#82 - The Future Of Sourcing Inventory with Joe Neiman

All right, hello. Welcome to this episode of the Independent Dealer Podcast. Today we have just an awesome guy. We cornered Joe Neiman over there at ACV Auctions, talked him into giving us 30 minutes of his time. What I think is really hilarious. And I'll set this up for any of you watching the YouTube video. Joe is actually at tech headquarters of ACV, selling 30,000 cars a month. Luke is sitting inside what I think is maybe some sort of a Ford Explorer at a physical auction with his feet hurting and his back hurting and he smells like smoke, and he's been standing and digging underneath cars all day long, trying to pick up a couple little scraps at a physical auction. So this is an awesome kind of paradox that we just.

Yeah, a little juxtaposition there. I tell you, Joe, thanks for being with us. But, you know, one thing Joe talks about that really resonated with me today was about the time and convenience thing. So I'll spend 48 hours essentially on the road buying hopefully 20 cars or so. But Joe tells me I can just sit at my office or sit on a beach in Mexico and buy 30 cars this week. So maybe that's what I'll do next week.

Sounds like a better use of your time, for sure.

All right, guys, hope you enjoy this interview. Here we go.

You are listening to the Independent Dealer Podcast with hosts Luke Godwin and Jeff Watson. Thank you so much for tuning in. Let's do this.

All right, Joe, thank you so much for your time. This is just a real, real treat to get you on the podcast today. Now, help me out here. I think I know a little bit about your history. You can correct me where I go wrong, but you used to be an independent dealer, right? For quite a few years. You ran your own car lot.

That's 100% correct. Yep.

So this isn't some Silicon Valley guy coming in here trying to tell us how to buy and sell cars. You were actually doing it for. For what, six, seven years?

Yeah, I mean, really longer than that. You know, in kind of ways that I think a lot of us get started. Started going to car auctions when I was a teenager, skipping school one day a week, you know, maybe once or twice a month, and going to the car auction with a friend's father. And it just. I've always been the kid that was playing with. Playing with the Matchbox cars and then go karts and, you know, some kids like sports, some. Some kids like engines. I was a motorhead once. I figured out how I could make some money doing it. And get into the game. It was pretty exciting. So yeah, started going, I'll keep it short here. But bought one car at a time and just kind of advertised them out of my parents driveway and would sell them and then realized I could actually do all right at that and started buying more and more and did it all through college and yeah, fast forward a bit through my twenties. Grew a small independent into maybe a medium sized independent dealership, I guess you could say, you know, by the time I was like 26, we were selling probably 40 or 50 cars a month and kind of like a used car factory model. Right. We go source the cars at auctions and bring them back and recon them really to the, to the highest degree we could possibly do. And then indoor photo room, hundred photos of the car, list them online, real thorough description and sell them all over the world. We sold a lot of cars on ebay and that was our shtick. But obsessed about inventory. Turn time and just move them as quickly as possible. It's in my blood.

What changed?

Yeah, yeah. Did you go to do a short stint in a new car store after that?

Yeah, so I did. So I think I went through some of the growing pains that all of us probably do as independent dealers. Hit some glass ceilings. I mean I was a young man and a dozen employees, mid to late 20s. And what I found was it was getting harder and harder to source the kind of inventory I needed. I liked the niche vehicles. As my business grew, I had to travel further and spend more time on the road, which meant more time away from the dealership and having my hands on my business. And so I just, you know, really felt like I was getting spread thinner and thinner as I was trying to grow my business. And I'm a, I'm a growth minded guy. I think ACV is kind of indicative of that. But really kind of reached a point where I was fortunate in that I was getting recruited by a big new car group to be a part of their used car operation for a couple years and you know, struggled with the idea. And then I think like many business owners, small business owners, we probably reach a point where it's like you got to ring that bell and try something different. So that's exactly what I did. Did that for a short time. You know, I'm an entrepreneurial guy. I probably don't fit all that well in someone else's machine, but I gained a lot of awareness. I figured while I, while it didn't feel like a good fit for me, I'm at least Going to. For the, you know, for the time that I'm going to be here, for the six months I'm going to commit to be here, I'll try and learn everything I can. And what really became obvious to me was as much as it was challenging as an independent dealer to source inventory at the auctions, it was really challenging, and I had no awareness of this. It was really a challenge for these new car dealerships to liquidate their inventory. A lot of work, a lot of maybe lack of real auction knowledge about how to price cars appropriately. A lot of pressure to just put too much into these cars without really knowing what they're going to cash for. So all of those lessons combined is what got me to the point of jumping full tilt into starting acv.

