On the face of it, Cazoo was launched as an online-only used car retailer that would deliver vehicles to consumers doors – and give them seven days to change their mind.
Since officially launching at the end of 2019, Cazoo has had several multi-million pound rounds of investment, bought a used car supermarket business and now a car subscription service.
Confused? We’re not surprised. In the fast moving year of 2020, Cazoo has been moving quicker than most so here we’ve pulled together everything we know so far.
Where did Cazoo come from?
Cazoo had all of the markings of another car classified website when it was first announced in 2019.
However, when the ex-boss of Zoopla, Alex Chesterman, said he was going to sell used cars online – that’s what he actually meant.
Not planning to advertise them for other dealers, he began stockpiling used cars that would be available on the website from launch.
- Listen to the first episode of the Car Dealer Podcast where we talk about Cazoo and other big stories of 2020
Who is Alex Chesterman?
Apart from being the steely faced frontman seen in Cazoo’s official pictures, Chesterman previously launched other successful tech companies such as Zoopla and Love Film. In 2018, he made £61m when the property listings platform’s parent company ZPG was bought for £2.2bn.
According to the Financial Times, he made £33.6m when Zoopla floated on the stock market and a further £40m selling shares between 2015 and 2017.
Love Film was sold to Amazon in 2011 and although it’s not known how much Chesterman made in the deal, it was speculated to be a considerable amount.
Chesterman also invested £1.3m in Carwow in 2014 with two other Zoopla directors and was part of the seed funding group for Motorway.
He has also been an angel investor, backing companies such as Graze, Farmdrop and SportsPursuit.
Who else runs Cazoo?
One of the first directors to be announced at Cazoo was chief commercial officer Paul Whitehead, previously chief strategy officer at Zoopla parent company ZPG and before that commercial director at uSwitch.
A huge name in online sports betting, Alex Gersh, was then announced in May 2019 as CFO. However, in March 2020 he stepped down from the role.
Although Cazoo commented that it wouldn’t be looking to replace his role immediately, in June Stephen Morana took over the CFO title.
Morana has floated both Betfair and Zoopla in recent years, with both achieving multi-billion pound valuations. He also sat on the board of online fashion giant Boohoo when it went public.
Owner of the Daily Mail, the Daily Mail & General Trust plc, also has a 22 per cent stake in Cazoo and its owner Lord Rothermere is executive chairman of used car retailer.
How much money have Cazoo made?
Cazoo has made a lot of money by raising funding, and arguably not as much from actually selling cars – so far. It has gone through three rounds of funding, and has raised a total of £450m.
When it was officially launched in December 2019, it did so with £80m pre-launch backing.
In June it received another £25m, taking it to the £200m total.
However, its results for the first year of trading showed a multi-million pound loss.
The business made a total loss of £18,921,615 in the period – £4m attributed to marketing costs, £2m to selling and distribution expenses – and had revenue of just £1.1m.
How much is Cazoo worth?
According to Cazoo, the company is now worth £2bn. In June, it announced the firm was worth $1bn (£800m) and when it topped up its funding to £450m, that value more than doubled too.
Are Cazoo going to float on the stock market?
So far, it says no. However, with new CFO Stephen Morana having floated some big names in the past, it’s easy to see why tongues are wagging.
Why did Cazoo buy Drover?
The two companies have a lot of similar and complementary features that make them seem like a good fit. In a lot of ways they’re two sides of the same coin, with the same aim of disrupting the car market and making it easier to buy or own a car.
How much did Cazoo buy Drover for?
Drover had just successfully raised £20.5m worth of funding, topping of its own investment to a total of £27.5m.
The price paid hasn’t been disclosed but it has been speculated that Drover could have been valued at £100m and that Cazoo would have paid in excess of that to save setting up their own subscription service later this year.
How much did Cazoo buy Imperial Cars for?
In July, Cazoo bought Imperial Car Supermarkets – a company that many would argue was the polar opposite to the used car website’s strategy.
Again, the price paid has not been disclosed.
As the deal was done in the early months of the pandemic, it’s difficult to speculate on how much the car supermarket would have been valued at – particularly as its latest results, released in November for the year ending May 31, 2020, show the company made a loss of £3.05m compared to a £1.3m profit in 2019.
Why would Cazoo want to buy Imperial then?
Well, there are lots of reasons. When Cazoo first started stocking up they were buying their cars from BCA, then the auction house was preparing and storing them until they were to be sold. BCA even built a whole new preparation centre to deal with this.
However, as has been proven by a lot of used car supermarkets, it can be more cost effective if you can prepare cars on a large scale in-house. Imperial had three huge prep centres and a lot of stock that Cazoo could take on.
That said, there are some clear clashes that came to a head in the early days of the takeover. Imperial had a lot of sales staff and that doesn’t work in Cazoo’s business plan, resulting in hundreds of people being made redundant.
And you would think it would be an easy win to keep selling at these locations and claiming each sale as a win for the revolution – but they’ve stayed on message and made them purely for collection if a customer doesn’t want home delivery.
Should car dealers be worried about Cazoo?
This question is a bit like Blockbuster debating whether they need to worry about this new DVD subscription postal service. Why would people wait for something to be posted to them when they can walk to a shop and get the DVD they want there? Or I’m sure the same as estate agents, saying why would they want to list their houses on Zoopla when people look for houses in newspapers or on their own websites.
There is a big difference with this new company though, and that’s owning the stock which has its own challenges. Then having vehicles in stock has an even more unique set of challenges.
It’s easy to look at Cazoo as a loss making company, but the loss is so far on track with the £70m it expects to lose in the first three years.
With two big purchases in the last six months, it will certainly be interesting to see what they do next.