The team behind an ambitious bid to "revolutionise" online car sales with a free-to-list website aims to create a profitable business by plugging into the ‘internet economy’ and warns that business models need to adapt for firms to succeed online.
CarMart.co.uk will go live on August 1 and will provide sellers with a lifetime free listing service in an attempt to create a market alternative to industry leader Auto Trader.
Steve Edwards, the former chief executive of Hurst Publishing who ran the Auto Trader business, announced the new venture last month.
The CarMart business model is a well-recognised one from other areas of the internet, with revenue derived from its role as a destination site with large volumes of visitors.
This volume of users will then be targeted with affiliate advertising.
This is the standard business model for many online service providers and one that has already generated enough interest to suggest it will be successful, according to Robert Nisbet, a former publisher and digital media entrepreneur who founded the magazine app platform Apazine and who is working with Edwards on site development.
He said: “We will be working with various providers and that is how we will generate revenue. For example, Facebook is free and they make a lot of money through affiliate marketing. You don’t pay to Tweet, so why pay to list cars online?
“This is a move away from legacy media models, where you charge someone to host their own photos and do their own write-up on your website.
“Instead, we are applying modern business rules to a modern e-commerce site. It should be free. There is enough demand to sustain a free-to-place site.”
He also has a salutary warning regarding the speed with which markets and expectations can change on the internet, when new models are developed.
For example, there is a list of websites that didn’t recognise the changing needs of digital consumers until it was too late to stem a shifting tide of customer loyalty.
Nisbet said: “Markets are very fickle. Think of Friends Reunited and MySpace. The digital audience will just leave. You have to fight to retain your market.”
He also recognises this applies to the launch of CarMart and Nisbet is adamant that a positive internet experience will drive consumer loyalty.
Relevant affiliate marketing will be woven into the car buying experience.
This won’t be an ad-heavy site, he insists, nor will there be a patchwork of irrelevant adverts mined from unrelated browsing history.
Instead, the site will understand what a buyer is looking for and suggest complementary options, such as warranties, insurance, tyres and so on.
It will also be a more immersive experience, able to synchronise with social media outlets such as Facebook and Twitter accounts to ‘bring finding a used car firmly into the 21 century’.
The firm claims it is already seeing ‘massive interest’ in the website from the industry and is receiving widespread support to ensure the initiative works.
The new venture co-incides with a new chapter in the history of its key rival.
Last month, Auto Trader launched on the London Stock Exchange with a £2.4 billion flotation.