Online used car sales startup Vroom relies on inventory, and eBay wants to inject new life into its own automotive business. Thus, the two companies announced a pilot program that could achieve both goals.
Under a pilot program, Vroom will offer cash to select eBay sellers who have not received or chosen to accept offers for their vehicles at the end of their listing periods. A seller can submit his or her vehicle identification number, photos, and details of the car to Vroom, which will provide a cash voucher in return.There are also certain eligibility conditions for the vehicle, related to age, mileage, and title. If the seller accepts the cash offer, Vroom will pick up car from the seller’s front door anywhere in the United States.
The program will launch in the third quarter. The partnership comes at a time when companies like Vroom are surging past eBay’s own online automotive business. eBay Motors, which launched in 2000, was the go-to place (at least online) for car owners and dealers to find buyers. The business boomed. In 2005, eBay (EBAY) processed $13 billion worth of vehicle and parts sales.
But local marketplace Craigslist and other online car sites, such as Carmax, started to erode some of eBay’s business. An explosion of online car startups, including Vroom, Beepi, Carvana, and Shift have taken over the marketplace; eBay’s car and parts business has dropped by nearly 30% in the past five years, according to analyst estimates.
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eBay is trying to grab some of that business back through acquisitions and strategic partnerships. In March, the company bought Cargigi, an advertising services startup that helps car dealers post sales listing on online classified sites.
Unlike other online car retailers that create marketplaces for people to sell cars to each other, Vroom handles the entire transaction. The company takes possession of the used car from the seller, reconditions it, and then delivers it to the buyer’s door. The goal is to make buying or selling a used car as quick and painless as ordering an Uber.
For more about why consumers are avoiding car dealerships, watch:
In December, Vroom raised $95 million in equity and used some of those funds to acquire Texas Auto Direct, a competitor known for developing software that significantly reduces the time it takes to process and recondition used vehicles. The equity round brought Vroom’s total venture funding to $168 million—and about $35 million in debt funding—since it launched in 2013.
Investors in Vroom include Jeffrey Boyd, the chairman and former CEO of The Priceline Group (PCLN), and Bob Mylod, former CFO of The Priceline Group also invested in the last round. Earlier this month, Priceline’s more recent CEO Paul J. Hennessy resigned from his position to take over as chief executive of Vroom.
