{"id":9688,"date":"2019-10-17T07:56:36","date_gmt":"2019-10-17T11:56:36","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/carmax\/"},"modified":"2019-10-17T07:56:36","modified_gmt":"2019-10-17T11:56:36","slug":"carmax","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/carmax\/","title":{"rendered":"Carmax"},"content":{"rendered":"

Overview<\/strong><\/span><\/p>\n

Carmax makes buying and selling cars easy and hassle free.\u00a0 It is just one of many used car exchanges and resellers that have popped up on the internet in the recent several decades.\u00a0 It seems like an obvious application, some people wish to sell their used car and others want to buy a used car.\u00a0 However, the execution of such an idea is where things get tricky.\u00a0 Along with Shift, Autotrader, Vroom and Cargurus, Carmax attempts to steal marketshare in a seemingly “race to the bottom” industry.<\/p>\n

Process<\/strong><\/span><\/p>\n

So how does it work?\u00a0 Carmax facilitates a two sided marketplace of buyers and sellers to trade used automobiles on.\u00a0 It purchases used cars and holds them until a buyer is ready, keeping transactions liquid and efficient for both parties.<\/p>\n

Selling:<\/span><\/em><\/p>\n

A seller will go on Carmax’s online platform and put in some information about their vehicle.\u00a0 They then drive the car to one of the super-store locations and get an immediate appraisal with the option to be paid or trade-in same day.\u00a0 Other services like Shift will come to the seller’s house to appraise the vehicle, but this service is likely expensive and would cut into margins.<\/p>\n

 <\/p>\n

\"\"<\/a> \"\"Figure 1: Carmax Selling Platform<\/a><\/p>\n

 <\/p>\n

Buying:<\/em><\/span><\/p>\n

To facilitate liquidity in the marketplace, Carmax will purchase the used car for the seller and store it until a buyer is interested in the purchase.\u00a0 They hold thousands of vehicles in inventory ready for members of the second side of the marketplace to come and execute a buy.\u00a0 To buy a car, prospective customers can use an online catalogue to browse over 50,000 automobiles currently owned by Carmax.\u00a0 There are also Carmax super-stores where this inventory is on display and prospective purchasers can come and look at options.\u00a0 Once someone finds a car they are interested in, they can schedule a test drive and decide on financing.<\/p>\n

 <\/p>\n

\"\"<\/a>\"\"Figure 2: Buy-Side Process<\/a><\/p>\n

 <\/p>\n

Differentiation<\/strong><\/span><\/p>\n

Carmax makes money through pricing arbitrage.\u00a0 They purchase the cars from the sellers at a lower price than the price they sell it to the buyers to.<\/p>\n

There are several features to Carmax that makes it interesting to prospective customers and somewhat differentiated [1]:<\/p>\n

    \n
  1. Carmax claims to be the biggest used car reseller and with scale comes efficiency.<\/li>\n
  2. There is a Carmax quality certification which involves a 125+ point inspection.<\/li>\n
  3. You can return a car within 5 days if you experience buyers remorse.<\/li>\n
  4. There’s no negotiating of pricing which keeps things straightforward.<\/li>\n
  5. Carmax offers flexible financing to customers.<\/li>\n
  6. Appraisals happen almost immediately when selling a vehicle.<\/li>\n<\/ol>\n

    Summary<\/strong><\/span><\/p>\n

    Looking forward, it will be interesting to see how this network ecosystem continues to grow.\u00a0 There are obvious direct network effects at work here, the more cars on the site the more buyers are attracted, which then draws in more sellers to sell their cars to Carmax. It will also be fascinating to see how targeted algorithms facilitate more efficient identification of buyers and sellers.\u00a0 One question that pops-up is given the infrequency of car purchases per-person, how could Carmax expand into new verticals to capture more value out of ever customer.\u00a0 Regardless, this company is a perfect example of an innovative platform capturing value as a marketplace.<\/p>\n

     <\/p>\n

    [1] LiveAbout. (2019).\u00a010 Facts You Need to Know About CarMax<\/i>. [online] Available at: https:\/\/www.liveabout.com\/facts-you-need-to-know-about-carmax-3308431 [Accessed 17 Oct. 2019].<\/p>\n

    [2] https:\/\/www.carmax.com\/<\/a><\/p>\n

    [3] https:\/\/shift.com\/sell-my-car<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

