Shift Happens: Online Car Company Manages Crisis With Class

No chief executive worth his or her salt wants to have the meeting that Shift CEO Toby Russell had last week. The online car selling platform’s March town hall meeting was supposed to be a victory lap to celebrate February, which was the most successful month in the company’s five-year history. It was supposed to be full of good news and smiles, but instead, Russell was looking at one of the worst months in Shift’s history and delivered the results while fighting back tears.

“We saw early on that this crisis could have an impact on our teams as well as on the business model,” Russell said. “We had a lot of late nights talking it over and we saw two options. One: mass layoffs. Two: find a way to keep our teams engaged and keep their healthcare at a time when healthcare was critical. Above all, we wanted to address the crisis and take care of our people the best we could.”

Russell and his executive team at Shift split the difference: They kept the health insurance of all full-time employees and furloughed half of them or reduced their hours with a commitment to make best efforts to bring them back with a fundraise after the crisis passed. Additionally, there were furloughs at the corporate level, while all salaried employees took a 25 percent reduction in salary for at least eight weeks, which will be assessed as the crisis continues.

The company also made radical shifts to its business model. Usually, Shift sells cars in two ways. One is a “hub” model in which buyers browse at one of its physical locations. The other is a straight online purchase, in which the car is delivered from the hub to the buyer for a test drive. The buyer can either keep the car for a period of time to evaluate it or purchase it on the spot. Shift’s concierges usually accompany buyers on their test drives. Now the hubs have been shut down and the concierges will only drop off cars for test drives. Concierges are equipped to wipe cars down before and after the test drives.

In these worst of times, companies could learn a lot from Shift’s approach of exercising empathy toward their teams and embracing the reality of a changing business model. Even its messaging was on point:

“We are currently living through a situation that is totally unprecedented. These times have also brought out the best of who we are as a team. We are encouraged by the stories of Shift employees looking out for each other, be it through covering shifts for a coworker who has to stay home to take care of their children, or the innovative practices we are adopting to ensure the health and safety of our colleagues and customers,” reads its corporate blog. “Taking these measures breaks our hearts. However, we are decisively taking these serious actions now to position Shift to weather this storm and come through it stronger. We extend our deepest sympathies and gratitude to the furloughed employees, some of whom volunteered, and we hope that all will return to Shift once we’re through these difficult times. As this crisis environment continues and we assess demand, it is possible we have to go further than this, but we hope to see higher demand than we had anticipated. If this happens, we would be able to bring our team members back to work.”

The online car business will take a huge hit from the crisis disruption. Cars.com, which has posted strong sales numbers but has had to answer to some liquidity issues from analysts, has implemented a program that includes 50 percent off April bills and 30 percent off May and June bills automatically applied across Cars.com and DealerRater. The company has also tried to assist its dealers with new no-cost merchandising and digital solutions, including home delivery and virtual appointments through badging, chat and video. However, it has also announced a substantial reduction of marketing and operational expenses as well as a “prudent draw-down on our revolving credit facility to provide additional liquidity of $165 million. We maintain strong relationships with our banks, and continue to have ongoing conversations with them on our financial performance and metrics,” per reports.

“Our dealer customers are facing unprecedented and uncertain near-term business impacts,” the company said in a statement. “Due to the unique circumstances with every customer, we are offering a range of flexible solutions, including immediate financial relief as well as expanded digital retail solutions to address today’s shoppers’ needs. Our immediate focus is on helping car shoppers better connect with dealerships and navigate their car-buying process online during this time of social distancing and staying at home. Our customers understand, now more than ever, that a strong digital presence is needed to help weather this storm.”