A Case Study on Cazoo's Online Car Retail Platform

INTRODUCTION

With the advent of a progressively more and more digitised world, there has been a gradual revolution in the way consumers prefer to shop. While online retail has become ubiquitous in our lives, it is only recently that companies have realised that the market for car retail exists online, and has moved to exploit he market. One such company is Cazoo, a UK based firm, which provides a platform for customers to buy or sell their cars online. It is a not a peer to peer platform for buying d selling, instead Cazoo owns and maintains the cars it sells and can lay claim to be one of the fastest growing companies in the UK. The company was founded in 2018 and in 2018, reports it is getting another funding of over 2.5 billion pounds, only six months after it received a 116 million pounds funding (EU-Startups, October 1 2020). Whether evaluating the strategies behind Cazoo's rapid growth or examining the broader implications for the automotive industry, delving into this specific topic can provide the most valuable insights for business dissertation help.

The website offers a catalogue of used cars, complete with their technical specifications, usage duration, conditional specifications etc. Additionally, they also offer services of delivering the second hand car to the doorstep, essentially eliminated all need for the customer to physically go to a dealership and drive the car home.

2. SWOT Analysis

A reliable tool to assess the competitive position of a company in the market is a SWOT analysis (Leigh, 2009). The SWOT analysis framework consists of strengths, weaknesses and threats. The SWOT analysis applied to Cazoo is presented below:

1. Strengths: Cazoo is one of the fastest growing businesses in the UK with an estimated 150 million pounds turnover. Cazoo has built up a loyal customer base, with over 15,000 car sales to satisfied customers to date (EU-Startups, October 1 2020). Cazoo has created a niche for itself in the retail world, whereby they have successfully made online buying and selling of cars very easy and convenient.

The pandemic has benefited the organisation by encouraging people to order online as opposed to the traditional method of going to a car dealership and selecting the car. Once positive reviews have flowed in, the mentality of people are changing wherein people have warmed to the convenience of having cars delivered to their doorstep on doorstep from an organisation thy can trust. Impeccable reviews, quick and efficient customer service, fast redressal of customer complaints and warranty offered have built up a solid base of customer trust.

2. Weaknesses: One of the most pertinent vulnerabilities that the organisation acknowledges is the outsourced vehicle preparation and storage. Many people believe that cars are something which should only be bought in stores after physical examining the car themselves, since it is a significant investment.

This leads to an examination of the market which suggests that a majority of people are still apprehensive regarding buying a car online because they feel that the quality of the car may not meet the minimum standard. It implies the vendors who have been outsourced the work of preparing, servicing and storing the vehicles have a very large bargaining power, and any mistakes on part of the vendors will result in a loss of trust which is of great significance to an organisation striving to win it.

3. Opportunities: One of the more lucrative long term opportunities is harnessing the vast amounts of data that the online platforms and website generates since the organisation uses their own website. Studies have estimated that with nearly 25 million cars on the road in the UK, the global market for car data could grow as high as $150 billion by 2030 (Huang, 2020). With integration of machine learning to analyse the data, it will also be possible to customise and personalise suggestions for an individual customer based on the customers viewing patterns for example, thus providing a more seamless shopping experience for the customers.

The possibility of expansion to other European nations also remain, since nations like France, Germany, Spain, Portugal all have the fundamental advantages of high internet adoption, good broadband speeds and the compact geography and proximity of its population centres.

4. Threats: Since the online car retail market is being developed, there exists the possibility of car producers to enter the market directly. Companies such as Honda, Toyota can adopt the model that newer companies like Tesla, NIO and Canoo have adopted, disrupting the existing model of the car production companies selling to the dealerships. These companies directly sell to the consumers, mostly through online means, and they provide a good experience for the consumers and offer consistent pricing, much like Cazoo, and can potentially undermine the market share of the organisation

