just as good.

Ah, so no test driving then: Nope. But what they do offer is a week-long trial after which if you decide you don’t like the car after all then they will come and take it away again – FOC. That’s dealer-speak for free of charge.

Actually now I come to think of it if the customer does not pick up the car from a dealership then how does it arrive? Via a large fleet of vans. The delivery staff will then do a complete handover with all the usual blah de blah. And if the consumer is part exchanging then they will take the old car back with them in the van and out of the owner’s life forever.

Sheesh. It all seems convenient. I wonder why no-one was doing it before: Mmmm. Well some people would argue that really quite a few dealerships round the country were doing pretty much this but maybe not with such a coherent and national profile. The idea originally was to be totally online – a completely digital service, including financing all done from your armchair. In fact the marketing strapline is that a customer can choose, finance and have a new car delivered in 72 hours.

I can sense a ‘but’ coming here: Again it’s too early to say but six months after launching, Cazoo announced it was buying Imperial Car Supermarkets with 18 locations across the UK. This was billed by Cazoo as best of both worlds in that it marries up its marketing nous with Imperial’s infrastructure and gives them a nationwide set of collection and storage hubs. Other less charitable people in the car industry sucked in their breath and said: ‘Completely digital my foot. What’s that if it’s not buying a load of used car yards.’

What shall we call them then? Well, Cazoo are calling them Cazoo Customer Centres (CCS) so we shall too. It absolutely is a bit too early to tell if Cazoo is finding its digital-only label difficult to maintain or if they will mainly store refurbished used cars in them and maybe pass the odd customer their cars face-to-face rather than delivering to the door. But it’s not the only partnership Cazoo has entered into.

Proceed: It doesn’t take a genius to work out that all the cars Cazoo receives have to be reconditioned and refurbished to a very high level before they can be resold. And that requires a lot of space and kit. So early on it went into business with BCA.

And what did it get out of that deal? More infrastructure really, including a premises in Corby that can service 50,000 cars per year and store up to 6,000. Plus the part-exchange disposal services. And finally and very importantly the imagery tech AutoOnShow.

It sounds to me as though Chesterman is not interested in reinventing the wheel particularly with this one: I like that analogy. But yes, it seems the main aim is to make Cazoo a household name nationally in the way that no-other company is in this particular space. He knows he needs somethings that already exists and is happy to buy it in.

How is that nationwide marketing strategy going? Pretty well. Two Premier League sponsorship deals in the bag with Everton and Aston Villa. And Cazoo scored another goal when it gave a £250 discount to health workers who were buying cars to get safely to work during the Covid-19 lockdown.

Clever: Yes, one week and 50% of all its orders were from health workers. That’s how you get the brand recognition going. And that’s what the investors are banking on.

Who are they by the way? Goodness. General Catalyst who also invested in Deliveroo and Airbnb are on-board. As are DMG Ventures. Cazoo’s total investment to date makes it possibly the record holder for investment in a British start-up. Of course the other thing everyone is banking on is that post-Covid-19 the consumer shift to digital channels remains a permanent fixture.

Competitors? Yes, obviously. And the main one hasn’t even launched yet either. Carzam is due to appear at the beginning of September with the mother of all used car salesmen, Peter Waddell, at the helm. It’s going to be a battle royal but Cazoo launched first and now we know the catchphrase which is half the battle.

Do we? Cazoo Yeah we do!

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