Automotive
6 minute read - May 13, 2020

Lessons from Carvana: The psychology of why used car buyers prefer purchasing online

Here’s the psychology of why used car buyers are increasingly turning to online alternatives instead of visiting a dealership, and what lessons can be learned from Carvana’s success.
David Gomez
Enterprise Partnerships

For most people, used car shopping is not a fun experience. Many Americans strongly dislike and even distrust the traditional car dealership process. This distaste is why more and more people are turning to websites like Carvana for their used car purchases. As an exclusively online platform, Carvana removes the well-known inconveniences of buying a vehicle in person - such as the dreaded sales negotiation and paperwork.

But eliminating the time and hassle associated with visiting a used car dealer is only part of the reason why Carvana has become so popular. The main driver of Carvana’s success is that it has brought in new technologies which address many of the classic problems associated with the purchase of a used vehicle.

In order to glean some insights from Carvana’s unique brand wins, let’s take a look at some of the problems a typical car buyer encounters along their purchase journey and examine how Carvana is addressing those issues with technology.

Researching is a pain in the bumper

Used car buyers today spend an average of 96 days on the market when looking for their next vehicle, with 59% of that time spent conducting research online. These numbers reflect a huge amount of effort for the typical consumer, and a lucrative opportunity for online brands hoping for sales conversions.

Carvana recognized the importance of attracting potential customers during their research phase and smartly moved to differentiate themselves from the rest of the market with a novel way of displaying their available vehicles. The interactive gallery at Carvana.com shows both exterior and interior photos of each vehicle taken from multiple angles. Users can quickly browse a large number of vehicles and even view a complete 360° virtual look of each car. This level of detail isn’t offered on most other car buying platforms, giving Carvana the competitive edge.

Consumers are visual, and the most important information that online shoppers are looking for is images. In fact, Snappr commissioned a study of 600 consumers across the U.S. and found that online shoppers considered viewing vehicle photos to be over 3 times more important than reading details and descriptions. And viewing online photos was over 4 times more important than viewing accident records!

Carvana is successfully attracting new buyers with their unique interactive vehicle galleries, and similar brands would do well to focus on improving the quality and functionality of their web galleries as well. Improving online access to high-quality vehicle photos makes research both easier and more enjoyable for the consumer. And by attracting buyers early on during research, used car marketplaces have a better chance of solidifying their brand relationship with consumers before their competitors do.

Buyers are overwhelmed by too much choice

6 out of 10 car buyers don’t have a specific vehicle in mind when they start shopping for a car. These shoppers may become overwhelmed if shown too many vehicle options right away. Research shows that if a consumer is presented with too many choices, they are more likely to be hesitant and indecisive. This is because the human brain associates the unknown with risk, and having more options means more unknowns and more risk. Showing too many options too soon is off-putting to buyers who are just beginning their purchase journey. It is essentially asking them to make a decision when they are still lacking information.

Carvana is attempting to address this issue with online services like their car finder tool and chat box. Helping buyers understand what their needs are and what type of vehicle best fits those needs creates a more attractive experience for buyers just starting their car research. Offering these types of tools helps brands make a better overall first impression.

Having asymmetrical information and trust issues

The typical used car buyer enters into their shopping process with a dubious mindset. Buyers are understandably worried that they will inadvertently buy a lemon or overpay for an unreliable car. Unlike new vehicles, a used car could have unseen issues with internal parts that don’t show up on the vehicle history reports. Used car marketplaces must also contend with the old stereotype that every used car salesman is out to cheat buyers out of their money, even when it isn’t true.

This same negative mindset is also applied to online marketplaces where the buyer is at a serious disadvantage and doesn’t know as much information as the seller. In such situations, it is important to first give transparency so that trust can be given in return - and Carvana uses a neat photo trick to do this.

Carvana chooses to highlight cosmetic imperfections, such as scratches or dents, upfront in their 360° car views. By actively alerting buyers to external damages, Carvana is signaling to the buyer that they are trustworthy and transparent when it comes to any internal damages.

Other car marketplaces can learn from this example and use their images to provide honest information. This will go a long way towards winning the buyer’s trust and establishing a positive brand image. Building a good relationship and reputation upfront will increase user retention and brand loyalty, as well as the likelihood that buyers will turn to the brand for additional services such as financing or warranties.

Understanding buyers purchasing power ASAP

Many buyers are finding that Carvana’s pre-qualification option is a great way to figure out what they can afford and which cars they should consider. Filling out an online pre-qualification also provides Carvana with valuable information that helps identify which buyers are high value.

Carvana can also use this information to make better vehicle recommendations based on what an individual buyer can actually afford - creating a more personalized car shopping experience.

Other car marketplaces should also encourage buyers to pre-qualify and provide financial information early on. Having this information allows sales teams to better focus on high-value leads and reduce time spent on buyers that are just kicking tires.

About the author

David Gomez
Enterprise Partnerships

David Gomez leads partnerships for enterprise Automotive clients at Snappr. He has helped dozens of major players in the industry with their content strategy. He is available for a no-obligation consultation about your Automotive photography needs.

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