What was the turning point? Where did you. So I understand how it came about. Like, one day you just woke up and said, okay, I think this is what dealers need, and this is what the new car side needs. That's what the independent side needs. Where did this, I mean, how did you just all of a sudden wake up one day and go, let's roll?

Yeah, you know, there was definitely a turning point moment in 2014 where I was at the new car dealership and we were. I was appraising a trade and, you know, I always wear a new car dealer hat. Sorry for the dinging in the background. I always, you know, identify as a new, or, I'm sorry, a used car dealer. And so as appraising trades, I'm always thinking of them as my own, even if they're for someone else's dealership. And in that moment, appraising a trade, calling a wholesaler on it and jealously thinking, man, I'd like a crack at that car, even though I didn't even have a dealership anymore. It just felt like, man, if we could market these cars in real time at the dealership, not only would that be great for the. The seller who's looking to get, you know, a fair market value, this would be a way for them to get a really fair market source value for the car, but also for the buyers that we all want to crack again, really the moment. I mean, it's kind of obvious now. And I talk to a lot of dealers and they say I had that exact idea. And I'm sure they did. Right. The idea is not the. Not the genius of it. It's that we've been very, very fortunate and able to execute and run really fast and gain some market share here.

Well, talking about the other People having the same idea who was first. You were a trade rep.

So interesting. They were. I had no awareness of them. They were in Canada, but. But yeah, no, I didn't, I didn't even know they were a thing. I became aware of them when, when the press release came out that car corporate bought 50% of them, which was. That was right around the time that we were just getting started.

So, Joe, help us out here. So for those of us that don't know or small dealers that haven't dabbled in the area or even looked at it, we know the words we've heard. Trade, rev, acv, backlot, all these kind of dealer to dealer platforms give us kind of the quick pitch, what is it as a dealer and how is it going to be a benefit to us?

Okay, sure. So really the way it works is we have a team right now and we're growing every day, about 500 inspectors, full time employees, not contractors. They work for us. We train them. We arm them with paint meters, OBD2 scan tools. We teach them how to look for frame damage. They check every single thing out on the car. Are they perfect? No. Are any of us as buyers perfect? No. I've made plenty of mistakes. But we're all over it. We send them to primarily new car dealerships. These new car dealerships are our partners, right? And they give us access to their wholesale trade in inventory. Anything that they would take to an auction, we get kind of first crack at with our, with our dealer partners. We do these condition reports. We take 50, 60, 70 photos of each car. Undercarriage photos, we record the sound of the engine. It's thorough. We spend 20, 25 minutes a car, then we list each car.

Do they drive the car?

They drive them around a lot. So in today's world, we don't take them out on the road. You know, insurance. I mean, we do our very best we can to validate that the car is going to be good again. Do we miss some things? Absolutely. If it has a bad transmission that identifies itself at 40 miles an hour, we're not going to detect that on the lot. That's a hard thing to detect at a physical auction too. But ACV actually green lights these cars. So we'll greenlight the cars up to 200,000 miles, which means if it's the unfortunate situation where you buy a car and it has that bad transmission that identifies itself at 40 miles an hour, call us. We're going to make it right. And we do that through. Occasionally we just buy cars back. We try not to. And more often than not, we're making a fair monetary adjustment to fix the car. So. And to put it in perspective, our arbitration rate is right around 4%. Yeah, it's great. I mean, it's still some issues. We sold over 30,000 cars last month. So, you know, in that mix there were some rotten apples. But that's, you know, that comes with the territory and we're working very hard to stomp out as much of that as we can.

How would you compare your CR reports and the technology use with an Odessa or a Mannheim? You know, with them being the biggest players? What's the main difference?

Sure. You know, I think we're very different. These are all our inspectors that work for us. And if you look at our CR, it's extremely thorough. Again, 50 photos on average compared to 7 or 8 photos high resolution. You can zoom in on these things. You can listen to the engine. Our goal is trust and transparency and we don't say that lightly. And now some of the other players in the industry have jumped on that bandwagon and you know, we welcome that. But that's really what drove us to this point, is I only bought cars in lane, in person, never bought cars online because I didn't feel like I could trust it. I didn't like the experience of being a simulcast bidder, going against lane bidders when I couldn't see what was going on, didn't feel like I had good visibility into the vehicle if I was online. And our goal is we really set out to build a product and experience that was good enough for me because I bought thousands and thousands of cars in lane and I would not buy them online. And I know there's a lot of other guys that were and continue to and are fine with simulcast, so. So I consider myself kind of the dinosaur here. So that's not to knock anyone else's cr. I just know that we've set out and if you talk to customers that use us, they hands down, say head and shoulders above acv. CR is you can't even compare another one to it. That's them speaking, that's not me. I want to be clear, I'm not just trying to self promote.

