The new way of car sales. Visiting Cazoo office in Lisbon
The used cars market is one of the largest retail markets in the world. For a long time, this market was owned mostly by auto dealers purchasing used cars or trading in them from their customers and reselling these cars to the buyers. Most of the dealers are more focused on margins than customers’ needs. So improving the customer experience of used car selling and buying became the desired goal for many startups worldwide. Cazoo is one of them. Quite successful in the UK market with 6000 cars a month sales and a team of 3700 people. Founded by Alex Chesterman, the creator of Zoopla, and supported by many famous investors. One of Cazoo’s tech hubs is located in Lisbon and I recently visited it, took many photos and talked to several people from the product team. Join me and let’s take a look at how the online product and effective offline operations could solve really challenging offline problems.
Cazoo was founded in 2018 to make buying and selling a car as simple and seamless as ordering any other product online today. Previously, in 2008, Alex Chesterman founded Zoopla which delivered greater transparency and efficiency to the UK property market. Alex is one of Europe’s leading digital entrepreneurs and has spent the last twenty years applying data and technology to improve consumer experiences. I was following Zoopla products for many years since my CPO position at Kolesa Group times. We were developing the leading real estate product in Kazakhstan. Some ideas were copied in Krisha.kz products and were really successful. So when Cazoo was launched I began to follow its progress and product strategy.
The business model is quite simple. Cazoo is purchasing used cars from private owners and leasing companies. After detailed technical inspection and car refurbishment, Cazoo sells these cars to private buyers — people who are ready to buy a used car with a new car sale experience. Warranty, financing, car delivery, and own offline infrastructure help Cazoo to provide the best car buying experience. You can check more than 25 000 happy customer reviews at Trustpilot with an average 4.7 rating.
Cazoo's mission sounds quite ambitious but very relevant to modern tech trends:
We want to make buying your next car no different to ordering any other product today. Where consumers can simply and seamlessly buy or finance a used car entirely online for delivery or collection in as little as 72 hours.
The main customer-facing product is divided into 2 main flows: Sell and Buy. The Lisbon team’s mission is “to make researching and choosing your next car so transparent, simple, and reassuring, our customers will feel confident they’ve made the right choices”. The product offers a car sale complete online without leaving home experience. The buyer can choose home delivery or collection in as little as 72 hours, any day of the week. Also, buyers can apply for finance and sign the agreement online by simply choosing from monthly payment options and having a decision within minutes. Selling a used car to Cazoo is also very simple. The company will make an instant online valuation that will be guaranteed for 7 days, and you can choose if you want to drop your car off at their nearest customer centre for free or they will pick the car up from your door for 149£. The payment will be done on the handover day. That sounds like a really good value proposition!
The office is located in a quiet and cosy area of Lisbon. In case you don’t know the exact address you, probably, will not notice this nice place located in the old building of an ex-cinema theatre. The company is renting the whole building so there is a lot of space to work and to relax. There are several working spaces, meeting rooms, a kitchen and a large terrace on the top floor with a great view of surrounding houses windows. The terrace is the favourite team’s place for barbeque parties, so many neighbours can feel the smell of Cazoo teamwork :)
I was lucky to visit Cazoo office on Thusday — the day when all teams meet for a small party on the terrace. That was a good chance to talk with people about the product and company culture having a bottle of beer or cider. The most of the Lisbon team members are local. Cazoo acquired Drover, the UK’s leading car subscription platform, in 2021. One of the Drover technical hubs was located in Lisbon. So most of the Drover employees joined Cazoo and formed the Lisbon team.
The UK’s new-vehicle market is the seventh-largest in the world. In 2021, the UK registered more than 1,6 mln new cars and vans according to the Society of Motor Manufacturers and Traders report. The used car market is highly dependent on new car sales. This is the main source of cars in good condition that every dealer desire to purchase and resell.
The used car market itself is huge — more than 7,5 mln cars were sold in 2021. The best-selling used cars are Ford, Vauxhall (a local UK brand), Volkswagen, BMW and Audi. More than 30 mln passenger cars are on the road in the UK. With about 68 mln people population and close to a 95% internet penetration rate, this is a great market for any online e-commerce product. Especially in the case of high average price goods, when you as a business could have significant operations costs, but still be financially effective. That is why many e-commerce startups select the UK as the target market in Europe. Cazoo is not an exception.
In under three years, Cazoo has become one of the largest players in the UK used car market. In October 2022 Cazoo reached the significant milestone of selling its 100 000th car entirely online.
But the UK was just the beginning. In 2021 Cazoo expanded internationally, launching its used car marketplace in Germany and France. In 2022 the company acquired leading Italian online car retailer Brumbrum and announced the launch of its online car marketplace in Spain. Unfortunately, the global financial crisis influenced Cazoo's European expansion plans. In August 2022 the company announced that it was conducting a strategic review of its business in mainland Europe, with the aim of further preserving cash and positioning the company to achieve profitability without the need for further external capital. Following a review of a range of strategic options, management has concluded that the right course of action is for Cazoo to now focus exclusively on its core opportunity in the UK and wind down operations in mainland Europe. Probably, this is the right decision and it will help the team to focus on product and operations excellence, rather than on growth. This always works for better customer experience and product maturity.
I had a chance to talk with my ex-OLX colleague Tim Gregory, who joined the Cazoo team about a year ago. Tim has a Head of Product Merchandising position in Cazoo and is leading all car sales products. He says the team is very focused on customers. As an example, the Trustpilot rating is one of the main metrics for the company. Most of the initiatives are focused on customer experience and internal operations improvements. I think this is the only way to build a successful phygital (physical + digital) product today. Customers’ expectations of the service are very high. They are used to real-time communications, next-day delivery and high-level customer service in an online retail product. Why the car buying should be different?
Tim also shared some information about the tools Cazoo is adopting today. Cazoo Car Care subscription plan offers an extended warranty for purchased cars. CazooGuard Paint & Fabric Protection is a one-time coating that preserves a car’s interior and exterior from day-to-day dirt, messy spills, bird droppings and much more. Also, Cazoo offers Service Plans to cover the costs of future repair services. With a free 7-day money-back guarantee, 7-day driveaway insurance and at least 90 days of warranty and RAC roadside assistance the used car sale experience fills really different! This is a great example of tech changing the way people face challenging tasks with completely different levels of customer experience. These cases are one of the main reasons I love product management work!