CARY, N.C. -

They have been called startups, disruptors, online retailers and ecommerce platforms throughout their young histories.

But Cox Automotive has a new name for companies like Carvana, Shift and Vroom: “New Form Online Retailers,” or NFORs.

And even beyond relatively recent forays into the public markets (Vroom’s initial public offering and Shift’s SPAC merger in 2020; Carvana’s 2017 IPO), these “NFORs” are showing growth in their ability to connect with car shoppers.

According to the Cox Automotive Car Buyer Journey: Pandemic Edition study, 17% of car buyers last year went to an NFOR website. That compares to 11% in 2019, 7% in 2018 and 3% in 2017.

Meantime, there was a decline in dealership (61% to 52%) and OEM website traffic (26% to 24%), while third-party usage was steady at the top (79%).

Cox Automotive says greater consumer interest in used vehicles has helped spur usage of these NFOR sites.

(Its study found 57% of 2020 buyers browsed used and new vehicles versus 53% a year earlier).

“The NFORs are clearly promising what consumers want, and they are catering to a majority of vehicle buyers in America,” Cox Automotive analysis said in a Data Point analysis from March 3 recapping some of the study.

And those buyers have a greater appetite for used, which Cox attributes to tighter new-car supply and economic fallout for many families from COVID-19.

“With strong interest in used vehicles, it should come as no surprise that these new online retail operations are expanding their reach, finding more visitors on their sites and delivering more sales,” analysts said. “Their business models are built on the promise of a completely digital transaction — a 'click-to-buy' experience that is relentlessly promoted.”

That promotion comes in a variety of forms, from car vending machines to Super Bowl ad spots.

And Cox Automotive has found the “appeal” of these NFORs “is working.”

Online platforms boost sales in 2020

As previously reported in Auto Remarketing, Shift increased its total units sold by 18% year-over-year, moving 13,135 vehicles. Of those, 9,497 were ecommerce sales (up 15%) and 3,638 were wholesale sales (up 29%).

The company closed the year with a record quarter for total units sold (4,666) and revenue ($73.4 million).

Vroom had 34,488 ecommerce sales last year, beating the year-ago figure by 82%. Wholesale unit sales were up 4.5% at 21,108. Its TDA sales fell 43.3% to 7,385 units.

All told, total unit sales were up 20.7% for the year, coming in at 62,981

Carvana had 244,111 retail sales in 2020, a 37% hike, with revenue climbing 42% to $5.59 billion.

“The NFORs are not yet profitable, as their efforts are focused on volume growth, but in terms of consumer awareness and shopping traffic, 2020 was a breakthrough year for many New Form Online Retailers,” Cox said in its analysis.

‘2020 only helped accelerate the growth’

Carvana, which Cox said is “the largest, most established NFOR,” discussed that breakthrough year in detail in its second annual online car buying report released last week.

“Car buyers have been waiting for a safe, transparent, and effective way to purchase vehicles online, and the events of 2020 only helped accelerate the growth that we were already generating,” Carvana founder and chief executive Ernie Garcia said in a news release accompanying the study. “We’ve examined the data from more than 244,000 purchases last year, showing some remarkable trends in online car buying, and how we’re positioned for more and more consumers choosing to buy their next car online.”

Carvana said it took a “slight” sales hit at the outset of the pandemic, before a late April rebound. Its sales ultimately, “continued to improve with sales growth of approximately 40 percent year-over-year later in Q2,” the company said in the report.

Deliveries for Carvana climbed more than 31% between the second and fourth quarters, it said.

And the third quarter brought this first for Carvana: it bought more cars from consumers than it sold. The company said it has purchased more than 350,000 vehicles from consumers in its history. Close to three-fifths (203,000) of those purchases occurred last year, Carvana said.

The five models it most often purchased from consumers were all Honda and Toyota models. That list included the Honda Civic at No. 1, followed by Honda Accord, Toyota Camry, Honda CRV and Toyota Corolla, respectively.

As far as what consumers are buying from Carvana, the list included the Civic, Chevrolet Equinox, Ford F-150, Accord and Nissan Rogue.

The brand of vehicle consumers most often purchased from Carvana was Chevrolet, followed by Ford, Toyota, Nissan and Honda, respectively, the company said.

The fastest-selling rides on Carvana’s platform (based on time from listing on site to purchase) was the 2018 Volkswagen Jetta (1 minute) followed by the 2017 Lexus RX 350 (3 minutes), 2018 Hyundai Santa Fe Sport (4 minutes) and the 2012 Audi A6 (5 minutes).

The SUV was the most popular body style for Carvana last year, representing 35% of its sales. Sedans were next with a 34% share, followed by wagons (11%), hatchbacks (8%), pickups (5%), coupes (3%) and minivans (3%).

One vehicle type that showed growing interest among Carvana buyers was the electric vehicles. Purchases in that segment were on 24% year-over-year on Carvana’s platform, it said.

While the Nissan Leaf was the most popular EV among Carvana buyers, two of the top five were Tesla vehicles: the Model 3 in second and the Model S in fourth.

Tesla vehicles sold an average of 37 days after Carvana acquired them. The rate for other vehicles is 70 days.

Of the Tesla units Carvana sold last year, 70% were purchased from consumers.

Market expansion

Carvana also realized some geographic growth last year.

By the end of the year, Carvana was available to 266 markets — a reach that covers nearly 74% of the U.S., it says — and the company had 27 car-vending machines.

Total markets climbed 82% from 2019.

“To meet the demand of more online car buyers, we opened a record 100 additional markets across 24 states in one day to provide those who needed to purchase a vehicle to keep moving, with an entirely online car buying experience,” Carvana said in the study.

It added: “We supported urban commuters that typically relied heavily on public transportation and saw an uptick in deliveries in the Northeast region, for example, by 177% from the year prior.”

Dealers heavily in the mix, too

Going back to the Cox Automotive study, its analysts emphasized that these new retailers “are not the only ones shifting the auto buying landscape.”

The industry at-large is moving towards digital, and that includes a heavy dose of digital progress by car dealers.

And players like CarMax, which announced in September that it had finished rolling out its omni-channel capabilities nationally, a process it started in late 2018 with the launch of omni-channel in Atlanta. CarMax’s omni-channel experience lets consumers buy used cars online, in-store or a blend of both.

As dealers made more of the car-buying process available to be completed online, transaction times fell and satisfaction increased, Cox said.

“Importantly, vehicle buyers who did the most steps online were the most satisfied buyers. And those same satisfied buyers will be expecting to move through the process with more steps online when they return to the market a few years down the road,” it said.

Calling last year a “tipping point” for the industry, Cox said dealers enacted “dramatic changes” in response to consumer demand.

“In addition to driving more efficiency into the purchase process by digitizing more steps, more dealers began offering home services such as virtual vehicle walkarounds, test drives at home and vehicle delivery which includes the option of completing the final paperwork wherever consumers are located,” the company said.

“After many years of consumers wanting a better car buying process, the pandemic accelerated changes in auto retailing and revolutionized the buying process across the board — at all dealerships, not just the rapidly growing NFORs,” Cox said. “If customer satisfaction is the ultimate measure, the car buying journey is changing for the better.”