Well, it definitely seems like that's going to be the crucial point, right? I mean, with anyone buying it online sight unseen, you've got to trust the guy on the other side of the computer that he's giving you an accurate look if you're going to be putting 10, 20, $30,000 up on these things. And I Think that's where as these online auctions or for any auction or CR report starts to gain credibility with the dealer. I as a dealer know that if I'm going to be buying from so and so new car store, I know that Jimmy is the ACV rep there that does all the crs and his track record is spot on right now.

Right.

You know, and of course like you said, there's an, there's an occasional slip through but the big argument and I think the issues that we see a lot of times in the forums with the dealer groups is you don't know that a 5cr at Dallas Mannheim or Odessa is a 3cr here at. You know, it's the exact same car. It just got transported across two states and all of a sudden the CR report dropped by a whole.

Yeah, we don't do auto grade. We won't do auto grade. You know, in the future. Might we come up with our own?

Maybe.

But it's funny, when we talk to dealers about that, they're really advising us against that. So you just can't. We don't trust it. You know, don't even put yourself in that, in that soup, so to speak and just give us the facts. And that's what we really try hard to do is give you the facts and you know, look through all the photos if you're going to use acv, right. Like listen to the recording and read all the documentation that we, that we put in there. You know, you can consume an ACV CR in 60 seconds. And that's how US car dealers operate. Right. You can scan through it, but definitely do yourself the service of looking through the whole thing. We're not trying to trick anybody. There shouldn't be any surprises. It should all be in there. And then that's what we've got arbitration for in case we miss out on something. But going back to your original question of how does the whole thing work and flow, we write the cars, we list the cars. The cars go live for 20 minutes. Some of our cars go into a run list, like kind of a static run list for 24 hours first, not all of them. And the cars go live and they get auctioned off. To give you some rough stats, we sold close to 31,000 cars last month. 56% overall sell through. And our cars are up for auction. The cars go off every single day. So really, really seven days a week? Definitely six days a week. Sunday's a light day for us, but every day we're selling somewhere between 1,000 and 1,500 cars getting sold. And so when I think about car dealers and the audience that this is reaching, this is not meant to be a self promotion by any means, but simply whether it's ACV or any of these other digital platforms, if you're going to the auction every week and not and kind of refusing to look at the online sites, you're actually missing out on a lot of cars. Right. You're kind of downstream waiting to fill your shopping basket. And yet a lot of stuff has already been plucked off the shelves. So I think you've got to look everywhere, you know, and that's not to say you need to stop going to the physical auction. A lot of our best customers, they do both still, but they also embrace the fact that, hey, you know, this is easier for the seller. ACV is, it's actually easier for the buyer. And there's a lot of stuff I can just pluck, you know, without having to get out of my chair.

There's a huge argument for that upstream thing. You know, we definitely, we went through a phase here at our dealership where we had access to a new car store and we were getting some nice trade ins and we were, we felt like we were getting the app bad at these cars before they went through two wholesalers and then ended up at the end auction. Right now would be the thing where if you leverage ACV's reputation and brand to be the front line at these new car stores, now you have that in that you didn't have to work decades and best buddy with the used car manager to be able to take a swing at those. Because guess what? When they don't sell on acv, they end up at your local auction. And now you're there sitting in a car, driving eight hours, they're to Florida to pick through the leftovers. Right, Luke?

That's funny, Joe. Did you say 56% was your sale rate?

That's correct. Yeah. And look, that's a mix. You know, we have some sellers that are 100%. We have others that kind of refuse to embrace it, so to speak, and they struggle to sell the cars. But we see that at the physical auctions too.

Yeah. I was wondering, how does that compare to Manheim? I don't know Manheim's numbers, but that would seem. 56% seems a little on the low side.

Do you know, dealer consignment wise, they're right in that range. When you add like some of the big fleet lease accounts that are there to dump a lot of cars that's how they inflate that number.

Well, I don't think there's, I mean, there's not a lot of cars leaving. When you send a physical car to Manheim or Odessa or any of these auctions, I mean, you sell it like you might run it two or three weeks, but it's not like you're pulling that thing and trying another source. Like it is where cars go to die.

