Kelley Blue Book creates a marketplace of its own

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Shopping for used cars on the Internet is here to stay. It’s been reported that six in 10 used-car buyers purchase a vehicle that they find online. To capitalize on this, Kelley Blue Book, one of the automotive space’s most heavily-visited sites, has added a shiny new tool to its tool box -- The Trusted Marketplace. It’s a consumer car buying configurator that matches consumers to used (and new) cars. But can it deliver the goods?

In the past, Kelley’s car buying, dealer lead mechanism was cleverly partnered with used inventory giants Cars.com or, in more recent past, Autotrader.com, serving up dealer leads and sharing revenue with the partnered company. The new venture aims to serve both consumers and dealers in a more judicious way.

With the rising popularity of used car buying in the past few years, Internet service providers have become increasingly clever about how to streamline the consumer buying process while making a profit by selling dealer leads. Kelley’s secret sauce for consumers is search algorithms that ‘match’ consumers with the right vehicle, which in theory, should lead to more valuable leads for dealers. For used buyers, things like condition, options and the like, are harder to come by so finding the right make, model, price and proximity becomes vital in the search process.

Competitors Cars.com and Autotrader.com have a business model that allows dealers to pay for ‘premium placement’ of certain cars they want to sell which then are served up at the top of the list to potential buyers. Add to this the fact that these companies sell dealers ‘subscriptions’ to their site and, as a result, many of the leads sold to dealers lead nowhere.

James Bell, executive market analyst for Kelley Blue Book’s kbb.com suggests that their competitors’ business model may not have the consumer’s best interest in mind. “Other automotive classified sites initially provide car shoppers with a list of vehicles for which dealers have paid top dollar, rather than returning a list of cars in the order that best match their needs at the best price like on kbb.com.”

However, when it comes down to who has more used car listings, Autotrader is tops with 3 million listings nationwide and Cars.com with 2.5 million new and used cars. Kelley has partnered with aggregator, Vast.com who culls listings from other pay-per-lead online sites such as Dealix, AutoUSA, AOL, Overstock.com and Autobytel Inc. But, ultimately, the largest input will come from the monthly 12 million car buyers KBB attracts who are first looking for the value of their current car and second, shopping for a new car. But is it a case of the cart before the horse?

The competition thinks so. Reported in Ward’s Business News, Mitch Golub, Cars.com’s president said, “KBB is a strong brand when it comes to used-car valuations, however, pay-per-lead classified listings are a completely different business. They clearly have their work cut out, especially if they pursue a model that aggregates listings from a wide array of providers. That model has yet to work.’

-- Joni Gray