Carvana SWOT and PESTLE Analysis

Strength

1. The company has a pooled inventory system which provides a wider choice to customers: Automobiles differ in size, colour, model, price, age, style among various other features. Customers exhibit differing tastes, budget, style and purchasing goals which require dealers to maintain a large inventory. As of December 2021, Carvana offers customer a pooled inventory of over 7,300 high quality used vehicles on their website. The company uses proprietary algorithms to optimize their inventory acquisition based upon data of customer behaviour and the extensively used vehicle market. The company maximises the wide range of cars it provides to customers in any location by the nationally inventory pooled system. There is a higher likelihood that customers are able to find a car according to their requirements and choices. This provides a competitive advantage as traditional dealers are only able to provide a limited range for vehicle selection compared to Carvana.

2. It has a vertically integrated e-commerce platform: The vertically integrated e-commerce platform provides the company with the control of all critical operations and transaction elements facilitating a fast and consistent user experience. The company has control over the algorithms that helps it to determine the vehicles that are made available to the customer, the prices of these vehicles, the financing terms, vertical service contracts and GAP waiver coverage option provided to customers and the trade-in values that the company offers. The control of the company over the logistics infrastructure provides customers specific, fast and reliable deliveries and pick-ups. The e-commerce platform of the company provides a lower and differentiated cost structure providing the best-in-class buying and selling experience. The traditional dealers and technology enable auto platforms do not provide these facilities and only the company’s end to end model enables it to provide superior solution while reducing costs of operating and to provide better products and services.

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Weakness

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Opportunity

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Threat

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Political

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Economic

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Social

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Technological

1. Technology used to provide a 360-degree view to customers of the actual vehicle: Carvana is an e-commerce platform where customers can buy and sell vehicles online. In order to provide transparency to its customers it uses automated and patented photo booths with which it can capture a 360-degree view of the interior and exterior of all the cars present on the company’s website. The custom-built photography technology system creates a 3-dimensional model of the car allowing for future innovations. A complete virtual tour can be taken with the help of its 360-degree photography which helps customers to review vehicle imperfections through high quality photography and provides the customers with a list of vehicle details, safety features and accessories in an easy to review manner. The photo booths capture the interior and exterior of a vehicle and the technicians annotate material defects in the vehicle based on visibility threshold category.

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Legal

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Environmental

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