Online retailers' market expansion is heating up

What does Texarkana, Texas, have in common with Eugene, Ore.?

They're both markets to which Carvana Co. is extending its as-soon-as-next-day-delivery services. The online used-vehicle upstart announced the move into each market in the last couple weeks as part of a flurry of expansion notices from Carvana and its competitors.

Carvana said in April and this month that it was adding several other new markets throughout the South, West and Pacific Northwest. At press time, the retailer said it was providing as-soon-as-next-day delivery to 291 cities across the U.S.

Vroom Inc. and Shift Technologies Inc. also are growing.

This month, Vroom announced it had opened a new hub in Los Angeles and said that site will support its last-mile concierge service to some 13 million people within a 50-mile radius. The next day, the company hailed a similar new hub in the Detroit area that covers 3.4 million people in a 40-mile radius.

Shift announced this month that it would begin purchasing cars from consumers in the Las Vegas market. The company sells vehicles to consumers in all 50 states but had largely limited its hubs and its more involved operations — such as buying customer cars or taking vehicles to people's homes for test drives — to markets concentrated along the West Coast.

Now the company is shifting that Western focus.

Days after announcing the Las Vegas expansion, Shift said it had extended both its buying and selling operations to customers in Austin and San Antonio. Shift last year said it would expand its efforts to buy vehicles from consumers into Texas.

All three of these online retailers are growing their reach quickly. Another thing they have in common? They remain unprofitable. Their idea has been to invest capital in expansion, reach scale and then collect the profits expected to follow.

Investors have more or less agreed with this approach. Many dealers, however, remain skeptical.