If you’ve ever tried to buy a car, there’s a good chance that a lot of your research has shifted online as it’s become easier and easier to figure out exactly the kind of car you want — and less of it is about going to a dealership.
At least, that’s what Michia Rohrssen is baking on. He and his co-founders started Prodigy, a company based on extending that same kind of experience you have researching cars online to the actual dealership itself. Instead of walking into a dealership knowing exactly what you want, Prodigy aims to make that part of the experience as well by creating a service that customers use online and salespeople use on-site to help a buyer discover the right car for them. So, for example, customers might want to come in and try a few things out, and then go home and continue to research. Prodigy today said it has raised $5.4 million in a seed round led by 8VC, Battery Ventures, SV Angel and CrunchFund.
“Car buying habits are changing — you have customers visiting 1.6 dealerships down from 6 dealerships,” Rohrssen said. “Those customers are doing an average of 18 hours to 20 hours of research before going in. When they get there they’ve done so much research chances are they know more than the salesperson does. The consumer has changed significantly over the last 5-10 years, yet the dealership hasn’t changed much. Our mission from day one was, we want to build software that equips dealers with the tech they need to handle these customer changes and deliver.”
Like so many other startups, getting here was more of a discovery process for Prodigy, which started off as just focusing online. Rohrssen said this serviced a niche-within-a-niche part of the sales component for dealerships, but they found that a few were running it on iPads internally and kind of bending the service to work toward the way it does now. So they went back to the drawing board with that information and ended up with the result here.
The other goal was to unify the whole sales process into a single unit, while dealerships are used to jumping from six to eight different services. To test that, dealerships brought in fresh salespeople — who weren’t accustomed to the traditional process — and equipped them with iPads to see if it worked. So far the results have at least piqued the interest of a handful of dealerships, Rohrssen said,
“It’s worse now because [the customer] spent time doing an online purchase but nothing is synchronized,” he said. “The car isn’t ready. What we found is that if you want to help dealers evolve and succeed in retail you have to support in-store and online. Salespeople can do an entire deal from start to finish on those iPads. The customer can also do that online with our online sales platform. The two are totally linked. That’s a big advantage — you can start online and finish in store.”
With such an in-depth and complex experience, Prodigy may eventually hit a scaling issue. The team has to go in and deploy the tools themselves, as well as educate salespeople and dealerships on how to use it, Rohrssen said. And because it seems like low-hanging fruit, there’s always the constant challenge of fending off potential competitors. But as car-buyers looks to shift most of their behavior online, figuring out the best way to reconcile that in-store experience to line up with new car-buying habits is a sweet spot that dealerships have been trying to solve for a while — and like many industries, the dealership industry is a pretty tight one for personnel, he said, which means the firm has an opportunity to tap into that word-of-mouth.
Of course, all this would be moot if the whole in-person dealership experience is going to be dead in a few years. That’s the promise of some companies like Shift, where you can do all your research online and then just buy the car through that platform. But at the same time, a big startup like Beepi shut down, and there seems to be an opportunity to capitalize on keeping that in-person experience with an expert alive and making it more efficient, Rohrssen said.
“It’s probably the same as most software-as-a-service companies in that there’s always gonna be competitors and always people announcing the funding and big names,” Rohrssen said. “There’s gonna be competitors that come out of the woodwork, and I think ultimately with those software-as-a-service businesses, what determines success is customer happiness and emphasizing happy customers and reference customers. That’s one of the unique things about the dealer industry, although it’s rather fragmented everyone knows each other.”