Online used-car retailer Vroom is making good on its intent to invest in technology and marketing after garnering more than $1 billion in funding from its June IPO and September follow-on offering.
Vroom entered into an agreement Wednesday to acquire CarStory, an AI-powered analytics and digital services company for automotive retail, through the $120 million acquisition of its parent company, Vast Holdings. The deal is expected to close in January 2021, comprised of 60% in cash and 40% in shares of Vroom’s common stock.
CarStory leverages machine learning to analyze national car data of more than 7 million daily listings and 18 million monthly consumer sessions, according to a Vroom company release. The partnership will ultimately extend the reach of Vroom’s digital platform, Chief Executive Paul Hennessey said. CarStory will continue to operate its core business as a separate brand, but allow Vroom to leverage its data model.
Vroom also recently launched a new digital advertising campaign to expand its reach with consumers and tout its hassle-free, touchless business model. The ad, “Never Go to a Dealership Again,” features a couple walking into a carnivalesque dealership, only to be accosted by surreal clown-like sales and finance agents, loud noises and flashing lights, before eventually abruptly transferring the couple back to their peaceful front yard. A similar ad, “Sell us Your Car,” depicts the process of selling a car to a dealership as an aggressive gameshow with an overbearing host and rowdy audience.
The ads are meant to highlight some of the consumer-perceived challenges of shopping at a dealership, and evoke an emotional connection with customers, Chief Marketing Officer Peter Sherr told Auto Finance News. “Feeling the pressure when you’re trying to sell your car, the overwhelming nature of visiting a dealership, is immediately recognizable to people,” he said.
The two spots combined have cost the retailer an estimated $20.5 million in ad spend and garnered roughly 1.8 billion impressions, and have been running since June and July, respectively, according to marketing analytics company iSpot.tv.
As customers now consume media in a variety of ways, Vroom’s focus has been on diverse marketing, Scherr said. “It’s important to us to remain multifaceted when it comes to our marketing efforts. TV has been, and remains, an important part of our media mix,” he said.
Vroom posted record sales in the third quarter, clocking a 58.6% year-over-year increase in e-commerce units sold to 5,563 units, and a 120% increase to $19.3 million in total gross profit on vehicles sold. The company also expanded its inventory to a record high of more than 12,000 units, largely due to its data science initiatives, Hennessy said, noting it would continue to invest capital into technology and marketing initiatives, among other ventures.
Shares of Vroom [Nasdaq: VRM] were trading at $41.65 at 1:00 p.m. ET, up 4.96% since market open. The company has a market capitalization of $5.17 billion.
–Additional reporting by Garret Reich
Source : AutoFinanceNews
