In the digital age, data has become a highly prized, if abundant, resource. Properly put to use, data can inform how a retailer should buy and sell goods.
Vroom, the online used-vehicle seller that went public this month, is leveraging data in its quest to take share from traditional vehicle retailers.
“We are really driven by data,” CFO Dave Jones said last week, as Vroom’s stock was being listed on the Nasdaq exchange under the VRM ticker symbol. “It’s kind of the core of our business. Data informs everything that we do.”
The company ingests millions of data points from all corners of the automotive industry every day, Jones said. It uses the information to analyze market dynamics at scale. Vroom can use that insight for making decisions on pricing and selling cars, or on vehicle acquisitions.
“One of the big questions is what to buy,” Jones said. “Traditional dealers tend to buy on intuition, and we buy based on data.”
To be sure, plenty of traditional dealership groups also have embraced data and revamped how they buy and sell used vehicles in recent years.
Vroom has also used its gathered data to create an automated, algorithmic pricing tool, with which it provides real-time appraisals to consumers on its website and its app. Consumers can then take that information and either price their car or truck on peer-to-peer marketplaces such as Craigslist or use it as a negotiating point with dealers, Jones said. Or, if they like the price Vroom offers, they can sell their vehicle to Vroom.
“It’s allowing us now to really scale the business,” Jones said of the company’s data use.
For those traditional dealers who still rely more on gut instinct but want to remain competitive in the face of digital newcomers such as Vroom, maybe the question is not whether to use intuition or data. Instead, why not both?