“Take a no-obligation test drive wherever you are in 45 minutes or less.” Sound too good to be true? Turns out, this San Fransisco startup can make it happen. Meet Shift.
Founded by Irakly George Arison in 2013, the idea behind Shift is to take the hassle, the haggle, and the stress out of car shopping. You may remember our post on Beepi—Shift also saw the need for disruption in this old and tired space. However, while Beepi guarantees that their multi-point professional inspection renders a test-drive irrelevant, Shift conversely encourages a test drive as one of their main differentiation strategies. One of their “Car Enthusiasts” will bring the car straight to you to try behind the wheel—and in 45 minutes or less.
At Shift, they want to take the pain out of car shopping to make it something enjoyable and fun. Simply put, Shift’s website explains:
“Our goal is to turn what is universally regarded as a burdensome life event into a delightful experience, and to bring trust and simplicity to the peer-to-peer used car market.”
Peer to Peer
Their “peer-to-peer” business model is key here. This is what we’re seeing, of course, with so many modern skyrocketing startups: Uber for ridesharing, Airbnb for travel, and TaskRabbit for that pesky list of errands. It’s undeniable at this point that peer-to-peer is a disruptive way of doing business that lays a structure for people to cut out the middleman and utilize each other instead of depending on corporations. Somehow still not convinced of the economic muscle behind peer-to-peer models? Let’s take Airbnb, for example. Though they don’t own a single piece of hotel property, through their nimble collaborative economy contribution, the founders reported to The Telegraph that they plan to surpass InterContinental Hotels Group and Hilton Worldwide as the “world’s largest hotelier”. When we think about what this means for the collaborative car economy, could companies like Beepi and Shift take the lead?
Because Shift is online, their test-drives are mobile, and they buy from people to sell directly to other people, the startup is able to be agile and efficient in the market. Used car dealerships are burdened with overhead and other intermediary costs associated with being a car retailer, while Shift is able to buy high and sell low.
So if they can give people a fair price for their used cars, and then sell them on the market for a decent price—how do they make their money? Shift, as an online used-car marketplace, wraps up a cut for themselves in the flat fee given to the car seller in their quote. Folks who decide to sell with Shift make more on their used ride than they would at any given dealership, but less than if they sold their car directly on a platform like Craigslist. As the Wall Street Journal explains in their own Shift informational: “Shift splits the difference between the guarantee price and the final sale price with the car owner.”
So, why wouldn’t someone just sell on Craigslist? For starters, because we’re still bringing the hassle of car shopping with a platform like this. Haggling is thrown back into the mix, in addition to the fact that Craigslist doesn’t care if someone posts their lemon for you to buy, inspection-free. Unlike direct-to-peer selling and buying, Shift claims to guarantee a simplified experience, a rigorously inspected ride you can test-drive, and a seven day/250 mile return policy.
The Future of Shift
As a startup, Shift has a promising resume. With upper-management employees from highly esteemed companies like Google and Dropbox, investors have been quick to join the Shift team. So far over two rounds, Shift has pulled in $24 million in seed funds. For quick comparison, competitor Beepi is at $78 million over four rounds.
So with an industry in need of some refreshing, and Shift offering be the one to clean it up, we’re excited to see where the company takes the peer-to-peer used car market. Will you be ordering a test-drive anytime soon?