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Carvana is an online used-car dealer. Customers can go on Carvana's website to browse the used-car inventory and can quickly purchase a car from
Carvana is an online used-car dealer. Customers can go on Carvana's website to browse the used-car inventory and can quickly purchase a car from the comfort of their own home. Unlike traditional used-car dealerships, Carvana clearly displays the final price tag of each car and does not negotiate. Carvana's prices are often cheaper than those advertised by a traditional used-car dealer and are meant to be competitive without requiring customers to negotiate. Since Carvana is an online retailer unaffiliated with any car manufacturer, its inventory spans across different manufacturers (e.g., Honda, Toyota, and Ford) and across different geographic locations (e.g., people from Chicago can browse for cars located in Arizona). Carvana manages its inventory using large garages, which they call car vending machines, located in major cities in the USA. Carvana uses these vending machines/garages as a network of warehouses to manage its inventory in response to customer orders. Customers purchasing cars can choose to either pick up the car at one of these locations or have it delivered to their home. Lastly, Carvana offers seven-day test drives. A car can be driven for up to seven days and then returned at no cost. There is, however, a limit of two test drives per customer; i.e., only two cars can be driven for a 7-day period. What is the strategic position of Carvana relative to a traditional used-car dealer? How Carvana's operational decisions align with its focus?
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