This is Silicon Valley’s success formula: Get funding; conspire with friends to use the internet to disrupt an existing industry; rake in money. Alejandro Resnick, 32, and Owen Savir, 33, are attempting to apply the formula to the used-car business with their brainchild, Beepi.com.
The site acts as a virtual used-car lot, where buyers can peruse a selection of vehicles backed by Beepi’s own inspection and three-month, 3000-mile warranty. “It came out of my personal experience while at MIT,” explains Resnick. “I was moving from Argentina and bought a used car from a dealer. It turned out to be awful, and I had to sue him using Massachusetts’s lemon laws.”
Resnick figured there was a better way, and Beepi looks to replace traditional dealer lots with internet marketing. Beepi doesn’t stock the cars; it sells private vehicles on consignment. If the vehicle doesn’t move to a private party within 30 days at Beepi’s listed price, then Beepi buys the car from the seller at the list price, minus its commission, which ranges from 3 to 9 percent.
Prices are based, according to the site, on Edmunds.com’s online pricing data. In examples we tested on Beepi’s site, the trade-in price of our cars came close to what Edmunds.com’s pricing tool predicted plus exactly $1000. Thus, our imaginary 2014 Chevrolet Equinox LTZ AWD in Palo Alto with 13,000 miles that we used as a test case came up with a Beepi-reported “Lowball Dealer Offer” of $27,059, or what Beepi thinks we’d get by taking it to a dealer, and then a “Beepi Price” of $28,059, which is what Beepi would pay us if it sold the car. Add in the maximum, 9-percent commission that Beepi may charge and that would have the site theoretically listing the Equinox at $30,584.
Edmunds.com, using the same vehicle and location, showed a trade-in value of $27,483 and dealer retail price of $30,701. So Beepi is counting on getting close to dealer prices even from a buyer who has never laid eyes on the actual machine before it’s purchased.
If our Equinox sells, Beepi administers the transaction and transports the vehicle from the seller to the buyer. It also details it and puts a big bow on the hood. The seller gets a check that day.
Where Beepi pulls ahead of the traditional dealer is with its return policy. A buyer can return the car to Beepi up to 10 days after purchase for any reason and receive a full refund—including taxes and fees—with money from Beepi and not the original seller.
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Beepi only accepts cars with clean accident histories and less than 60,000 miles. Just one-third of the cars Beepi inspects pass its 185-point inspection, a prerequisite to being listed. The site is looking to occupy the cushy comfort zone of the low-miles used-car market, not the bargain bin.
Beepi sold its first car, a Ford Fiesta, in April, and it’s still operating mostly around its Los Altos, California, headquarters. “The first six or seven months are sort of a market test,” says Resnick. “We’ve had an overwhelming response and are going to expand quickly.”
Right now there are only about 100 cars listed on the site, and a search for a Toyota Tundra brings up a lot of Priuses. Read through Beepi’s disclaimers—which include binding dispute arbitration and waiving of any class-action status—and there’s reason for pause before selling or buying through the site.
Even with Beepi’s generous return policy, buying a used car sight-unseen strikes us as risky. But selling a used car through Beepi could be the hassle-free way of avoiding the tire-kickers on Craigslist.
Virtually Real
Besides traditional financing options—or spreading the cost of a car over five credit cards—Beepi is the first site that accepts bitcoins for buying a car. Yes, that bitcoin, which is described as a “decentralized virtual currency” by the U.S. Treasury Department. Since bitcoins aren’t backed by any government, their value can be impervious to national crises, and that may, in some instances, make it easier to make an international car purchase. But the U.S. government warns that bitcoin exchanges also may be susceptible to hacking or accounting mistakes, while leaving little legal recourse for its holders. Beepi was working toward its second bitcoin sale as this was written. But no, it’s not intended as a way around sales tax or registration fees. You’ll still pay those.
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