Entrepreneur Payam Zamani started selling used cars recently through his site OpenAuto.com, announcing this addition to his strategy at a late January trade show of auto dealers in Las Vegas, according to the Oakland Tribune.
Zamani claims that buyers who go searching for their vehicles online are frustrated when the site presents only a fraction of the available inventory. "We pool the marketing power of thousands of dealers nationally that can accept clients from any ZIP code anywhere in the U.S.," he said.
Meanwhile, on OpenAuto.com, the Walnut Creek-based entrepreneur said the consumer gets a firm price from the dealership right up front. "So you don't have to leave home until you're comfortable the dealer has the model you seek," he said. Zamani argued that buyers otherwise have to do a lot of research online before they find a dealer who claims to have the precise car they're seeking.
Jonathan Gaw, IDC research manager for consumer e-commerce, said that the online used car market is a challenge for a new entrant. "AutoTrader and eBay are the big guys. It's hard to recruit car dealers to sell cars on your site and get consumers to come to your site," he said. "The two really big players already have both of these things. So it's a difficult nut to crack."
Buying autos online has been a business strategy that has seen plenty of bumps over the years. Zamani knows because he's invested in some. IMotors, for instance, invited buyers to "build" their ideal car online by indicating their preferences for styling and options. Then iMotors would construct and deliver that auto.
It was a high-priced strategy for a narrow marketplace. When it tanked in the late '90s, Zamani bought its assets. "I started Autobuy.com in 1994. It merged with Autobytel which hardly exists now," he said. Autobytel.com merged with Autoweb.com and other online used car sales sites.
His current business, Next Phase Media (www.nextphasemedia.com) combines several sites that locate real estate agents, home improvement specialists, new-car sales, and now used-car sales all online. He thinks this combination of industries cross-pollinates well.
He expects $20 million in revenue this year, accumulated by the fees Next Phase Media collects from dealers. It does not accept advertising on its sites.
Zamani's business strategy helps the dealer, he said. A dealer who advertises online finds that it's expensive to pay a search engine to target his wares to a specific geographical area. Whereas, most online auto emporiums sell dealers a list of leads or a subscription to leads, OpenAuto.com charges dealers $20 for each lead. According to two dealerships in his network, OpenAuto.com's leads brought them results, reported the Oakland Tribune.
