Dallas-Fort Worth can officially count itself among the few markets where residents can buy a car like a candy bar.
The online automotive retailer Carvana revealed a car vending machine in Frisco Thursday morning, although anyone who’d driven by Highway 121 near Legacy Drive might’ve already put two and two together. The vending machine allows customers to insert a large coin into a digital customer bay and – with the help of a code provided by a Carvana employee – watch their purchase descend from as high as eight stories. Show Full Story
Ryan Keeton, Carvana's co-founder and Chief Brand Officer Jake Dean
Cars in racks wait for online buyers to pick up via Carvana's automated delivery system. Jake Dean
The Carvana eight-level showroom off 121 and Legacy in Frisco Jake Dean
Drop a token in a kiosk and an automated process delivers your car to you from a vertical showroom
Your automobile is delivered to a bay with a sliding glass door for your inspection and test drive.
The glass tower can hold 30 cars. When it’s digitally told to, a steel elevator raises up to the correct floor and rotates to align its tracking with the selected car. The platform then rolls out – car aboard – lowers to the ground floor, and moves horizontally to a delivery bay before moving the car forward into the bay and to the owner.
The structure is just the fifth of its kind in the country, but DFW lagged behind the other big cities in the state. Machines have opened in each of Houston, Austin, and San Antonio over the last five months.
Ryan Keeton, a co-founder who gave the Dallas Business Journal a tour of the facility Wednesday, said that Carvana – which is headquartered in Phoenix – has chosen to roll the machines out in Texas in part because of the high demand for vehicles. He said he couldn’t speak to the impact of the regulatory environment on the decision, and a Carvana spokesperson didn’t answer an email seeking comment on the matter.
But Keeton touched on the challenges in finding real estate that is both located in a high-impact area and available for automotive retail zoning. Places of dense population, he said, can prove a challenge. And visibility is key.
“It’s great branding to be able to have a gleaming tower on the side of the highway,” he said.
Keeton, who is 39 but looks younger, is the elder statesman of the company’s three under-40 founders, alongside CEO Ernie Garcia and COO Ben Huston. It was Garcia – who came from DriveTime – who brought the automotive and finance expertise that shaped the company, Keeton said.
He maintained that the problem they wanted to solve was exclusive to the auto industry.
“It wasn’t, ‘Let’s be the next ‘this’ of ‘that,’” he said. He was standing five floors up on the auto-elevator, a yellow mustang lurching forward.
In the eyes of the co-founders, the traditional car-buying experience had grown tiresome and, in the digital age, out of date. You could spend hours searching, test driving and having your ear talked off, but what do you really get?
"You've got to spend four hours," Keeton said. "And people don't really enjoy that."
The company decided to automate it all – dipping the overhead – and try for something truly disruptive.
They appear to have found it. Founded in 2012, Carvana last year was rated Arizona’s fastest-growing company by the Phoenix Business Journal, which recorded the company’s 2015 revenue at $130 million. In 2016, Carvana increased from 12 to 21 markets. Then, last month, Reuters reported that the company has hired investment banks to explore an IPO, which they expect could come during the first half of 2017 at a valuation of well over $2 billion.
The model is to offer delivery as soon as the next day to buyers’ driveways, plus a 7-day return policy. The bulk of the vehicles are kept at giant, non-customer-facing locations, with the one serving DFW located in Fort Worth-suburb Blue Mound, Keeton said.
Delivering cars comes with some inherent staffing needs. One way to lessen the burden? Bring customers to you. One way to do it without killing the convenience factor? Create a brand new and exciting customer experience, a la a vending machine that dispenses cars.
The company has gone so far as to incentivize the pick-up option for out-of-market buyers. To pick up in person, customers outside the Dallas metro area can receive a $200 airfare subsidy, and Carvana will pitch in “white glove transportation” from the airport.
Still, Keeton maintained that the vending machines are about granting convenience, control, and a great experience to the customers – while taking delivery burden off the company.
Depending on volume, the Frisco location will staff between 10 and 20 people. To take a look, check out the attached gallery.
Shawn Shinneman covers technology for the Dallas Business Journal.