CAZOO

Alex Chesterman — the founder of Zoopla (UK's #2 property site) and LoveFilm (acquired by Amazon, became Amazon Prime Video UK) — founded Cazoo in 2018 with massive ambition: do to used cars what Amazon did to bookstores. He raised $2 billion in funding and went public via SPAC in 2021 at an $8 billion valuation.

The timing seemed perfect: COVID was accelerating online shopping, and the used car market was a $600 billion industry in Europe that was still dominated by dodgy dealership lots.

Online used car marketplace for Europe. Cazoo bought, reconditioned, and delivered used cars directly to consumers — the Carvana model for the UK and Europe.

Revenue came from car sales and ancillary services (financing, warranties, insurance). The model: buy used cars from dealers and consumers, recondition them in Cazoo-owned centers, list them online with transparent pricing, and deliver them to the buyer's door with a 7-day money-back guarantee.

Cazoo was an online car buying platform with home delivery, a 7-day return policy, extended warranty options, and car financing. After the collapse, the brand was acquired and may continue as a marketplace only.

Pivoting from inventory-led to marketplace. After burning through billions, Cazoo abandoned its capital-intensive model of buying and selling cars, and pivoted to a pure marketplace model — just connecting buyers with dealers, without touching inventory.

This dramatically reduced cash burn but also reduced revenue per transaction. The strategy was essentially: stop doing the hard part and become an advertising platform.

Unit economics. Each car transaction involved buying the car, transporting it to a reconditioning center, spending $500-1,500 on repairs and cleaning, storing it, photographing it, listing it, and then delivering it to the buyer — all for a margin of $500-2,000 per car.

The capital intensity was astronomical. The used car market also cooled dramatically in 2022-2023 as interest rates rose and the post-COVID used car bubble deflated.

Cazoo was burning through cash at an alarming rate.

General Catalyst, Draper Esprit, D1 Capital Partners, Fidelity, Blackrock, and SoftBank were investors. Cazoo went public via SPAC at an $8 billion valuation.