Last week saw the failure of one of the big names in car buying sites, Tootle.
It certainly had been a popular site and we as wholesalers brought quite a few of our cars via the platform.
So where did it all go wrong?
Was it Brexit? an ailing car market or something else that caused the failure?
Here's our view...
What was Tootle
Tootle was a website that claimed to put your car in front of 2,000 car dealers across the UK.
These dealers it was hoped, would bid against each other, to buy your car giving you the best possible price.
Just like in the Car Auction.
Best of all, selling your car on Tootle was completely free.
Or so they led you to believe...more on that later.
The whole process they claimed took only takes a few minutes, and you could start receiving offers for your car in hours.
In fact, part of their claim was that a massive 82% of sellers receive an offer within 48 hours.
So why were they forced to close down the site? afterall it had had over £4.3 million invested in it.
As a free service, with a hugely expensive national TV advertising campaign, where was that profit going to come from?
A quick division of £4 million by what we knew to be the average buyer's fee per car gave us a figure of over 10,000 cars, Alarm bells rang.
Advertising Your Car For Free
Tootle's platform allowed sellers to list their car for sale for free, they promised a quick and easy process that involved the minimum effort.
Tootle is a totally convenient way to sell. The entire process happens online, so you won’t be bombarded by dealers calling you"
The platform quickly proved to be one of the most popular places to list a car for sale to the motor trade.
Especially for people with a high-end prestige car to sell, which as it happened was our target audience.
So rather than worry about competing with them, we simply registered as a buyer and let them do the marketing to attract in the cars.
Tootle will only pass your details to fully vetted, professional dealers so you needn’t worry about dealing with any timewasters.
What Tootle failed to mention, was that in order to have that many dealers on the site they didn't vet them all as fully as you might imagine.
"Dealer" in the public perception means "Car Dealership" but the reality is it just means "someone who deals in cars", or as it turned out, anyone who deals in cars.
One of the other main attractions for listing a car on Tootle was the relaxed format, you could get a car to go live on the site with just the registration, mileage and a single photo.
They didn't require you to complete a form, so if you just didn't know something about your car, then you could still advertise your car straight away without finding out that information first.
Tootle's site had a simple failing at this point though.
In order for a potential buyer to ask a question about a car for sale, they had to make some sort of offer.
So as a buyer, sometimes, you'd have to make a bid, before you knew all the facts.
If the subsequent information you received back from the seller prevented you from completing that purchase, your bid was still sat there on the system.
Tootle's auction format promised competing bids from dealers vying to buy your car, but unlike a car Auction, Tootle's registered buyers weren't legally obliged to carry that offer through to purchase.
So you might get a few dealers bidding you your asking price, only to be never seen or heard from again.
Being Famous has its drawbacks.
Fame isn't always a positive thing and for specialist cars, it can literally be a death sentence, let us explain.
If you've ever been to an auction or bid on an item on eBay? you'll know what happens when an item you're interested in quickly receives a much higher offer than you'd been prepared to pay.
You switch off and look elsewhere, don't you?
What then happens when you see that item, relisted?
You might assume that either there was something wrong with that item or with the seller.
Cars are no different.
Dealers reactions to seeing a previously sold car back for sale again, whether re-advertised or worst through an auction, automatically tarnishes that car by the suspicion that there's a problem
" didn't that already sell last week?" , "hey what's wrong with that I wonder" " oh not this one again"
Comments such as those above are often muttered amongst the trade attendees of car auctions, and with Tootle, it was no different.
This could mean that you may get an initial high offer from an unreliable dealer that had put other bidders out of contention.
Only to have to relist the item for sale again for less 7 days later when that offer evaporated.
Your car, now famous amongst the dealer network, would be back for another go.
These unreliable dealers fell under the radar at Tootle because of course you'd only be invited to review Tootle once you successfully sold your car.
And because Tootle was just a free advertising platform for your car then, of course, they hadn't actually done anything wrong.
No catches, No fees. It's completely free to use.
Ever heard the saying " there's no such thing as a free lunch"?
Tootles service was completely free to use, and they didn't charge sellers anything to list or sell their cars.
But, they did charge buyers and on some of the higher-priced cars, the fees to buyers could be as much as £2000, and so obviously this fee has to be paid by someone in the chain, and guess what it isn't going to be the buyers.
Who's actually buying your car
To understand the dynamics involved in how dealers source cars you have to understand how a car dealership works.
let's take your local food supermarket as an example you're all probably more familiar with.
Think for a moment about how apples get onto the shelves?
Do you think anyone who works on the supermarket shop floor actually goes out and buys a crate of apples one at a time from a local farmer?
Of course, what happens is the head buyers for these chains deal with wholesalers, and it's these wholesalers who deal with several different farmers.
And they then sell them in batches to the different supermarket chains as and when they have a need for them.
The supply chain for used cars, in the main, is exactly the same.
Sites like We Buy Any Car, deal with private sellers of cars, one at a time, all your cars get collected together and then put through a trade car auction and the buyers who work for the dealer groups bid on several cars at the same time, only buying the ones that fill a need.
Of course, there are exceptions to these rules, but in the main, the retailers are focused on retail and simply haven't the time nor inclination to deal with you popping by on a Saturday afternoon to value your car.
Tootle didn't do anything wrong in as much as they had a nice site, and it was run by decent people.
But trying to compete with Webuyanycar these days is like trying to start your own version of Amazon.
Webuyanycar is a huge international company owed by another huge company that in turn own one of the worlds biggest car auction groups.
And they were first to market, and they became a household name with a hugely irritating and yet successful marketing campaign.
Name a car buying site and everyone's going to say webuyanycar.
Tootle thought they could get between the seller and the buyers, cutting webuyanycar and the auction out of the supply chain, and keeping that bit of the profit for themselves.
It was a bold move.
But what they didn't understand was the real dynamic of how the supply chain works in practice.
And rather than adding value to it they were simply getting in the way of it.
Why We Won't Be Another Tootle.
Because we're not just another middle man adding costs into the supply chain, we get our profit by saving the retailers time and money.
By collecting all the information about each car carefully and then running around the country and buying cars with our own money, then delivering the cars to where they are most needed, we add value for the retailers, not extra costs.
It's far from easy, its time consuming and not easily scalable.
As a niche business, we have to keep our cost base low to find our little slice of the cake.
And I won't lie we'd love to have £4 million invested in us, but we know to become as big as webuyanycar, then that sort of marketing spend "wouldn't even touch the sides" as they say around our Northern base in Yorkshire.
So small and beautiful we are destined to remain, and thankfully...we like it that way.