Yes. It's a one way trip.

Yeah.

And the longer you hold that car at it, you know, the more costly it is. Right. We look. Yes.

So that's what I'm kind of, I kind of want to lead down to that question. Okay, so we've got these franchise dealers that are listing with you and they're selling about 56% overall. I see this for so, for so long that franchise dealers are overvaluing cars like you talked about or putting too much into the trade. And then they, then the cars bring enough money on your platform. And typically cars do bring the most money the first time they run. How. What can you as a company do to help these dealers get more realistic? Because the one frustration I had with using ACV when I've used it is that I bid all the money on the cars and the people don't sell me the car. And that's so frustrating.

Yep. So you're spot on. And that's indicative of an early market. So where's home for you or where were you bidding on these cars?

South Carolina.

Okay. So that makes a lot of sense. Right. So when we start in a market, we definitely get our fair share of sellers who try us on and they think of us in terms of like that more typical upstream classified type site where sure, they'll put some cars before they're really ready to sell them and they'll ask thousand to two thousand more than the car's worth and they'll hope that they just find some sucker. Right. And that's not, that's not what ACV was built on. I don't think the world needs another ove or open lane. Both of those are.

Yeah.

Like it's when people syndicate all their inventory to ove at full retail just to see who will bite. I mean.

Right, right. And look, there's a place for that, but we're not the place for it. So again, nationwide, we're 56% sell through in the Northeast. And simply because we've been here longer, not because the Northeast is a special area, we've been here longer, we kind of know our game and our Craft a bit better and we're more entrenched in these dealerships. We have several markets and regions that are 70, 75% sell through. So it's not a waste of time at all. When we go to new areas, do we run into the dealers that want to try us on? For sure. We coach these sellers actively on how to price cars. Right. Some of them are receptive, some of them, you know, don't, don't enjoy that experience of getting told what their car is worth. And I don't blame them. It's funny because the original genesis for ACV and why were these 20 minute auctions is because what I really wanted to do was get into, get entrenched into the trade in process. Meaning when the Smiths are there trading in their Ford Explorer, that car literally goes live for auction. And you know, then every dealer in the country can be that special dealer who has that relationship, who gets a shot at putting a number on that car, which we all know is kind of an exclusive opportunity that we'd all want. And then you don't have an opportunity for them for the, for the dealership to put $2,000 too much into that car. At least they know here's market. The reality is that that component of our, of our product offering gets used sparingly. It gets used on real oddball cars which is a great place for it. You know, Bentley getting traded in at a Ford store and that stuff happens all day. You know, the Ford dealer is smart enough to know I don't want to touch this 12 year old Bentley. You know, make this thing go away and they leverage us for that.

Joe, any thoughts of two follow ups to that? Any thoughts of starting your, your auctions at a floor just so then that you know if you, if you bid on it, you, you purchased it. Any did did it, did that ever come up in your thought process?

You know, I, yes, we, we've, we've debated a lot of these different kind of methodologies as far as how to kick the auction off. I'll tell you exactly what it is because it's meant to be transparent and, and the dealers that have used us for you know, a while figure it out pretty quick. It's not meant to be trickery but basically wherever the seller sets the reserve price, the start price is a percentage back of that. So very similar to if a cut. If a dealer has a car at the auction and he whispers in the auctioneer's ear, I need 10 grand for this, the auctioneer is going to kick it off, he's going to go high, and then he's going to drop down to about seven grand. And inevitably around seven, somebody's going to put their hand in the air, right? And then someone else is, and you're off to the races. The way ACB works is exactly the same. So if I floor a car, if I set the reserve as a seller for 10 grand, it's going to open somewhere around 7 grand. And I don't even know what the exact math is. It might be 6,800, 7,500, but it doesn't matter if it's a Ford or a Ferrari. If the reserve is ten grand, it's starting at around seven grand. And now what this does is this allows buyers to make an immediate decision by saying, like, okay, I've seen cars that open around 7 before. I know they want about 10. Now, if 10 is right for that car, or if 10 is cheap for that car, or if 10 IS too much money for that car, you're going to make a decision immediately, Right? So what I mean by that is it's the same thing when I was walking through the auction lanes, and when an auctioneer kicks off stupid high, even if I wanted the car, I'm just walking away. You know, he told me that the seller is completely unrealistic on his expectations. So this works very well. But it also means that sellers who overprice cars, that start price is too high, it waves the buyers away, it pushes them off right from bidding on that car. By the same token, the advice I always give to sellers is, you gotta trust us, right? But start the car, like, floor the car low. And they say, well, I can't afford to lose money. And I say, look, if you want an audience on your car, this is how you get it, right? If you think the car is worth ten grand, it would open at seven. Maybe you're right, maybe wrong. Let's say it is worth 10. If you floor that car for nine, it's going to open for around six. And inevitably, you will pull more buyers into your lane. And when you have more buyers, you have more competition. And inevitably that's going to drive that price higher. So some of these sellers embrace it, some of them don't. Just like at the physical auction I.

