Inside Vroom’s omnichannel experience with CEO

Auto retailer and e-commerce platform Vroom brought Chief Executive Tom Shortt into the company in 2022 for his experience in omnichannel development in consumer retail shopping. Shortt had already helped develop the omnichannel shopping experience at several companies, beginning with Office Depot, where he was executive vice president from 1998 to 2001, he said at the recent Auto Finance Summit 2023. [caption id="attachment_58335084" align="alignright" width="231"] Tom Shortt, CEO, Vroom[/caption] “In 2001, Office Depot was the first company to launch an omnichannel [approach]. We merged stores, e-commerce and catalog altogether under this notion of omnichannel,” Shortt said. “We didn't call it omnichannel back then because no one had anything [similar].” Shortt joined Walmart in 2018 as senior vice president to help build its e-commerce platform to compete with Amazon , he said, and worked to improve Walmart’s product delivery speed. In the third quarter, Vroom’s portfolio size declined. Vroom’s finance receivables at fair value fell to $387.8 million in the third quarter, down compared with $454.6 million in Q2 and $140.2 million at yearend 2022, according to the company's Q3 earnings release. United Auto Credit Corp. , Vroom’s captive, originated more than 40% of the retailer’s loans in Q3. During the summit, Shortt sat down with Auto Finance News to discuss joining Vroom, building omnichannel shopping and what the auto industry can learn from consumer retail. What follows is an edited version of the conversation. Auto Finance News : How did you end up at Vroom? Tom Shortt: A person I've known for a long time called me up and said, “Hey, Tom, I've got this incredible opportunity for you at Vroom.” … At the time, I don't think I bought a car in a decade; we tend to buy and drive until the wheels fall off. I started looking up Vroom. Having been at the forefront of omnichannel at Office Depot, it had never dawned on me that e-commerce penetration in automotive — the largest consumer category — was so small. I did my research, and I thought this is the biggest opportunity out there, this is exciting. AFN : How does your experience in consumer retail omnichannel inform your strategy at Vroom? TS: Looking at retail, it's a source. The traditional dealer, depending on their size, may have less than 100 or several 100 vehicles in assortment. We have thousands of vehicles. What I see in our net promoter score results every day, customers come in and we have the exact car that they want. Many customers are emotional about the car they get. It's about assortment and logistics. To offer a large assortment, you have to have logistics. If you can move nine vehicles on a line haul truck altogether, the cost to move them is low. Assortment comes into that and then we want to make it easy so that you can buy, finance and have your car delivered without ever having to talk to a human being — unless you want to. In 2001 when we launched this at Office Depot, there was no playbook. There are lots of playbooks out there today. Office Depot, Home Depot and Walmart all did it. There are many traditional dealers today that are offering the assortment of all their collective dealerships together on a single website. They’re offering delivery and the ability to do the deal entirely from your house. Lots of those things are being adopted today. There’s no question in my mind consumers are headed that way, and what will be interesting for us all to watch over the next decade or two is who transforms with what consumer expectations are. AFN : How does auto finance play into e-commerce success? TS: Financing is critical, particularly in the automotive industry, given the percentage of consumers that finance their vehicles. There are several angles on that, but one is ease and helping the consumer find the car they can afford given what their FICO score is, and having the assortment there to have the car they want. Think about the things that are still traditional, paperwork where you have to manually sign documents, and certainly over the next decade that's going to continue to evolve where everything is digital. Titles are moving to digital. Making that transaction as easy as it is buying something from Amazon . That’s the challenge for us — is how we make it easy. Then, looking at all the traditional finance stuff around the right risk and term or the individual asset class and consumer. AFN : Where does United Auto Credit fit in to make this process smoother? TS: We bought UACC in early 2022 as our captive finance operation. We're still fully committed to UACC’s business to continue to drive growth in their traditional dealer model. One of the things we've done at Vroom is to make sure that we don't break UACC, so we focus significantly with the leadership team at UACC to make sure that the core business remains, and then we integrate the parts to enable Vroom’s customer experience to be more seamless. What UACC has brought to Vroom is the significant subprime experience that we didn’t have, so now we have this blend of options for consumers when they are financing their vehicles.

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