Beepi, the digital car buying and selling platform, was launched in California in 2014. It had an ambitious goal to transform the traditional used-car industry by providing the convenience of buying\/selling a car with a touch of a fingertip. Beepi was on Forbes\u2019 list of the top 10 hottest e-commerce startups in 2015 and had been valued as high as $546 million. Despite its brilliant idea and booming business at some point, it eventually failed in 2017. Beepi is a classic example of a startup with a good idea at its core but runs into the ground due to bad execution.<\/p>\n
Beepi was a peer-to-peer marketplace. Instead of buying the car outright, Beepi sent one of its 100+ inspectors to the seller and run a 240-point two-hour evaluation. If the car passed the inspection, the car was listed on the Beepi site. Once it\u2019s bought, the money would be transferred to the seller and another Beepi employee picked up the car and delivered it to the buyer. Beepi took up to a 9% commission. If the car did not sell in 30 days, Beepi would buy it, and continue to list it until it sells. While buyers did not personally inspect or test drive the car before purchase, they had a 10-day return window after delivery and a warranty. Buyers had the option to pay Beepi in bitcoin, direct debit, financing or credit cards.<\/p>\n
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Disruptive Strategy<\/strong><\/p>\n Beepi\u2019s goal was to fundamentally change the way people buy and sell used cars through digital transformation. Its strategies were disruptive in nature, through real-time data and analytics platform and disrupt used car market to become a dominant marketplace. Their disruptive strategy can be characterized by:<\/p>\n <\/p>\n Challenges and Opportunities Beepi had Faced:<\/strong><\/p>\n As Beepi chose to be a marketplace player, they chose to be a disruptive force as a new entrant that needs to focus on execution and competition with traditional incumbents. The challenges and opportunities include the following.<\/p>\n Opportunities<\/p>\n Challenges:<\/p>\n <\/p>\n What Went Wrong?<\/strong><\/p>\n Beepi\u2019s disruptive strategy was highly contingent on the value creation and value capture hypotheses. Its value creation was dependent on the fact that it\u2019s painful for buyers to buy a trusted car (potential for lemons) and people are willing to buy a vehicle without a test drive. Unlike other industries, digital transformation in the used-car industry is hard to succeed. As said by Alan Haig, president of buy-sell advisory firm Haig Partners, “Everyone who has been successful has realized that used cars are unique, depreciating assets, and the margins are shrinking because the Internet allows consumers to choose more freely between vehicles, you have to be a good retailer, not just a software developer .”<\/p>\n In addition, according to Collapsed.io, Beepi\u2019s poor organizational management was the main contributors that caused the company to shut down in 2017. A majority of Beepi\u2019s burn went to \u201cgrossly high salaries\u201d and the leadership also mismanaged funds. Beepi had massive funding or \u201coverfunding\u201d, but was unable to manage them well.<\/p>\n <\/p>\n What could Beepi have done differently? <\/strong><\/p>\n Beepi\u2019s disruptive strategy was attractive at first as the market was very fragmented, and the top player only represented 3% of the market for used car sales. The problem was that they had to create a platform that could be adopted by both buyers and sellers, and they had to develop a strong brand and identity that consumers are associated with. They also had to execute against large competitors with significant resources. I would recommend that Beepi do the following:<\/p>\n First, I would utilize the financing and potentially expand through acquisitions or investments into teams on the East Coast that have seemed to gain traction (acquihires). Eventbrite approached this similar strategy as they expanded. Some local markets had online event players that had already broken local threshold, which Eventbrite then acquired. Similar to this, Beepi should identify which players are gaining traction and then look to strike a deal with local teams that are doing well. Beepi could observe and monitor certain cities and create an active list of potential targets. This list would also be used for competitive tracking purposes as well. Beepi had invested into technology and algorithms on its platform so it would be able to add value to local players that don\u2019t have technologically deep platforms. Ideal M&A targets could include local dealers that have strong local knowledge but lack technology, a vertical integration play into new geographic expansions.<\/p>\n Additionally, I would recommend Beepi test out new markets by taking a simple test step of attempting to sell 2-3 cars on current marketplaces such as eBay motors on behalf of local car owners based on their value creation hypothesis of seamless transactions and technology\/data-driven sales. They could try selling 2-3 cars with online eBay posts that offer value points of their guarantee, utilizing their tech and data platform to identify which cars are most popular to sell, and offer value add services such as notes on a 10-point professional check and concierge delivery services. This approach would be an MVP approach leveraging existing market platforms to test their value hypothesis of seamless transactions and great service. Another form of this strategy could be collaborating with local mom and pop car dealers that don\u2019t have a web presence. This would be a value-chain to disruptive strategy. Beepi could initially work with mom and pop dealers to sell their inventory online in the Beepi way, if the local test markets go well then Beepi can be reassured that customers perceive value from Beepi\u2019s value hypothesis (10-point checks, concierge services, etc).<\/p>\n The digital innovation had reshaped every aspect of our life. Buying and selling used cars, unfortunately, hasn\u2019t changed for decades. Beepi\u2019s failure was a good reminder that not all digital transformation would gain traction, and companies need to be thoughtful towards aligning its value creation strategy and organizational management.<\/p>\n <\/p>\n Reference<\/strong>:<\/strong><\/p>\n Lee, Evan (July 22, 2017). https:\/\/collapsed.co\/startups\/beepi<\/p>\n Burke, Katie (December 12, 2016). http:\/\/www.autonews.com\/article\/20161212\/RETAIL04\/312129946\/beepis-demise-shows-perils-for-used-car-startups<\/p>\n Del Rey, Jason (April 15, 2014). “Beepi Could Be the Car Buying Site We’ve Been Waiting For”. Re\/Code..<\/p>\n Lawler, Ryan (September 5, 2014). “Peer-To-Peer Auto Marketplace Beepi Adds A ‘Prime’ Option, Now Shipping To 140 Cities”. TechCrunch. Retrieved February 12, 2015.<\/p>\n","protected":false},"excerpt":{"rendered":" Beepi fell from being the Top 10 hottest e-commerce firm to closing up shop in just 3 years. How could it be played out differently? <\/p>\n","protected":false},"author":10570,"featured_media":8267,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-8266","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry"],"connected_submission_link":"https:\/\/aiinstitute.hbs.edu\/platform-digit\/assignment\/driving-digital-transformation\/","yoast_head":"\n\n
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