By Phil Gibbs on November 12, 2015
Thanks to Carvana, Nashville has a new car vending machine. Carvana, founded in 2013, is disrupting the car buying experience. Traditionally, buying a used car involves visiting multiple car lots, haggling with sales people over price and struggling to understand financing–it could be described as complex, inconvenient, time consuming and probably expensive.
With the Carvana model, you shop online, take a high definition, 360 degree virtual tour of cars, select and finance the car of your choice, and either have it delivered to your home or pick it up from a car vending machine, with a seven-day test drive.
And according to Carvana, you save money. In as sense, it is an efficiency innovation as described by Christensen. The traditional business model requires a large inventory, sitting on expensive real estate that is staffed by a team of sales people, resulting in a lot of fixed cost.
While technology is important in the Carvana model, it is not breakthrough disruptive technology, but business model innovation that drives the cost savings. The customer experiences simplicity, convenience and cost savings.
This new model is likely to attract enough customers to significantly impact more traditional used car dealers. Certainly Nashville’s new car vending machine has captured a lot of attention.
But, is Carvana already a dated model? Will it be disrupted before the new vending machine is even completed? This is the difficult question that even the most innovative companies have to ask.
Local Motors, a Phoenix-based company, manufactures cars using crowdsourced designs and 3D printing technology in micro factories, with a factory under construction in Knoxville, Tennessee. The company recently announced that they will start pre-selling cars next spring with delivery expected in 2017.
So could Local Motors potentially disrupt Carvana? Local Motors is rethinking the whole car ownership experience. Rather than trading in your car as has been the practice, with Local Motors you can recycle your car.
You simply take the car to your local micro factory, get an upgrade or have the car melted down and 3D print a new car. Sounds like it has the potential to disrupt the whole used car market.
So just how fast is everything moving? It hasn’t been long since mega used car dealers like CarMax came along and disrupted small, mom and pop car lots. Then Caravana came on the scene with a new model that put traditional used car lots and mega dealers at risk. Now on the horizon is a whole new model that may make even the concept of “used car” antiquated.
It appears that the pace of innovation is accelerating at an unbelievable rate. If it is happening with used cars, you can believe it is happening in almost every sector. It just may not have a fancy car vending machine to grab our attention!
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