Vroom, an online car sales marketplace, recently opened up a new delivery hub in the Valley to better serve people in and around Phoenix.
New York-based Vroom (Nasdaq: VRM) buys and sells used cars online from customers across the country. Vroom competes with Virginia-based CarMax and Tempe-based Carvana for digital car shoppers, a market that has become extremely tight during the Covid-19 pandemic.
Vroom saw car purchases by Phoenix-area customers jump 56% from 2020 to 2021, with the Ford F-150 selling the most frequently, followed by the Tesla Model 3 and the Ram 1500.
The company declined to state how many people work at the new Vroom center in Tolleson, called a Last Mile Hub, but the team there is up and running, serving about 4.8 million people in a 70-mile radius.
Vroom has been buying and delivering vehicles in the Valley for years already, but chief logistics officer, Mary Kay Wegner, told the Business Journal that the new hub will bring a refined touch to the process.
“We have Vroom employees with Vroom delivery trucks who deliver the vehicle right to the customer’s driveway, providing what is more a concierge level service,” she said. “We’ll help the customer get oriented around the features of the car, really make it an exciting event for them when they’re purchasing a vehicle or selling us a vehicle.”
Wegner said there are 25 of these delivery hubs across the country today, with plans to add 5 more by the end of the year.
The Covid-19 pandemic spurred a greater demand for all sorts of electronic goods, and there’s been a computer chip shortage as a result.
Many automakers cancelled their orders for chips last year, only to realize that they’d need those cancelled orders within a few months. Consequently, automakers like GM and Ford have cut production this year due to a lack of semiconductors, and demand for used cars has thus skyrocketed.
Wegner said these macroeconomic trends are impacting customer behavior, which Vroom is well positioned to capitalize on.
“We’re seeing a shift with a consumer that in the past would have purchased a new car; they’re now looking to see what’s available in the used car market.”
In Vroom’s most recent earnings report, the company said it sold more than 18,000 vehicles in the quarter ended June 30, up 172% from the same period last year. E-commerce gross profit notched $49.6 million, a 588% year over year increase, but overall the company still lost money in the quarter.
Carvana, Vroom’s hometown competitor, has also seen high demand for its e-commerce platform recently but Carvana is selling far more cars. Carvana reported a quarterly profit for the first time ever last week after selling more than 107,000 vehicles in the quarter ended June 30.
Carvana and Vroom don’t just compete for customers, but talent too. John Piatak, Vroom’s vice president of transportation who manages these delivery hubs nationwide, previously worked as a senior director of logistics at Carvana.