By Desiree Homer
Online used car retailer, Vroom Inc. has officially announced this week that it’s ready for public offering. This company operates within the same space as Carvana, offering an entirely online car-buying experience for consumers. Vroom is taking a more “hybrid approach” to scalability and consumer reach. This recent filing with the U.S. Securities and Exchange Commission indicates it’s ready to hit the ground running with this IPO targeting.
The Vroom, Inc. Announcement
Officials for the company announced Tuesday that the online retailing contender had started an initial public offering of 18.75 million shares. The common stock is expected to be priced within $15-$17 per share, producing a value range of $281 million to $319 million. Investors can expect to see the Nasdaq Global Select Market ticker symbol, VRM. The Vroom team is eyeing the opportunity to capitalize on an incredibly fragmented used car market right now. Hoping to embrace the best timing to position itself as a growth-centered company with vision during a time of nationwide losses, Vroom is seeking to increase market penetration in a big way.
The Hybrid Business Model Designed for Flexibility
Vroom CEO, Paul Hennessy talked about the company’s strategic positioning back in December. He outlined their more “hybrid approach” to used car sales and customer engagement. The model is both flexible and scalable, as it uses reconditioning centers and third-party partnerships to maintain its vehicle reconditioning operations. In the recent SEC filing, company officials highlighted the potential for the used car market right now as being “ripe for disruption.” Last year, $814 billion and 40 million units sold. Only 0.9% of those total U.S. used sales represent the e-commerce penetration. Today, with the new conditions presented by COVID-19, and a surge in remote and digital buying options, any company primed to offer entirely remote services can capitalize.
This Used-Car Market Also Presents Opportunities for Dealers
Dealers may want to prepare for yet another digital platform competitor in the coming weeks. Vroom may be investing in new third party partnerships and reconditioning centers as part of their growth strategy. However, dealer owners may instead want to see this announcement as an opportunity to capitalize on the fragmented used market right now, too. COVID-19 forced the hand of many dealerships to push forward with digital and remote buying options. It also introduced the digital purchasing options to many customers, who may move forward with remote buying preferences. Even as showroom doors continue to cautiously reopen nationwide, maintaining the online buying channels may be the primary growth method of the future.
Dealers have adopted new ways to evolve in the latest risk averse environment. These strategies and customer engagement trends may have started for one reason, namely the Coronavirus. But these efforts may serve well as a method for tapping into the super-fragmented used car market-facing dealers today. Vroom is moving forward with its hybrid business model with a precise focus on the opportunity to gain market share. Dealers can follow suit by maintaining their digital and remote buying options in the weeks and months to come.