Photo Credit: JOHN LLOYD/Flickr.com
According to a report by car auction company Manheim, the US auto industry has seen a bullish trend over the past few years. Used car sales grew 6% in 2016 and the trend is expected to continue in the next few quarters. But despite the market conditions, online player and a former Billion Dollar Unicorn expectant Beepi recently shuttered operations.
Beepi’s Journey
Beepi’s failure is tagged as a classic case of a good idea, but poor execution. The idea behind the Los Altos-based firm came to its co-founder Alejandro Resnik who had to go through a legal battle with a used car dealer who had sold him a car that broke down within two days of the sale. Inspired by the idea of improving the used car sales space, Alejandro teamed up with Owen Savir to set up Beepi in 2013. The online platform connected buyers and sellers of used cars using a smart algorithm and delivered a sales process that was transparent.
Once a sale was listed, Beepi would send out a mechanic to inspect the car, set the price, and add to Beepi’s inventory. If a buyer bought the car, Beepi’s driver would then take the certified car to the buyer’s address along with a ten-day money back guarantee. Gradually, Beepi added other features such as a price based on the geographic market, completing the paperwork for the car sale, and enabling the sale through bitcoin, direct debit, financing or credit cards.
Overall, the idea was well liked by the market. Beepi ensured that the sellers got to sell the car within 30 days of the listing for at least $1,000 more than what they could get at a dealership. Beepi earned revenues by charging a commission on the sale made. Last year, Beepi also diversified into car financing. It tied up with Chase and credit unions to offer traditional financing and with Ally Financial to offer leasing.
Beepi’s Financials
But Beepi’s monetization efforts were not enough. It did not publish detailed financials, but according to analysts, it was delivering a gross merchandise value (GMV) of $350 million for 2015 compared with GMV of $100 million in 2014. Beepi’s net revenue details are not known. Analysts estimate that it charged as much as 9% of the sale price as its commission. came to its co-founder Alejandro Resnik who had to go through a legal battle with a used car dealer who had sold him a car that broke down within two days of the sale, growing from $9 million in 2014. Despite the strong growth in revenues, Beepi was struggling with profitability. Reports suggest that the company wasn’t very cautious with usage of funds and was spending money on high salaries, overtime, perks for relatives of founders, and in making its office look pretty. The expenses led to the company running out of cash.
