Failure Analysis
Cazoo died from a lethal combination of unit economics that never worked, catastrophic timing, and founder hubris. The root cause was a fundamentally flawed...
Cazoo \UK
Cazoo promised to revolutionize used car buying by offering a fully online experience with home delivery, eliminating dealership visits. The value proposition was simple: browse thousands of cars online, complete the purchase digitally, and have your car delivered to your door within 72 hours. They offered a 7-day return policy and reconditioning guarantees, positioning themselves as the 'Amazon of cars.' The psychological hook was powerful—buying a car is universally dreaded, and Cazoo promised to remove all friction: no haggling, no pushy salespeople, no wasted Saturdays at dealerships. In the post-COVID era of 2020-2021, this resonated deeply as consumers had become accustomed to buying everything online.
Discover the reason behind the shutdown and the market before & today
Market Analysis
The online used car market has matured and consolidated. Carvana, once worth $80B, is now worth $6B and barely profitable. Vroom shut down. Shift...
Startup Learnings
Capital intensity is a feature, not a bug—and it kills most businesses. Cazoo's model required buying cars before selling them, which meant every £1...
Market Potential
The used car market is massive (£80B+ in UK, $840B in US), but online penetration has plateaued at 15-20% and may have hit a...
Difficulty
Building a car marketplace today is technically trivial. Modern no-code tools (Bubble, Webflow) can create the frontend. Stripe handles payments. Shipping APIs exist. The...
Scalability
This model has fundamental scalability problems. Unlike software, each transaction requires physical inventory, reconditioning labor, delivery logistics, and carries significant risk (returns, warranty claims)....
Rebuild & monetization strategy: Resurrect the company
Execution Plan
Phase 2
Partner with 2-3 inspection services and 1-2 reconditioning shops to provide standardized reports and services. Take a commission on referrals.
Phase 3
Cold outreach to 50 fleet managers at mid-sized companies (200-1000 employees) in Texas. Offer free listings and white-glove service to get initial inventory.
Phase 4
Run targeted LinkedIn ads to HVAC, plumbing, and electrical contractors in Texas offering 'certified fleet vehicles with financing.' Drive them to listings.
Phase 5
Manually broker the first 10 transactions to understand pain points, pricing dynamics, and what services buyers actually value.
Phase 6
Add Stripe-powered escrow and financing applications (partnering with a commercial lender) once you've proven demand.
Monetization Strategy
Transaction fee of 3-5% on vehicle sales (split between buyer and seller). Financing commission of 1-2% on financed purchases (partnering with commercial lenders). Reconditioning and inspection service fees (20-30% commission on referred services). Subscription tier for high-volume fleet managers ($500/month) offering priority placement and analytics. Target $5K average transaction value, 4% blended take rate = $200 per transaction. At 100 transactions/month, that's $240K/year run rate. Path to $10M ARR at 4,000 transactions/year is achievable in a $50B commercial vehicle market.
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