By, Krunal Barabde
As we are approaching the middle of the Fall 2014 semester, most of the MBA students who will be completing their basic credits at the end of current semester are remembering Hamlet’s opening phrase “to be or not to be” shall we opt for graduation in December 2014 or extend to May 2015, because most of the International students are still in job search mode.
However, some students have different dreams such as Alejandro Resnik a 31 year old Argentinean, an MBA from MIT Sloan School of Management 2013 batch, has completed Engineering from ITBA (Argentina) and Owen Savir not much known about him except an important fact that he is a Stanford MBA 2013 batch. On April 15 2014 in Silicon Valley Bay Area together, they launched a startup called ‘Beepi’. Beepi provides end-to-end services in car selling and buying business and connects buyers and sellers of cars[i] using Peer-to-Peer (P2P) online platform.
The inception of idea came when Alejandro and his wife bought a Jeep and later were in disagreement with their decision[ii] Alejandro spoke about this problem to his angel investor friend Fabrice Grinda, who later introduced him Owen Savir. Both calibrated that if “internet of everything is changing everything” then why not car buying and selling. This led the seed for Beepi’s business model.
Beepi starts the work right by inspecting & certifying car by a Beepi inspector, taking & uploading photos, and listing the car on the website from the sellers point. A buyer has to check the listings on the website, select car of his choice and make payment (Complete Paperwork including DMV Registration, Car Wash and Wax, Full Gas Tank, Delivery charges), and the car will be delivered to the doorstep. Beepi provides guarantee to both buyer and seller; for seller the car will be sold in 30 days and for buyer 10-day money back guarantee. Additionally, Beepi provides 3 months/3000 mile full service and warranty parts[iii].
Beepi, provides convenient options of financing (Loan), bitcoin payment, and reserve the car for 48 hours by placing some deposit amount, if doesn’t want to buy the car after 48 hours deposit will be refunded. Beepi identifies important questions in the purview of a buyer and has all the answers, before one can proceed to purchase. The websites lists complete history of the vehicle in the form of Auto Check Printable report, which includes all details of the vehicle such as odometer readings, accident check, title and problem check, Vin Number. The price listed includes all the services so there are no hidden charges; to improve transparency Beepi connects you to edmounds.com to verify market rate for the same car. Beepi also provides detailed external inspection reports of dents and bruises on the car body making it easy for a user to imagine the real picture of the car.
Since Beepi is in a service based industry it has clear emphasis on customer intimacy. In order to build customer relationship and answer all possible doubts of the buyers Beepi introduces ‘Beepi Inspector’. Additionally they provide online chat and call help. Since, it is new way of services offered in the industry, Beepi is making conscious efforts to educate their customers, by providing an option of learning more on the website and provide testimonials, backseat blog where owners explain the business model in a subtle way. Beepi also has a young and diverse team, and emphasizes the importance of front line Beepi inspectors who are the first form of interaction with clients.
Beepi’s marketing strategy is very clear ‘to change the car buying and selling experience’. Make car buying selling simple, fast and fun experience end to end[iv]. Beepi provides convenience, transparency and hedges the risk in the market. At present Beepi’s target market are millennials in age of 20’s and 30’s in California Bay Area and with Beepi Prime they have expanded market to 140 cities in Nevada, Arizona, and Oregon[v]. Beepi Prime charges $999 for delivering the vehicle in 5 days to door step, using their own transportation system which charges lower than market rate.
Beepi’s team has put considerable efforts on brand building and has featured on most of the important news channels and news website to create awareness amongst users; they are creating awareness through social media (FB,Twitter and Linkedin). However, so far their reach has been considering the number of followers on the social media. Beepi differentiates itself from competitors on price, assurance, convenience, and end-to-end services; Beepi’s main competitors are traditional car dealers and craigslist.
In a location (Bay Area) where startups are like popcorns, securing funding can be a challenge, but Alejandro must have had advantage in securing funding because of his experience of working as an angel investor with Fabrice Grinda (Co-Founder of OLX). Beepi Secured $5M Series A Funding in April 2014(Is the first significant funding in silicon valley model of startup-name refers to class of preferred stock sold to the investors for their investment[vi]) from investors including Redpoint Ventures, Silicon Valley bank, Jose Marin, Rick Boyle, Fabrice Grinda, Tina Sharkey and Jeff Brody. Beepi has recently raised $60M in funding from Venture Capital firms that have also invested in Uber[vii]. This funding will help Beepi to go mobile and increasing its reach to its target customer and improving on the quotient of fun on buying and selling cars on-line. Beepi is today valued at $200M starting just 6 months back[viii].
If Beepi gives everything, how does it make money to be valued so high? Here is the answer – Beepi makes approx 9% on each transaction, which 80% less than traditional dealer charges. Beepi saves cost on overheads such as administrative costs, space and human resources. From April to September 2014 Beepi had achieved revenue run rate of $10M.
SWOT Analysis of Beepi
Views of T-Birds on the Startup:
Adriano Caccamo: “I’d love to see some video reference of people that used their services on their website. There should be a video showing very closely all particulars of the cars on sale, but there are only pictures from a little far. I’d sell a car through them! I’d buy only if they offer some guarantees and if I can test it before buying it. Great Idea”
Abhijeet Joshi: “Questions their financial growth in the market which is very price sensitive. However, endorses their guarantee-based policy as very useful in consumer perspective”
Scott Grindle: “Beepi.com demonstrates both a clear service gap in a homogeneous market space and an ingeniously simple repositioning strategy. The question is, can they really change consumer habits; will they convince people to buy a car without seeing/driving it first? “
Jakub Marciniak: “I believe that the business model yields a lot of costs that need to be amortized by volume (e.g. the technicians need to be paid and motivated to be accurate in their evaluation of a car). The largest challenge in my opinion is to reach a critical mass that trusts the business model of buying a car without a test drive. Trust is the main part of a business. I analyzed the website and I am not clear about certain pitfalls that could backfire (e.g. what is “damage”? How is mileage handled if you drive over 1,000 miles in 10 days? …)
If you go to a used car dealer – do you trust him/her immediately?
Now imagine that you don’t even touch the car. Would you buy it?
Transparency in marketing is key to Beepi’s success. Good press is crucial. Leaks in the business processes are deadly.
I understand that the huge advantage is that cars can be bought, sold and shipped all over the US in little time and that the concept is portable and thus, globally applicable. But I am skeptical by nature because the amounts that are transferred are vital to some people (buying or selling a car is a major decision compared to buying or selling a new phone).
I would like to know more about how the technicians are selected, a general deconstruction of the fees that are applicable (and WHEN they occur!), a calculated example of a transaction (from seller to buyer and how Beepi makes money) and reviews from trusted sources”
If Beepi is successful, it will endorse the fact that “internet of everything is changing everything” so is customer purchase behavior. We would like to see more inspired business ideas and entrepreneurship initiatives, which will truly change the business in future.
Disclaimer: The article represents writer’s personal views and no affiliation with Das Tor any assumptions are based on the educated guess.