The rapid rise of online car retailers promised to revolutionise the way Britons buy used cars. Companies invested hundreds of millions of pounds into marketing, logistics and technology in an attempt to persuade buyers to purchase vehicles almost entirely online.
One of the most high-profile examples was Cazoo, whose dramatic share price decline during 2022 raised questions about whether the online-only used car model could ever achieve long-term success.
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But was Cazoo’s struggle unique, or had Tesco already attempted—and failed—to prove the same concept more than a decade earlier?
Cazoo’s Rapid Rise—and Equally Rapid Fall
Following its launch in December 2019, Cazoo expanded at remarkable speed.
The company invested heavily in:
- National advertising
- Sports sponsorships
- Brand awareness campaigns
- Technology platforms
- Vehicle preparation centres
- Business acquisitions
In 2021 alone, Cazoo reportedly spent over £65 million on sports sponsorships while acquiring numerous automotive businesses worth more than £320 million.
By mid-2022, however, the company had reported substantial financial losses and its share price had fallen by more than 80% from previous highs.
At the time, quarterly trading updates also showed declining gross profit per vehicle, leading many industry observers to question whether its growth strategy was sustainable.
Was the Online-Only Model the Bigger Challenge?
Rather than focusing purely on investment levels, another question emerged:
Were online-only retailers attempting to change a buying habit that many UK consumers simply weren’t ready to abandon?
While websites such as Cazoo and Cinch promoted a convenient, fully online buying experience, many motorists still preferred the traditional dealership process.
Buying a vehicle is often one of the largest purchases a household makes, and many customers still value the opportunity to:
- Inspect the vehicle in person
- Test drive it
- Compare multiple cars
- Speak to knowledgeable staff
- Arrange finance face-to-face
For many buyers, these steps provide reassurance before committing thousands of pounds.
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Tesco Cars: A Similar Idea More Than a Decade Earlier
Long before Cazoo entered the market, Tesco launched its own online used car retail platform in April 2010.
The concept was similar:
- Browse online
- Purchase online
- Convenient vehicle delivery
However, the service closed within a year.
Unlike Cazoo, Tesco’s biggest challenge appeared to be vehicle supply.
Its principal supplier, LeasePlan, mainly provided former lease vehicles from manufacturers such as:
- Ford
- Vauxhall
There were comparatively few premium manufacturers available, including:
- BMW
- Audi
- Mercedes-Benz
- Volkswagen
Tesco had also hoped to source significant numbers of ex-Motability vehicles, but many of these continued to be supplied through existing disposal partners instead.
Without a broad choice of vehicles, attracting buyers became increasingly difficult.
Cazoo Took a Different Approach
Vehicle supply was one area where Cazoo attempted to avoid Tesco’s problems.
The company acquired several automotive businesses, including:
- Imperial Cars
- Drover
- Smart Vehicle Solutions
- Cluno
- SMH Fleet Solutions
- Cazana
- Swipcar
- Vans365
These acquisitions gave Cazoo access to large numbers of vehicles, preparation facilities and logistics capabilities.
However, acquiring supply at such scale also came with significant financial commitments.
Do Buyers Still Prefer Visiting a Dealership?
One theory is that traditional dealerships offer something online-only retailers cannot fully replace.
Many established dealers now combine:
- Online vehicle reservations
- Digital finance applications
- Home delivery
- Part-exchange valuations
- Money-back guarantees
Alongside these services, customers can still:
- Visit the showroom
- Inspect vehicles
- Test drive before buying
- Speak directly with sales staff
Rather than choosing between online and physical retail, many consumers appear to prefer a blend of both.
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Traditional Dealers Adapted Quickly
While online-only retailers attracted significant attention, many traditional dealer groups modernised rapidly.
Motorpoint, for example, reported strong revenue growth during the same period while generating a significant proportion of its sales online.
Its success demonstrated that established dealerships could embrace digital retailing while retaining the advantages of physical locations.
For many buyers, the ideal experience appears to combine:
- Online convenience
- Physical reassurance
rather than replacing one with the other.
Has Consumer Behaviour Really Changed?
The pandemic accelerated online vehicle purchases, but as restrictions eased, many customers returned to visiting dealerships before making a purchase.
That doesn’t necessarily mean online car buying has failed.
Instead, it suggests that many consumers still prefer to:
- Research online
- Compare prices online
- Reserve online
before completing the buying journey in person.
The future may therefore belong less to purely online retailers and more to businesses capable of offering customers both options.
Final Thoughts
Cazoo and Tesco approached online vehicle retailing differently, but both highlighted one of the biggest challenges in the automotive industry:
Buying a car isn’t quite like buying everyday products online.
For many motorists, seeing, driving and inspecting a vehicle remains an important part of the purchasing process.
While online retailing continues to grow, the most successful businesses may ultimately be those that combine digital convenience with the confidence that comes from visiting a dealership.
Looking into Getting Rid Your Car?
Whether you’re buying online or through a dealership, selling your current vehicle is the first step and we can help you with that.
All you need to do is enter your reg number into our free online valuation tool and we’ll show you just how much your car is worth. It’s as simple as that.