Did when y' all came out with the undercar Cam, can you talk about that? Because I believe y' all are one of the first, right?

Yeah.

And it's really. I see Mannheim Express is using it, and I'm not on trade rev as much anymore, but that's so important with us as buyers. Can you kind of talk through your thought process behind that as well?

Yep. Yeah. I mean, I remember when we started, we didn't even take pictures of the undercarriage. We started in Buffalo, New York, and if you know anything about upstate New York, this brown thing called rust. And we learned quickly, we better start taking, you know, one or two pictures, the undercarriage. And that's. That's evolved into 10 pictures of the undercarriage. And then finally we built some. It's actually patented technology. It's fascinating that it's never been done before, but what we do is we've got a jig, I guess you could say, with a. A mirror on it that spans the width of the undercarriage of the car. The phone device, because all of our CRs are captured on an iPhone. So you put the phone into the jig, it records as the car slowly crosses over, drives over. This device takes, I don't know, somewhere in the nature of, like, 2,000 images and then stitches them all together. So it's pretty slick and it's illuminated, and it gives you a really good shot of the undercarriage of the car. Something you really. I mean, I remember being at auctions and you crawl down on your hands and knees, and some auction safety person comes over and says, we're gonna throw you out of here if you do that. Well, that's great, but if you want me to buy this truck for 20 grand, I need to see the other.

Yeah. At least see the frame.

So I'm not aware of anyone else that has this technology. It's not to say they won't find a way to work around our patents, but this one, I'm pretty sure, is an ACV exclusive. So we call it Virtual Lift, and we're continuing to iterate on it. We've built our V1, and, you know, generally it gives a really impressive undercarriage view. Sometimes. Sometimes they're. They're a little. They're a little out of. Out of sorts. And, you know, but that's partly training and that's partly just optimizing the software. But I do.

Yeah, I think y' all's your platform, and your technology is really pushing the industry. Is this something. I mean, you're not a. You're not an IT guy. How did this develop and how did. I mean, how long did it take for the first app?

I mean. Yeah.

Can you kind of walk us through that?

Certainly. So we kicked us off from Idea Stage in the summer of 2014. We went commercially live summer 2015. So in the course of a year, we raised a little money and it was just a couple. It was three of us, you know, just late 20s, early 30s, entrepreneurial guys that saw an opportunity. And, you know, I've always been an entrepreneur and, you know, very fortunate to be naive enough to jump into something really big. But I think it's. I think we've always known there's an opportunity here. I mean, our competitors are great companies, but they're also behemoths and they don't really turn on a dime. And we've all seen industries get disrupted rather quickly. And, you know, brick and mortar is brick and mortar, and digital can scale more quickly. And I'm a big believer that if we can get that core product market fit right, which I think we've done to a large degree, if you can really give the customer base what they need, they'll naturally gravitate to it. And, you know, that's something that I personally wrestled with investors on because investors love subscription models. You know, they call it SaaS software as a service. You know, why can't you just get these dealers to pay X per month? Because no dealer will commit to pay X per month for an auction. Right? It has to be results and success driven. So I'm excited about what we do because, you know, for us to go and sell 1500 cars today, that means we created really like 3000 great experiences, right? You got 1500 guys that bought cars and 1500 guys that sold cars. And to me, that's real value add. And that's what keeps us in the game. And we have tremendous skin in the game. So we're not a. We're not fly by night. And, you know, we've kind of got our DNA all over these transactions. And what I mean by that is, all the way at the very start, we're the ones doing the condition reports, we're the ones handling the titles. We're the ones handling all the payments. We're integrated with all the floor plans. We transport through our own brokerage 50% of these cars. So last month we moved 15,000 cars for our dealers. So we have an extremely high sense of ownership in this. The last thing we're trying to do is just dump this off and say, okay, dealers, you know, duke it out yourselves.

So Joe, tell me this, is there an opportunity for independents to, obviously we can buy on sites like this and others. Is there an opportunity for us to sell or is there a threshold of, you know, maybe, obviously you need to be in A market where you've got a rep that can come and image the cars and list them.