2.1 Use of Corporate Social Responsibility

Corporate Social Responsibility or CSR is about behaving ethically with the stakeholders of a particular business (Hopkins, 2014). The company has found several methods through which it is fulfilling its corporate social responsibility duties. For example, the company partnered up with the Everton football team and has promised that for every goal scored by the team, they would donate 1000 pounds to charity. The name of this particular charity has been dubbed as ‘Goals for Good’ by the company (Everton FC, 17 September 2020). Apart from that, the company is also the sponsor for the football team of Aston Villa and is in partnership with that team in another charitable initiative called the ‘Golden Goals’ initiative. According to the terms set by this initiative, the company has pledged to donate 1000 pounds for every goal which is scored by Aston Villa. The donations from this initiative will be utilized by the Aston Villa foundation, which will work to better the community in the local area as well as the wider region of Birmingham (Aston Villa FC). Recently, the company significantly increased the amount which it would donate to the foundation every time Aston Villa scores a goal from 1000 pounds a goal to 2000 pounds a goal. Even when Aston Villa and Everton are playing against each other, the company has pledged to donate for both sides as they score goals. So far, the company has spent up to 46,000 pounds already in donations, collectively to the charitable foundations handled by Everton FC and by the Aston Villa Foundation (Aston Villa FC).

2.2 Creativity and Innovation in Business

The distinctiveness between creativity and innovation is that creativity is the process of developing and coming up with new and unique ideas. Innovation, on the other hand, is the process of embodiment and tangible coming-together of that particular creative idea (Jolly, 2003).

An integrative definition that considers both creativity and innovation to be important elements of basically the same process. One should point out that most creativity study has focused on the stage of idea production, but innovation studies have frequently covered the latter stage of concept execution (Anderson et al., 2014). In the context of this understanding, the company Cazoo has come up with the creative idea of making it easier for individuals to buy second hand cars, and making them just as accessible to individuals who want to buy new cars. They have executed this by providing an online and seamless method of buying cars.

3. Conclusions and Recommendations

In conclusion, Cazoo has created a niche for itself in a burgeoning market of online retail for cars. While it was assisted by the pandemic driven restrictions, it managed to lure a substantial number of customers online and built up a loyal base of customers, and more importantly built up an element of trust. The most essential part of consolidating the market is to convince people that online shopping for cars can be reliable and safe, because of the existing reluctance to make such significant investments in products without testing them. Certain long term weaknesses were identified, such as dependence on third party vendors to service, prepare, maintain and store the cars because any drop in the quality standards on part of the vendors will have negative repercussions on public perception. Thus it is recommended to maintain sufficient number of personnel engaged in on site assessment and maintenance of quality. In the long run, the data indicates that the percentage of consumers opting for online purchases is rising in every sector, and the automobile sector is no exception, but that also brings about long term threats. With the increase, it is possible or inevitable that the car producing companies may elect to reach the consumer directly, which would bring about competition. Thus it is important to create a unique signature, and one of the best ways to create that is to have uniformed delivery personnel trained to have a broad knowledge about the essentials a buyer needs to know at the handover, such as where the fuel cap release button.

References

• Huang, G., 2020. When to haggle, when to hold firm? Lessons from the used‐car retail market. Journal of Economics & Management Strategy, 29(3), pp.579-604.
• Leigh, D., 2009. SWOT analysis. Handbook of Improving Performance in the Workplace: Volumes 1‐3, pp.115-140.
• Tucker, C., 2020. British Used-Car Startup Cazoo Raises €263 Million, Bringing Total Funding To Around €494 Million. [online] EU-Startups. Available at:
• Evertonfc.com. 2021. Cazoo Provides EitC Funding Boost With 'Goals For Good' Initiative. [online] Available at: [Accessed 22 July 2021].
• Club, A., 2021. Cazoo pledges support for Aston Villa Foundation. [online] Avfc.co.uk. Available at: [Accessed 22 July 2021].
• Club, A., 2021. Cazoo to double Golden Goals donations for the Aston Villa Foundation this weekend. [online] Avfc.co.uk. Available at: [Accessed 22 July 2021].
• Hopkins, Michael. (2014). What is CSR all about?. Aspirare. 1.
• Jolly, A. ed., 2003. Innovation: harnessing creativity for business growth. Kogan Page Publishers.
• Anderson, N., Potočnik, K. and Zhou, J., 2014. Innovation and creativity in organizations: A state-of-the-science review, prospective commentary, and guiding framework. Journal of management, 40(5), pp.1297-1333.

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