Cazoo is the ‘business model of the future’ but the used car dealer was wrong not to utilise more industry experience from the start.
That is the view of the firm’s COO, Jonathan Dunkley, who has been sitting down with Car Dealer in our first-ever interview with an executive from the online disruptor.
Earlier today, the firm announced improved financial results for Q3 with gross profit reaching £11m and gross profit per unit reaching record levels.
It comes after the outfit previously racked up eye-watering losses after throwing money at expensive sports sponsorships and business acquisitions.
Since Dunkley was appointed in March, he has overseen a slimming-down of the business, with several sites sold off to raise funds.
Despite still being forecast to lose as much as £120m for the year as a whole, the former CarShop boss feels things are now heading in the right direction.
He said the initial approach to the business allowed Cazoo to build a nationally recognisable brand, but he admitted that mistakes had been made along the way.
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Dunkley told Car Dealer: ‘I think obviously, it was a hyper growth business that was kind of proving the demand in the market.
‘Look, we have had to pivot for various reasons in order to make sure that we can prove the underlying unit economics of the business.
‘That has been about putting in place a lot of the basics in terms of making sure we’re very focused on how much we’re spending in certain areas, how we’re pricing our cars, how we buy our cars, how we’re preparing our vehicles, how we’re managing our overaged stock and looking at conversion.
‘It’s been about getting all of those things coming together, really focusing on the unit economics, as well as continuing to leverage data and tech to make sure that we’re delivering that market-leading level of customer experience.
‘I think there’s been a little bit of a slight change across this year at recognising that we’re in the used car market. Value is super-important to customers as well as convenience.
‘We’re really refocusing on your target audience and what’s important to them as well.’
After launching, Cazoo founder Alex Chesterman hit the headlines with his scathing comments on the UK’s motor trade, which he called ‘flawed on every level’.
In an apparent attempt to show how different his new outfit would be, he crammed his team with business know-how but very little in the way of industry experience.
As a figure with over 20 years’ experience in the industry, Dunkley refused to be drawn on Chesterman’s comments but he did say the firm had acknowledged it needed to strike a better balance.
He added: ‘ I think that has been recognised by the business, hence why there’s now people like myself involved and other members of the team as they bring that balance.
‘I think that’s the case for any team in any organisation, right? It’s got to be that balance and expertise and perspective, and I think that’s what we’re working towards now, which, you know, seems to be paying off.’
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Cazoo is free of ‘legacy challenges’ facing traditional dealers
Dunkley says the latest set of improved results, which included a quarterly revenue rise of £3m on the second quarter, is the start of Cazoo beginning to be able to ‘deliver on its promises’.
Despite the retailer’s chequered past, he remains adamant that it has all the tools to be a success and says he always believed he could make an impact on the struggling dealer.
He told Car Dealer: ‘Clearly we are really pleased with the progress that we’re making throughout this year, and it’s good to start creating a little bit of a track record of being able to deliver on our promises and our forecast as well, so to see that consistency come through is obviously really, really important.
‘For me, personally, coming from the industry, seeing that GPU [gross profit per unit] performance in the quarter that we delivered around the £1,500 per unit mark kind of gets us back in the place of industry norms, if you like.
‘Those sorts of performances, in the context of a pretty tough market, is obviously fantastic to see delivered.’
He added: ‘This is definitely the business model of the future, from my point of view.
‘It is about really being able to focus on digital and data without any of the legacy challenges that maybe some of the other businesses in the trade have.
‘That is the very forward-thinking, evolutionary kind of mentality that this business has and some of the talent that [Chesterman] was able to generate internally.
‘I knew that I was going to be able to come in and have a very quick and significant impact on the business in terms of my experience in the industry, and then making sure that we have the right balance in this business around industry expertise, as well as the expertise around tech and data and all that kind of stuff.
‘Really bringing all of that together in the correct balance has been my focus.’