Yeah. So we've got 150 territories that we are operational in. In some of our territories, we're selling 1300 cars a month. And other territories were brand new and we're selling, you know, 50 cars a month. So these all go through a maturity cycle. The ones where we're selling a thousand plus, we've been in that market for three, four years now. And that's kind of the upstate New York where we're really a dominant player and into New Jersey and Pennsylvania. And as we, as we expand out and we've gotten into newer places, it takes us a little while to get the thing up and going. Independents can sell. We have a program called certified independence. And all we ask for there is that you're an existing customer that we've done some business with and we know each other well and we work together well, and you continue to buy cars. I'm a big believer in pedigree. I know not all of these cars are perfect. We all know that they're at an auction for a reason is, you know, what a lot of people say. And there's some truth to that. But in order to keep the marketplace healthy, we don't want retreads. Right. We don't want people scraping up cars somewhere else that are known issue cars and then dumping them through the ACV platform. That erodes the confidence of all of our buyers and everything we set out to do. So that's where we, that's why we initially focused only on franchise dealer new car trades. Just because of the pedigree. Right. The story that, that follows that car. Perfectly nice people just trading in a car and, you know, whether it's off brand or too many miles for that dealership to retail. That's a logic.

So independents can get in if they're, if they are hooked up and they've got some background and you can't just jump in and one off your blown engine. Dakota in the back. And that makes total sense. What are some other things that as independents, obviously we can buy on the platform. Would you give us maybe some best practices or things that we should be aware of or look for or, you.

Know.

You know, things we need to be aware of.

Yeah, get in there and get comfortable is what I would say. I mean, today we're gonna list, you know, 3,000 cars. Right. Kind of embed yourself in this experience, see how the, how the auctions flow. Get used to the condition reports. Nobody's making you push the bid button. I think the biggest opportunity here though, is that, and this is what I experienced as a, as a used car dealer is I made smarter decisions and made more money on these cars when I went broader, meaning when I had visibility into more cars. Right. And kind of the way I attribute that is like if I went to the same little pond with my fishing pole and dropped my fishing pole in the same little pond and that's, you know, the local auction, what am I really gonna catch there? I'm gonna catch the same old stuff. Right. Versus if you can cast some big nets in a bigger river where there's just more flowing through it, you'll make better choices. Right. You'll pass on stuff that you otherwise would have felt. Well, I have to take this one because I don't know when the next one's gonna come. What ACV is all about is being able to. And I talk to dealers all over the place that have done this. They can't believe how far and wide they buy cars from. And is there some transportation expense to that? Of course there is. Right. And that's also right there in the app. You know what your total cost is going to be? Make your decision. But you know, I'm in New York. Are there great cars in Florida that I would love to have and sure it's going to cost me 800 bucks to ship the thing back, but I never would have seen that car before. If I just kept going through the motions with my blinders on and wasn't willing to embrace technology and innovation, then I'd say, well, ho hum. I'm just going to keep going to the same auction and just dealing with the stuff that shows up there. So what we see is this ACV and the other marketplaces, they allow for buyers to reach way further out and it also allows for sellers to touch a much bigger audience.

Yeah. And you don't necessarily have to dedicate your entire Thursday to drive down and do this thing. You could do it at 3 o' clock on a weekday when things slow down for you, or 10 o' clock at night while you're sitting in bed. You could be looking at some of these things in sourcing and you're able to look at 20 Silverados instead of the five that are going through your local auction.

That's right.

Tell me about this. As far as we know, there's transportation and obviously technology is bringing our world together. And I think as a transportation company, that's geez, so funny how you think physical Auctions are dying, but physical transporters are probably gonna be booming because of the fact that people are okay shipping a car from Texas to New York and Florida to Alabama. And like, we're shipping cars all over the country. And you bought something in Texas and brought it to Utah, and then I sold it to somebody in Nebraska. Like, these cars are crisscrossing the country nonstop. But maybe you could speak to us a little bit about what those other fees. And I know a lot of dealers just get continually upset when they see some of these physical auctions continually raising their fees every year. And these auctions are making more on the car than we are sometimes.

Oh, yeah.

Speak to us on that. Are the fees different from an online dealer to dealer auction?

