Vroom! Vroom!: Startup Wants Super Bowl To Accelerate Business

Major online used-car brand contrasts its e-commerce platform with the “torture” of a dealership experience.

Vroom has become a roughly $1.5-billion company in a business that the CEO says no one knows about. So Paul Hennessy intends to fix the problem by broadcasting a 30-second ad on Sunday during Super Bowl LV that offers American consumers the “pain-free” option of buying a used car on Vroom’s e-commerce platform instead of going to a traditional dealer.

“The world doesn’t know that you can have a car brought directly to your house, with massive selection, and that all the things you can do through a dealership, you can do through Vroom,” Hennessy, an e-commerce veteran who joined New York City-based Vroom in 2016, told Chief Executive. “And most of us don’t know someone who’s done this even with all of our online competitors.

“We want to tell everyone that this business exists and that now our business is ready for scale. And what better stage than the most popular and most-televised and most-watched event of the Super Bowl to tell our story so that customers can take advantage? It’s such a prominent placement and will be very efficient for us – and we’re ready.”

Vroom has joined major competitors CarMax and Carvana in establishing a completely virtual platform for American consumers to sell a used vehicle and buy another used vehicle. Vroom rocketed to $340 million in overall revenues for last year’s third quarter, its first as a public company, and by now annual sales roughly have doubled the 2018 figure of $855 million.

Covid provided a “tailwind,” Hennessy said. “Consumers said, ‘I want to adhere to social-distancing rules and don’t want to spend the day in a closed dealership,’ so they experimented with models like Vroom. We were doing well before that, but now a lot more people are having many things delivered. We think it’s a structural change that more and more consumers will start to engage.”

Yet, noted Hennessy, the three biggies in online used-car purchases combined have only about a 3-percent share of America’s used-car business via companies, while about 42,000 traditional auto dealers maintain the rest. The nation’s auto dealers have been putting together a massive counter-offensive against pests like Vroom in efforts to hang onto their position in the used-car market as a receding pandemic presumably brings more people out to dealership lots.

What’s more, of the roughly, 40 million used cars sold each year in the United States, about half are “peer-to-peer” transactions between individuals.

So there’s much, much runway for Vroom. And the best way for his company and its peers to really take off, Hennessy believes, is to paint the boldest possible contrast between their model and traditional used-car sales. That’s why the Super Bowl ad depicts a hapless consumer, tied to a chair and being painfully interrogated by a used-car dealer. Then the script flips and the guy is still in a chair – but now sitting in his front yard next to his wife as a Vroom truck pulls up with his new car.

Vroom gives consumers an alternative to both the showroom and the netherworld of peer-to-peer sales.

“Consumers bring their car into a dealership and get a low-ball offer and say, ‘I know I can make more money on this myself,’” Hennessy said. “They don’t want to accept the low offer, so they do their best at eBay Motors, or on Craigslist, or with a cardboard sign in their driveway. But it’s awful.

“With Vroom they can go to the web site, give us a license plate or VIN number and answer just a couple of questions, and we put a guaranteed offer on the car right there, sight unseen. The customer says, ‘Yes,’ and we dispatch funding and a truck” to consummate a deal that can be undone of the customer acts fraudulently. “The value-add to consumers is just massive.”

And when it comes to buying a used car, Vroom has an online inventory of about 16,000 vehicles “while a typical dealership has 100 used cars on the lot, and a larger one has maybe 200. So customers have to go from lot to lot trying to find the car that suits them well – or just pull out our app.”

The ad “almost wrote itself,” Hennessy said. “Customers know what we’re talking about, and Vroom gives you a happy ending.”

The reported cost of a 30-second commercial in Super Bowl LV is about $5.5 million. Vroom joins a list of dozens of startup and relatively small companies that have turned to Super Bowl advertising to create huge awareness of their brands and business models, including a few other small fry in this year’s Big Game on CBS between the Tampa Bay Buccaneers and Kansas City Chiefs.