June 26--The on-demand economy has, with a few taps on an app, brought everything from lunches to laundry to our doorsteps. Now it wants to bring us something a lot bigger: used cars.
Bay Area start-up Shift recently rolled out its on-demand car buying and selling service in Los Angeles, providing what it calls the "full end-to-end experience" of buying or selling a used car -- from your desktop or phone. At its core, it's like Craigslist, but a slew of features brings it closer to on-demand counterparts like grocery delivery service Instacart and postal service Shyp.
For sellers, instead of listing a car and fielding expressions of interest, Craigslist-style, Shift sends one of its "car enthusiasts" (i.e. independent contractors) to the seller to provide a quote, pick up the car, take it to the company's warehouse for mechanical inspection, handle Department of Motor Vehicles paperwork, and sell the vehicle on the customer's behalf.
On the buyer's side, Shift's contractors bring the car by for a test drive, and handle the paperwork.
It's one of several California start-ups launching in Los Angeles that's using technology to facilitate peer-to-peer car buying and selling.
Instamotor, also a Bay Area company, had its own launch in Los Angeles and Orange County last week. Its mobile-first service is more akin to a Craigslist, with the added benefit of an algorithm that scans cars to check for bad history: fraud, past recalls and hidden damage.
In the case of both Shift and Instamotor, neither buyer nor seller pays a fee for the service. Instamotor makes money through brokering loans and pushing warranties; Shift offers similar services through its partners, and also gets a cut of the car's sale price.
The company's independent contractors determine a minimum guarantee with the seller, which is a guaranteed amount the seller receives when the car is sold. Using an algorithm, Shift then determines a sale price for the car, which is competitive with the local market. The difference between the minimum guarantee and the final sale price is then split evenly with the seller and Shift. Buyers do not negotiate the final sale price.
Los Angeles will be Shift's second market after the Bay Area, and its chief operating officer, Minnie Ingersoll, anticipates it will be the company's biggest.
"L.A. is a car city, there's a car culture, but buying a car there is a real pain point," said Ingersoll, a Pasadena native. "In L.A. you get stuck on the 405 trying to get anywhere, and having to drive an hour and a half to get to a car dealership... that's something we want to solve. So we'll come to you if you're selling a car, and if you're a buyer we'll bring the car to you for a test drive."
UPDATE
11:31 a.m.: This story was updated to include information about Shift's business model
This story was originally published at 7:25 a.m.
