Cazoo: Redefining the Automotive Industry Through Online Innovation

1. Introduction

The UK has had a long tradition of being the origin place of some of the world’s most established and innovative companies. It is common knowledge that companies like Unilever, AstraZeneca and GlaxoSmithKline has carved out a niche for themselves in the international market. However, there exist companies which originate from the UK and have just started making their mark in the world. This paper will discuss one such company, Cazoo. Cazoo is an online used-car store that offers car buying and selling services and delivers used cars to the customer’s doorstep.

The company was founded in 2018 and in 2018, reports it is getting another funding of over 2.5 billion pounds, only six months after it received a 116 million pounds funding. (Lunden, October 1 2020). The website offers a catalogue of used cars, complete with their technical specifications, usage duration, conditional specs etc. Additionally, they also offer services of delivering the used car to your doorstep, essentially eliminated all need for the customer to come to the store and invest any time other than choosing their desired car online.

The business has been one of UK’s fastest growing startups and doesn’t show any signs of slowing down. This paper examines the growth strategies of the company and critically examines the areas in which it can improve its operations.

2. Analysis

The following section will categorically look at the features of this company in an attempt to understand the strengths and weaknesses of the organisation. SWOT has increasingly been a method of business analysis since Weihrich’s (1982) use of the concept. The use of SWOT is not merely to analyse the strengths and weakness of the organizations but also to plan the future endeavours of the business (Zack, 1999).

2.1 SWOT Analysis : The SWOT analysis of an organisation is examining their Strengths (S), Weaknesses (W), Opportunities (O) and Threats (T) that present itself to an organisation.

Strengths: The advantages that Cazoo has now are several; the recent circumstances brought about the pandemic has forced people to resort to buying cars online instead of the traditional way of visiting the stores. Cazoo, being the premier name in the UK for trustworthy second-hand car dealership is clearly unmatched in competition. In October 2020, it announced that it is investing a whopping 263 million euros into the operations of its business (Tucker, October 1 2020). This is a significant decision by the company, considering the current economic scenario where the GDP of UK fell by 20.4% in the second quarter of 2020, the biggest drop since 1955 (Partington, 12 August 2020). In the light of this, the fact that Cazoo is investing more money in its endeavour is heartening as it a sign that the company expects a massive growth in the coming years.

Thirdly, the very nature of the business is a great advantage to the business. In the month of September 2020, it was reported that revenue from online shopping increased by 15% from the month of April in the UK. No doubt this increase has been brought about by the restrictions by governmental administration and the general public’s fear for their health (Skeldon, 23 September, 2020). Hence, this is the ideal time for Cazoo to permanently corner the market and make a mark for itself in the second-hand car buying and selling business in the UK.

2.2 Weaknesses: No organisation is without weaknesses and Cazoo is no exception to this rule. Stroud and Simoneaux (2011) postulate that one of the weaknesses an organization may have is that they do not have a very developed body of workers. It may hold true for a company like Cazoo as it is a fairly new company, with just two years of operational experience. The uniqueness of such a company leaves a wide space for the possibility of unique problems, problems which will not be familiar to the managers as they haven’t worked in an organisation like this before. A significant problem that workers will face is with respect to no prior experience. Since this is a company which combines the services of a car servicing garage and a car showroom at the same time, it will require some effort on the part of the managers to find people who can draw from their previous experiences and apply it to the work they are engaged in currently.

However, even though online purchases are still at an all-time high, people still majorly buy offline, a global consumer report by KPMG suggests (2017). They discovered that one of the key reasons why people do not want to shop online is because they want a feel of the product they are purchasing first, and then decide if they want to buy it. This is especial concern when it comes to bigger investments like buying a car. Customers will always want to test the car before they buy, it falls in line with the logic.

2.3 Opportunities: There are several arenas of improvement for the operations of the business. Addressed in the previous section, the company needs to provide a service

through which prospective customers can test-drive the cars before they buy it. Currently, they have a policy whereby customers can return the cars in 7 days, but it would still require customers to buy the cars. The provision of a test driving facility would enable a greater number of people to try out their service. Additionally, it would encourage people to buy cars from their warehouse, saving them money which they would’ve spent in transporting the car to the customer.

In addition to that, the company need to increase their social media presence so that their target audience knows of them. Brooks et al (2014) postulate that an effective way of doing that is through measuring the traffic which comes into their website, monitoring it to see when and where they get the most views and build upon that to strategies a social media campaign which will profit them.

2.4 Threats: In the contemporary scenario, any business which is new faces the threat of bankruptcy, induced by the slowing economy. Even though the operations of Cazoo cannot be classified under small businesses, it is important to note that in the UK, several big businesses have also gone leg up. A 2019 report by Startup Genome revealed in their study that 9 out of 10 new businesses fail. A report by the same website suggests that business which have succeeded in the first year may not necessarily follow suit, as they fall into the trap of incorrect scaling. This means they excessively invest in the first phase of the startup (September 2, 2011). Since we saw that Cazoo recently invested a significant amount tin its operations and within six months, significantly invested another big amount, the company has to be careful to not fall into this trap.

Another possible threat the company might face is changing the traditional belief of buying cars from showrooms and after test drives. However, these are more easily mitigated threats as the company needs to make certain changes in its operational policies and it will be done.

3. Conclusion and Recommendations

Through this analysis, it was clear that the organization Cazoo has a definitive advantage in UK market because of the uniqueness of the service it provides and also because of the ease of operations of their online stores. While there is a large opportunity for their growth, they seem to have made the right choices when it comes to their brand image and advertisement. However, in order to capture the market of second-hand cars, they will need to complete with the trusted names of traditional second-hand car stores and subsequently conceive consumers that their service outstrips theirs. Additionally, they need to develop a better social media strategy, whereby their services are more known to every prospective car buyer in the UK. They have introduced services like 360 degree views of the car and also financing the buying of the car. However, they need to understand that prospective car buyers set store by examining the car and the feel of it on the road. Unless they can replicate that experience or the consumer trend moves away from this requirement, there is always the possibility of the company losing customers.

References

1. Weihrich, H., 1982. The TOWS matrix—A tool for situational analysis. Long range planning, 15(2), pp.54-66.
2. Zack, M.H., 1999. Developing a knowledge strategy. California management review, 41(3), pp.125-145.
3. Tucker, C., 2020. British Used-Car Startup Cazoo Raises €263 Million, Bringing Total Funding To Around €494 Million. [online] EU-Startups. Available at: [Accessed 5 December 2020].
4. Partington, R., 2020. Covid-19: UK Economy Plunges Into Deepest Recession Since Records Began. [online] the Guardian. Available at: [Accessed 5 December 2020].
5. InternetRetailing. 2020. UK Ecommerce Businesses Report Revenue Spikes In Excess Of 15% Since The Lockdown. [online] Available at: [Accessed 5 December 2020].
6. KPMG, 2017. The truth about online consumers.
7. Brooks, G., Heffner, A. and Henderson, D., 2014. A SWOT analysis of competitive knowledge from social media for a small start-up business. Review of Business Information Systems (RBIS), 18(1), pp.23-34.
8. Genome, S., 2020. Startup Genome. [online] Startup Genome. Available at: [Accessed 5 December 2020].

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