Yep. Yeah. I mean, our operational cost, but we don't have a brick and mortar infrastructure to support, so that helps us. And just speaking to the fees, they're 50. The buy fees are 50 to $350. So, like cap on a $15,000 car, it's 350. It doesn't get higher than that. Not to say down the road two years from now. Might we optimize? You know, maybe. But in today's world, not even on our radar. Right. We're happy with our revenue profile. It works well for our business. And that's really it from a fee perspective. You know what your transport is if you use a floor plan. And ACV just kicked off a floor plan company called ACV Capital. It's not available in all states, but that's also just a very transparent. It's one fee to put the car on. Our goal is to not nickel and dime. I used to have a floor plan when I was a dealer, and it was very challenging for me to even figure out what I was really paying between the interest rate, the adjustable interest rate, the curtailment fees. So I think we've just taken a fresh approach. It does eat you alive, or at least it feels like it does. But yeah, I mean, that's it. From the fee side. 50 to 350. I know they're going up at our competitors. I don't badmouth it. That that is what it is. I mean, we've taken some market share. And for the physical auctions to right size, they still need to make their revenue. If they need to make their same revenue on less cars, they're forced to raise those fees.

Yeah. I mean, to consolidate the physical or the digital auctions down to, you know, the top one or the top two. You know, I don't want to say you need to run a monopoly, but man, it would be nice to not have to jump on five different digital sites, plus two different auctions, plus, you know, it's nice to have some, some options, but man, sometimes it can get confusing if you got to be on 30 different platforms.

Yeah, absolutely. I mean, I think what we've seen starting to happen, and it's beyond starting to, but dealers kind of dip their toe in ACV and then they realized, you know, hey, this is actually, this is actually pretty easy, right? It's kind of like the cars come to you versus you having to go and chase after the cars. So it's nothing to go and buy a couple cars a day. And depending on the size of your dealership, you can, you know, you can onesie twosie one or two a day, and then all of a sudden you got 10 cars bought for the week and you go, geez, I only buy 30 or 40 cars in a month total. I guess I don't need to go to the auction this week. Right. And so we kind of, at the rate that the buyer is comfortable, we bring them into our experience and they tend to stay there and we get their kind of their wallet share. Because at the end of the day, if I was one or two cars behind my quota from a buy perspective for the week, I wouldn't really want to go get in the truck and drive, you know, two, three hours away to an auction. I'd say, well, for two cars, I'm sure I can pick something, you know, pick one or two up on ACV pretty easily. And then some of our bigger buyers, and we have some real meaningful size buyers, you know, some buy here, pay here, type dealerships and beyond, quite honestly, some real big players, names I won't name, but you know, we have those guys buying hundreds and hundreds of cars a month. And the way that they accomplish it is they set up a little war room, you know, and we've seen these. I think this is the future, quite honestly, is you take, you take, you take some sharp people that can have an inventory management tool and a Carfax or auto check on one screen, and on the other screen they have the ACV live auction. And it's completely realistic for one human to buy 10 to 15 cars a day, five days a week, and all of a sudden you're sourcing a lot of inventory. And it's not nearly the same pressure, stress, expense as it is sending somebody out on the road, staying over in a hotel, you know, and living in a physical car Option.

Yeah, if you're, if you're buying, I mean if you're selling, I would say 60 plus cars a month, you've got to have someone just focused on buying and that war room set up, I've seen it. It's the way it should be. How many buyers are actually buying? How many do y' all have that buy consistently on your platform?

Thousands. Thousands and thousands. I won't give exact numbers but I mean it's, it's thousands upon thousands of buyers.

Are you all over the country now? Every state or.

Okay, yes.

And tell me this, how so from an independent dealer standpoint, what are the protections? Are you guys a member of the National Auction Association?

We're not. Not because we don't want to be, but because they, they choose not to acknowledge us.

Yeah, there's, there's an old school thing. I get it.

Whatever.

What kind of protections do we have as far as like, like if we have an arbitration issue, if we have a title issue, like do we get a dedicated rep? Are we calling in and talking to a human?

