Carvana Lowers Costs, Boosts Customer Satisfaction With Technology

Technological solutions are driving cost reductions and higher customer satisfaction at Carvana.

The used car retailer has seen results from its latest innovations and is continuing to develop new ones, Carvana executives said Thursday (Feb. 22) during the company’s quarterly earnings call.

For example, when sourcing cars for resale, Carvana enables potential sellers to offer their cars and complete the deal from their desktop or mobile device, the company said in a letter to shareholders released Thursday.

In addition, the company’s sophisticated bidding algorithms enable Carvana to optimize its gross profit per unit (GPU), according to the letter.

“On the sourcing side, just like every other area, we’ve got teams that are working every day to pull in more data sources and refine our algorithms for putting the optimal valuation on every single car that we look at,” Carvana Chief Financial Officer Mark Jenkins said during the earnings call.

For inspecting and reconditioning used vehicles, to prepare them for resale, Carvana new, proprietary CARLI technology streamlines inspection processes, systemizes parts ordering and tracking, and uses machine learning (ML) to identify and manage costs, according to the shareholder letter.

“We have seen a more than $900 step-down in non-vehicle retail cost of sales since our peak over a year ago, and I think that’s been driven by many sources: getting better at managing the process of reconditioning, getting better at parts procurement and efficiency, and a number of things,” Jenkins said during the call.

When delivering vehicles to customers, Carvana uses technology to route and schedule these deliveries, minimizing the distance traveled and maximizing the use of delivery assets, the shareholder letter said.

The company said in the letter that its logistics and delivery network has provided customers with the selection and delivery times they want, while enabling additional revenue streams for Carvana.

“In outbound transport, just like the others, it’s the same story: pairing technology with process excellence,” Jenkins said during the call. “That’s the area where the teams have been focused up to this point, made tremendous gains, and I think they’re also looking at their business today and saying, ‘Yes, we still see further opportunity to make gains.’”