Ecommerce startup Cazoo has announced that it has raised £100m to enable users to buy cars online, as the Covid-19 coronavirus drives a surge in online shopping.
The latest funding round, which brings the total raised by Cazoo to £180m, was led by DMG Ventures. Additional funding came from Eight Roads Ventures, Mubadala Capital, Octopus Ventures, General Catalyst, Stride.VC and CNP.
The startup is the latest venture by Alex Chesterman, who also founded Zoopla and LoveFilm. It enables customers to buy second-hand cars entirely online, which are then delivered during a two-hour delivery slot.
The startup has also introduced a new handover process to support social distancing required during the coronavirus crisis.
The vehicles customers buy are owned by Cazoo and fully reconditioned before sale. They also come with a 7-day money-back guarantee, roadside assistance and a 90-day warranty.
Cars, online shopping and the coronavirus: Cazoo positioned for success
Launched less than 18 months ago, Cazoo already provided a strong offering prior to the coronavirus outbreak, as it provides a viable model to make ecommerce work for car buying.
Others have made moves to bring secondhand car purchases online, but this has usually only acted as a way to connect people with cars for sale, with the final purchase generally happening offline. By making the process entirely online, Cazoo is bringing disruption to a long-unchanged industry.
However, the outbreak of the coronavirus is undoubtedly going to accelerate the use of Cazoo.
While fewer people are travelling, those that need to travel are increasingly avoiding public transport, meaning some may consider purchasing a second-hand car. And a service that makes this an entirely online process with a small delivery window is well-suited to the needs of key workers who are pressed for time and need to avoid unnecessary outings.
Meanwhile, future potential customers who are isolating are purchasing products online that they previously would not have considered buying digitally, and this will increase consumer willingness to purchase big-ticket items such as cars online in the future.
“It’s clear that UK consumers are ready to buy cars online in a convenient, hassle-free way. Cars are an important form of transport for many in our society, whether conducting deliveries or getting to essential jobs and we want to ensure that those who need one can continue to get one,” said Alex Chesterman, founder and CEO of Cazoo.
“This new round of funding is a strong signal from investors of the scale of the opportunity. Our mission is to deliver the best experience for car buyers across the UK by delivering better selection, value, convenience and quality.
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“That mission is now also focused on keeping consumers safe by not having to leave their homes to buy a car. We are also looking at how Cazoo can help other organisations move essential supplies around the country via our fleet of car transporters in these difficult times.”