It’s getting easier for U.S. consumers to buy a car online like they would electronics or shoes.
Beepi, the Los Altos, California-based online used-autos marketplace, is expanding beyond its home state, first to Arizona, the company said. The startup, valued at about $200 million in October, plans to provide local vehicle inspectors, inventory and free delivery to seven additional regions across the U.S. and raise more funds by the end of the year.
Chief Executive Officer Ale Resnik said Beepi’s valuation should increase in line with revenue growth, which has increased tenfold since the company raised more than $70 million last year to fund the expansion.
With Beepi, “you can buy and sell a car with two or three clicks, the same way you could do it with buying shoes from Zappos,” Resnik said Tuesday in a phone interview, adding that the long-term goal is to provide the service globally.
Beepi is among technology startups seeking to break into the auto-retailing economy. While companies like TrueCar Inc. and Cox Automotive seek to simplify and speed up the dealership process, newer entrants like Beepi and Phoenix-based Carvana provide an alternative to Craigslist for direct used-vehicle transactions online.
These startups represent a new generation of digital car-buying services, Thilo Koslowski, vice president and automotive practice leader at Gartner, said Tuesday by phone. Instead of acting as the matchmaker between consumers and dealerships, they take over the processes an individual needed to undergo to directly buy and sell a car, such as posting the product online, inspecting vehicles and price haggling.
“Used-car selling on the Internet 2.0 is how I see this,” Koslowski said. These startups “can probably take over half of all the sales going forward” in the used-car market.
That market is booming. TrueCar estimates that used-auto sales will total about $640 billion in 2015, a 6.9 percent jump from the previous year. When the industry is doing well, about 40 million to 45 million used cars are sold annually in the U.S., and profit margins are typically much wider on those vehicles than on new ones, Koslowski said.
Beepi’s revenue soared 56 percent per month since it started operating in April of last year, Resnik said. TrueCar, meanwhile, said this week it added 840 dealers to its network in the first quarter, the biggest volume gain in company history.
“Right now the automotive market is really hot both on the new-vehicle sales and the used-vehicle sales,” Koslowski said. “This is a pretty important time to get involved.”