    Carmax is one of the leading car resale platforms that allows buyers and sellers to seamlessly exchange cars.<\/p>\n","protected":false},"author":12575,"featured_media":9698,"comment_status":"open","ping_status":"closed","template":"","categories":[510],"class_list":["post-9688","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-marketplace","hck-taxonomy-organization-carmax","hck-taxonomy-industry-auto","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/driving-platform-innovation\/","yoast_head":"\nCarmax - Digital Innovation and Transformation<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-digit\/submission\/carmax\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Carmax - Digital Innovation and Transformation\" \/>\n<meta property=\"og:description\" content=\"Carmax is one of the leading car resale platforms that allows buyers and sellers to seamlessly exchange cars.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/d3.harvard.edu\/platform-digit\/submission\/carmax\/\" \/>\n<meta property=\"og:site_name\" content=\"Digital Innovation and Transformation\" \/>\n<meta property=\"og:image\" content=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2019\/10\/carmax-Logo-Vector-Download.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"511\" \/>\n\t<meta property=\"og:image:height\" content=\"124\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/submission\\\/carmax\\\/\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/submission\\\/carmax\\\/\",\"name\":\"Carmax - Digital Innovation and Transformation\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/submission\\\/carmax\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/submission\\\/carmax\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/wp-content\\\/uploads\\\/sites\\\/2\\\/2019\\\/10\\\/carmax-Logo-Vector-Download.jpg\",\"datePublished\":\"2019-10-17T11:56:36+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/submission\\\/carmax\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/submission\\\/carmax\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/submission\\\/carmax\\\/#primaryimage\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/wp-content\\\/uploads\\\/sites\\\/2\\\/2019\\\/10\\\/carmax-Logo-Vector-Download.jpg\",\"contentUrl\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/wp-content\\\/uploads\\\/sites\\\/2\\\/2019\\\/10\\\/carmax-Logo-Vector-Download.jpg\",\"width\":511,\"height\":124},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/submission\\\/carmax\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Submissions\",\"item\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/submission\\\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"Carmax\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/#website\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/\",\"name\":\"Digital Innovation and Transformation\",\"description\":\"MBA Student Perspectives\",\"potentialAction\":[{\"@type\":\"性视界Action\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Carmax - Digital Innovation and Transformation","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/carmax\/","og_locale":"en_US","og_type":"article","og_title":"Carmax - Digital Innovation and Transformation","og_description":"Carmax is one of the leading car resale platforms that allows buyers and sellers to seamlessly exchange cars.","og_url":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/carmax\/","og_site_name":"Digital Innovation and Transformation","og_image":[{"width":511,"height":124,"url":"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2019\/10\/carmax-Logo-Vector-Download.jpg","type":"image\/jpeg"}],"twitter_card":"summary_large_image","twitter_misc":{"Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/carmax\/","url":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/carmax\/","name":"Carmax - Digital Innovation and Transformation","isPartOf":{"@id":"https:\/\/d3.harvard.edu\/platform-digit\/#website"},"primaryImageOfPage":{"@id":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/carmax\/#primaryimage"},"image":{"@id":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/carmax\/#primaryimage"},"thumbnailUrl":"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2019\/10\/carmax-Logo-Vector-Download.jpg","datePublished":"2019-10-17T11:56:36+00:00","breadcrumb":{"@id":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/carmax\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/d3.harvard.edu\/platform-digit\/submission\/carmax\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/carmax\/#primaryimage","url":"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2019\/10\/carmax-Logo-Vector-Download.jpg","contentUrl":"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2019\/10\/carmax-Logo-Vector-Download.jpg","width":511,"height":124},{"@type":"BreadcrumbList","@id":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/carmax\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/d3.harvard.edu\/platform-digit\/"},{"@type":"ListItem","position":2,"name":"Submissions","item":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/"},{"@type":"ListItem","position":3,"name":"Carmax"}]},{"@type":"WebSite","@id":"https:\/\/d3.harvard.edu\/platform-digit\/#website","url":"https:\/\/d3.harvard.edu\/platform-digit\/","name":"Digital Innovation and Transformation","description":"MBA Student Perspectives","potentialAction":[{"@type":"性视界Action","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/d3.harvard.edu\/platform-digit\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"}]}},"_links":{"self":[{"href":"https:\/\/d3.harvard.edu\/platform-digit\/wp-json\/wp\/v2\/hck-submission\/9688","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/d3.harvard.edu\/platform-digit\/wp-json\/wp\/v2\/hck-submission"}],"about":[{"href":"https:\/\/d3.harvard.edu\/platform-digit\/wp-json\/wp\/v2\/types\/hck-submission"}],"author":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-digit\/wp-json\/wp\/v2\/users\/12575"}],"replies":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-digit\/wp-json\/wp\/v2\/comments?post=9688"}],"version-history":[{"count":0,"href":"https:\/\/d3.harvard.edu\/platform-digit\/wp-json\/wp\/v2\/hck-submission\/9688\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-digit\/wp-json\/wp\/v2\/media\/9698"}],"wp:attachment":[{"href":"https:\/\/d3.harvard.edu\/platform-digit\/wp-json\/wp\/v2\/media?parent=9688"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-digit\/wp-json\/wp\/v2\/categories?post=9688"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}