On-Demand Auto Repair: Wrench Ratchets up $20 Million
November 12, 2019 | Contributed by: Mike Boland
The on-demand economy is mostly known for its demand-side impact. Consumers can have a remote control for their city, and summon things at will… not a new concept. But the supply-side dynamics are less discussed. On-demand services can flip the traditional model of customer acquisition.
In other words, traditional customer acquisition is essentially advertising. Money is spent upfront to boost awareness and acquire customers. On-demand services conversely de-risk that upfront investment by replacing it with an ongoing revenue share for getting connected to new business in real-time.
Theoretical benefits include less risk and better cash flow. Without having money tied up in advance customer acquisition investments, there’s more cash-flow leeway which is critical for lots of SMBs. There are of course dark sides to all of this, such as margin compression, but that’s the basic idea.
That high-level model varies in different segments of the on-demand economy, so questions always emerge about what local verticals are best suited to an on-demand model. For example, Home services have been pegged as sub-optimal due to sub-vertical nuance/specialty and rampant leakage.
So where in that spectrum does auto repair fit? More specifically, is auto repair conducive to an on-demand service that comes to you? Wrench thinks so. The Seattle-based on-demand auto repair service connects local mechanics to repair jobs, which are done at the customer’s location or driveway.
The way Wrench operates is that it connects mechanics to service requests in real-time. Service trucks arrive at customers’ homes with tools that are based on owners’ descriptions of the problem, in addition to diagnostic software. Each visit comes with a 12,000-mile warranty and vehicle inspection.
This works with some auto-repair jobs better than others. Though a service bay is needed to replace a transmission, Wrench can fulfill common repair requests like oil changes, tune-ups, brake jobs and no-starts. It has standardized pricing to keep things simple and avoid the stigma of shady auto-repair.
The home-visit aspect also has merits in streamlining unit economics. For jobs that can be done with the tools a mechanic carries in his or her truck, it can eliminate physical bottlenecks of a mechanic’s own garage. It also has a convenience benefit to the consumer in not having to bring your car in.
As city dweller, these factors resonate with me in terms of challenges in dropping a car off, or getting it towed to my mechanic (something I just went through). Likewise in rural areas, consumers can offer their garages or driveways to host a repair while they wait in their own home, versus a waiting room.
Based on these factors, Wrench just got a vote of confidence in the form of $20 million in funding from Vulcan Capital, Madrona Ventures, Tenaya Capital and Marubeni Corp. It joins other funded services in on-demand auto-repair such as RepairSmith, and adjacent home-visit services like Wype (car washes).
Given existing competition, the name of the game is grabbing market share and network effect. That dynamic can be seen in other segments of the on-demand economy, most notably ride-sharing. Wrench will use the new funding to expand and build its network in new markets, as well as executive hires.
So far, the company has serviced 100,000 vehicles which is both validating to its momentum and indicative of its growth headroom, given 270 million vehicles in the U.S.. It’s also accelerating that growth through acquisitions, such as FiiX, which has 80,000 customers in the U.S. and Canada.
Wrench could find success with a combination of direct-to-consumer business and enterprise accounts. The latter could involve fleet operators which contract a company like Wrench to be available on-demand for maintenance needs in the field (our speculation). Either way, growth prospects seem promising.
Wrench previously received $4 million in funding in 2017.