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NabThat
Location: Santa Monica, California, United States United States
Founded in: 2013
Stage: Napkin (idea)
Number of employees: 6-15
Funding history:
- Date: 03/2015, Seed: undisclosed amount
Short URL: vator.co/nabthat
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NabThat

Startup/business
Santa Monica, California, United States United States
http://www.nabthat.com
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Team
  • JJ Galvez
    JJ Galvez | Team member
    I grew up in Tegucigalpa, Honduras until I was 18. I moved to LA to pursue a double-degree in Economics and Entrepreneurship at Loyola Marymount University. I financed my education on my own and have been working on NabThat for the past year and 1/2.
Business model

THE PROBLEM

From the perspective of a car shopper, the car buying experience is flooded with agonizing feelings that originate from a lack of transparency on how the process works, a preconceived stigma of sleazy car salesmen, and the anxiety caused by negotiations and financing.

From the perspective of a dealer, changes in modern consumer expectations have altered the traditional way of doing business, and an adequate response has yet to be found. The unfortunate reputation of car salesmen has placed dealerships in an upward battle as they scramble for new alternatives and ways of moderating their diminishing profit margins.

Recognizing that this is a two-sided problem, the goal of NabThat is to find a win-win solution that empowers car shoppers and acknowledges the role of dealerships in the automotive ecosystem.

 

OUR SOLUTION

NabThat’s business model is based on the push model platform, which empowers car shoppers to name their terms on a car, and in turn enables dealerships to match or counter them. Our platform creates an experience that delivers benefits to car shoppers and dealerships very dfferent to the offerings of companies such as Edmunds, Cars.com, and TrueCar. These benefits are described in detail in our "Competitive Advantage" section.

NabThat’s Push Model


 

 

 1.    Pick a Car – Car shoppers pick and build a car to their liking. Car shoppers can also schedule test drives and receive recommendations from the NabThat Concierge staff for different budgets and lifestyles.

2.    Name Your Terms – Car shoppers create an anonymous offer for their car, which specifies payment terms and can be applied to either a purchase or lease, with or without financing.

3.    Dealers Accept/Counter – Dealerships within an area receive and review car shopper requests. Following this, dealerships reply to car shoppers with acceptances or counter-offers that include all tax and fees.

4.    NabThat Car! – Car shoppers select a dealership offer and the NabThat Concierge staff coordinates a pickup or delivery of vehicle. An express checkout is facilitated that significantly reduces the time car shoppers spend at the dealership.

 

HOW THIS AFFECTS MODERN CONSUMERS 

Our model is especially attractive to the younger generation of digital consumers, which last year surpassed the number of Gen X buyers by making up 26% of new car shoppers in the United States. In truth, as more and more millennials enter the workforce, we will begin to see a higher participationin the car buying market by consumers who grew up with the Internet and expect any transaction to be as easy as ordering a book online. NabThat’s push model platform eliminates the drag of negotiating and drastically minimizes the amount of time needed to complete a transaction, something that is valuable particularly to the younger generation of buyers.

 

REVENUE STREAMS 

1. Monthly Dealership Subscription - $500

This is a fee that dealerships must pay in order to access NabThat’s push model platform, and it is substantially more cost effective than other fees charged by NabThat’s competitors. Additionally, subscriptions are charged on a monthly basis with no long-term contract, which is much valued by our dealers because of the flexibility they receive.

2. Subscription Upsells - $1,000

NabThat is also rolling out numerous add-on products to its dealerships. The first of these add-on’s, named the NabThat Dealership Widget, has been received with considerable success from dealerships not only in California, but in Nevada and New York as well. The widget acts as a pop-up upon a visitor’s exit of a dealership website, and it reassures consumers that their personal information is protected. With roughly 80% of online car shoppers valuing privacy, the NabThat Widget does a tremendous job of reducing the average dealer bounce rate of 98% and substantially increasing online conversions. Below are some screenshots: 

 

Dealership Widget Pop-Up

*Dealership Widget Pop-Up

Dealership Widget Landing Page

*Dealership Widget Landing Page

Dealership Widget Step 1

*Dealership Widget Step 1

Dealership Widget Step 2

*Dealership Widget Step 2

 

THE OPPORTUNITY

  • 17,000 new car dealerships in US
  • Market size of $306 million
  • Greater LA market size of $9.72 million
  • These numbers are solely based on NabThat's current revenue model. Total digital spending for dealers is $6.15 billion

 

Competitive advantage

NabThat offers a two-way solution for the car buying experience. As much as we see ourselves as an advocate for consumers, we also see ourselves as a partner to dealerships. By developing a solution that reconciles dealership business practices with modern consumer expectations, NabThat has created a unique experience that separates it from other players in the automotive retail industry. Below we list the key benefits NabThat delivers to both car shoppers and dealerships.

