CarOrder Inc., the company that was going to change auto retailing by selling cars directly to consumers over the Internet, has shut down. And this time it is for good.
Trilogy Inc., the Austin, Texas, technology firm that funded CarOrder, went out of business Monday, Feb. 26, and laid off most of its remaining 26-member staff.
The two California car dealerships that CarOrder acquired as it attempted to reinvent itself into a bricks-and-mortar car dealer are for sale.
A former employee who asked not to be named said the Austin startup 'epitomized everything that was wrong with dot-coms run by 20-somethings with a nearly unlimited budget.'
CarOrder was started in 1999 by entrepreneur Brian Stafford, 24, who aspired to be an e-dealer. The company began as a broker, but was shopping for car dealerships with an initial $100 million in cash and technology from Trilogy Inc. The intent was to sell cars online through a national Web site, using a network of car dealerships as distribution points. But the effort backfired when auto manufacturers balked at granting franchises to the company. By then, CarOrder was running out of operating capital, shut down its Internet operation and changed its business model to mirror that of a traditional dealer.
'It is difficult for an online retail business to sustain itself and with the automotive segment this is especially so,' said Baba Shetty, an analyst with Forrester Research Inc. in Cambridge, Mass. 'This is not the time to launch a new auto e-commerce venture.'
CarOrder, which early last summer had a staff of 150, reduced personnel and closed its brokering operation, carOrder.com, in August. It bought two California car dealerships and changed its mission. But the transformation failed to impress Trilogy, which invested $125 million in the business.
Neither Stafford nor CarOrder Vice Present Jerry Ducharme could be reached for comment.