Yeah. So we have dedicated reps for every buyer. Human beings. Right. We also have a big titles team, we have a big arbitration team. I think the best way to think about this is all of our policies are available to go and read through. Right. So nothing's hidden. If you're comfortable with the policies, engage. If there's things about them that don't feel right. Again, no one's forcing you to do business with acv. We try and be, we know what the baseline is and we work hard to be better than baseline when it comes to arbitration. When you buy a car on ACV you have a 10 day if the car is green light, which 90% of them are, you have a 10 day arbitration window if you transport the car. With ACV transport. This is not meant to be some self fulfilling or self serving thing. It's simply that gives us visibility into when that car gets grounded. At your dealership, you always have two days beyond when that car lands. Meaning worst case scenario, it takes 14 days because of a snowstorm to get the car. We'll give you an additional two days. You can also purchase 20 day coverage or 30 day coverage right at the end of the checkout. So for 150 or 250 I think are the, are the price points somewhere around there 100 or 200, you can extend your arbitration window. So it's the same rules apply but it just gives you more time to submit a claim and then really I Mean, we stand behind these cars. If it's something we missed, we're going to own up to it. If it's something that, you know, it's intrinsic to the vehicle. Like we're, we really don't monkey around in this stuff. Arbitration is always, it's tough to appease every customer because at the end of the day, any arbitration is a less than ideal situation. But we're all over it. We're making improvements, you know, and not to don't pity us, we're thrilled with our success and we're doing great. But these are challenging problems while you're growing too. Right. So some people refer to it as you're jumping off a cliff and you're building the airplane as you're going down, you know, like, like getting closer to the ground. And that, that's been our reality and we're used to that and we're pretty darn good at, at fixing things.

Yeah. Well, Joe, I'd like to know your opinion in general. Where do you see the, where do you see these platforms like yours going, you know, to kind of give us the broad, the long term picture to wrap this up?

Yeah.

Dealer to dealer type auctions and going digital. I mean, maybe give us your opinion. Do you think it's the future? Do you think the day will come where we're only buying these things online and things physical auctions are kind of a thing of the past?

I absolutely do. And that's not again, not like a self serving vision of mine. I just truly believe it. When I talk to these dealers and they tell me they're buying cars when they're on the beach in Mexico, we give you something back that no one else can and that's time, meaning you can source cars on ACV and fill your lot. If I had this, I never would have left my dealership. Never. Because the reason I just bagged it on my dealership and that was not an easy decision to make is it was half of my week was consumed being out on the road chasing cars around the Northeast, you know, and then I'd get back and I'd step into just all the problems of the past two or three days and that's just not sustainable. So to me, we give you time back. And I'm also just, you know, we watch the Trends. We're growing 200% year over year. What used to be really hard for us to crack new markets open. There's dealers there like pulling us there. When are you guys gonna get here, help us? We watch it so you know, old habits die hard. The car business is full of skeptics and, you know, and that's fine. And I was the biggest one.

So it's like you said, you're buying time and convenience, and it's exactly what people like Amazon have done to the. The big box stores. Right. I don't want to go and drive and battle the crowds to purchase one or two items at Walmart or wherever. I'm going to just jump on my phone, order it, and have it here in a couple of days, right? Yeah, exact same thing. I could shoot down to the auction tomorrow and bring three cars home, but it takes my entire day. Or I could get on ACV, buy 3 cars before I even go to lunch today and have them delivered to me sometime next week.

Yeah. And look, I'm not a tech guy, you know, I've never written a line of code in my life. I have an iPhone 8 with a cracked screen and I function just fine. But if technology helps me, I'm gonna use it. We use Instacart at home for all of our groceries. We use Amazon. I never go to stores to go and shop. And, you know, for 15 years, I've been selling cars on ebay because it allowed me to hit a bigger marketplace. Not because I'm a tech guy, but because it delivered results and it worked.

And it makes me think of one thing. Sorry, it makes me think of. It almost helps you to buy them online. Because I think when I go to a store, the reason my wife doesn't want to take me to Costco or some of these places, because of the impulse nonsense, I see some fancy new gadget that they came out with and I want to impulse buy these things. And I think we have that same issue at the auction. We get down there and we feel like we've got to take home a truckload, we've got to get 10 cars today, you know, or we see some shiny car shoot through the lane that we didn't have a chance to look at, and we're just going to raise our hands and we're going to make bad decisions.

Yes. ACV allows you. And I can see it being smarter. Yeah. It allows you to be more disciplined. Especially when, you know, tomorrow there's gonna be 3,000 more cars to go and look at. Right. Like when, when you operate from a scarcity mentality, you make poor decisions. And that was. That was me. Right. Like, I wrestled with the fact of do I want to spend more days on the road buying cars or do I just want to fill my truckload, let's say, between these two auctions, because I have to be back at the store and therefore I'm stepping up and buying the wrong cars out of like, you know, feeling pressured into it.

Awesome. Luke, do you have any other questions for Joe? This has been great.

I don't. I just. I appreciate the time, Joe, and I think I'm gonna get back on your platform and really focus on trying to buy you. You talked me into being a new customer again today.

Mission accomplished.

Awesome. All right, Joe, thanks so much for your time.

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