 

CAR SHOPPER VALUE PROPOSITIONS:

  • Complete Privacy – according to a 2012 survey conducted by JD Power, over 77% of car shoppers value privacy and would rather stay anonymous. The reason why is because nobody likes to be spammed! NabThat shields car shoppers from the bombardment of salesmen phone calls and emails by keeping their information private until a deal has been locked.
  • Concierge Service – throughout the entire NabThat process, car shoppers have access to a Concierge staff that can assist in selecting a car, scheduling test drives, and coordinating the pickup or delivery of a customer’s new car.
  • Express Checkout (or Delivery) – according to a JD Power sales satisfaction survey, the average time that car shoppers spend at dealerships is more than 4 hours. NabThat significantly reduces this by verifying its users credit scores and gathering required documentation BEFORE they walk onto the dealership lot.
  • Guaranteed Pricing – the dealer replies a car shopper gets on NabThat all include tax, license, registration, and all fees. NabThat verifies consumer credit and location, therefore allowing this to happen and consequently eliminating unexpected fees when picking up the car at dealership itself.
  • Auto Insurance – finally, NabThat provides guaranteed car insurance quotes from first-rate insurance carriers. We have partnered up with local brokers that offer competitive quotes shown to save customers up to 50% from their previous insurance.

 

DEALERSHIP VALUE PROPOSITIONS:

  • Complete Privacy – dealership information is kept completely private in the same way that consumer information is. This grants a second chance to dealerships that might have had a bad experience with a consumer in the past.
  • Freedom & Control – dealers have the ability to handle every customer request individually, instead of being constrained to pre-determined prices. Additionally, dealers do not have to pay a commission per every car but are instead charged a monthly subscription fee for NabThat’s service.
  • Access to Phantom Shoppers – phantom shoppers make up over half of all car shoppers today. These are people (probably like you or me) who do all their research online and whom dealers have no record of until they show up at the showroom. With NabThat’s platform and its dealer products, dealerships are able to both access and convert phantom shoppers.
  • Saved Resources – by reducing the amount of time a car shopper spends at the dealership, NabThat enables dealers to free up their sales staff during the transaction process so they are able to focus on acquisition of other customers instead.

 

Through these different value propositions, NabThat stands clearly apart from other players in the auto retail industry. In fact, NabThat goes beyond providing a service, and in fact creates an entire experience that completely redefines the way we buy or lease new cars.

Below we have included an analysis that compares the NabThat experience to a TrueCar experience. Though the car buying industry is also characterized by companies such as Edmunds, AutoTrader, and Cars.com, TrueCar provides a good example of another company who is more transaction-focused as opposed to research-focused.

 

 

 

ADDITIONAL INFORMATION

  • 15 million new cars were sold in 2013 (highest number since 2007)
  • Total automotive industry in the US accounts for 3.5% of GDP
  • Industry forecasts show growth of 6% for 2014
  • Dealerships are forecasted to spend $6.15 billion in digital advertising in 2014
  • The average dealership spent $616 per advertising on car sold in 2013
  • On average, only 2% of dealership online traffic fills out a lead form (an even lower percentage ends up converting into an actual sale)
  • 77% of online car shoppers value privacy & anonymity
  • 56% of people would rather go to the dentist than deal with a car salesman
  • Only lobbyists and members of Congress rank lower than car salesmen in perceived honesty/ethics

Clearly, the US auto industry is huge. Despite the efforts of many, there is still an evident unmet need in the market. Car shoppers do not like the process and dealers have not been able to come up with an alternative solution. NabThat is that solution.

 

 

*Sources:

-JD Power & Associates

-Gallup

-Statista

-eMarketer