The Modern “Grocery Store”: Rethinking Inventory Sourcing

In Episode 25 of Lot Talk, the Lotpop team dives deep into the heart of used car acquisition—a growing challenge for independent and franchise dealers alike. Host Chris Keen is joined by Renaldo Leonard and John Anderson in an energetic, no-nonsense conversation about navigating today’s tight inventory environment and increasing dealership gross profit through smarter acquisition and operational strategy.

In the dealership world, the “grocery store” is a metaphor for where you shop for inventory. Traditionally, this meant the auction lane—but as the team highlights, relying solely on auctions today is a costly habit.

The Auction Trap

Auctions are high-cost environments. Between auction fees, transportation, and PSI, your all-in acquisition cost can easily spike by $1,500 to $2,000 per unit. The kicker? Many dealers are appraising trade-ins based on auction values, which sets a wholesale mindset in a retail business.

“If you’re looking to retail it, what does the auction value matter?” – Chris Keen

Dealers must break this habit. Appraising with retail resale potential in mind—not wholesale comps—is key to maximizing gross and capturing valuable trades.

Appraisal Process: Where Gross is Won or Lost

Poor appraisal practices are leading to missed trade-ins, and it’s costing dealers big.

Common Mistakes That Hurt Trade Acquisitions:

• Using wholesale benchmarks (auction/MMR) to price trade-ins
• Applying auction fees, transport, and recon estimates by default—even on trade-ins
• Factoring in packs before the vehicle is sold

These practices undervalue incoming inventory, making it nearly impossible to win trades without drastically undercutting profit potential.

Solution: Appraise Like You Sell

Renaldo breaks down the ideal process:

1. Start with what you can sell the car for in your market—not what the books say.
2. Back into your appraisal number based on actual recon costs (not default estimates).
3. Use your CRM and DMS data to track how similar units have performed on your lot.

“Just because the car’s on your lot doesn’t mean you’re not at the grocery store. You still have to buy it right.” – Renaldo Leonard

The DoorDash Analogy: Let the Inventory Come to You

Rinaldo brilliantly compares sourcing from your trade-ins and service drive to DoorDash: the cars are coming to you—you just need to answer the door.

Low-Hanging Fruit:

• Service Drive Appraisals: Appraise every service customer’s vehicle. Use hang tags with QR codes that link to a trade-in form (e.g., KBB ICO, TradePending).
• CRM Insights: Review customer leads that didn’t result in sales. Offer to buy their vehicles outright.
• Internal Teams: Empower your office staff, service advisors, and porters to scout cars in the community—pay them a finder’s fee.

“Why spend $1,500 at auction when you can pay your receptionist $500 for sourcing a trade?” – John Anderson

Inventory Tools: Use Them, But Don’t Be Ruled by Them

The team praises tools like vAuto, VinCue, DealersLink, and others—when used correctly. However, too many dealers treat these tools as gospel.

The Right Way to Use Inventory Management Tools:

• Use them to guide, not dictate, decisions.
• Combine tool insights with internal sales history and team capabilities.
• Customize default settings: many tools apply static recon and fee assumptions that distort appraisals.

Auctions: Still Useful—If You Use Them Strategically

Despite rising costs, auctions can still be a valuable inventory source—especially if viewed as a lead generator.

Chris’s Three-Legged ROI Strategy:

1. Buy a late-model unit from auction (even at a slim margin).
2. Use that unit to generate a trade-in—which has more gross potential.
3. Capture F&I revenue and keep reconditioning in-house, building margin across the store.

Think of every auction purchase as a potential “Secretariat” vehicle—one that spawns a profitable lineage of trades.

Final Tips for Dealers

1. Google Yourself: If your dealership’s “We Buy Cars” messaging doesn’t appear in search, you’re losing trade opportunities. Ensure your site and Google business listing shout it clearly.
2. Track Trade Lineage: Like bloodlines in a horse race, know which units are generating multiple trades and gross.
3. Fix Your Appraisal Defaults: Remove default recon, transport, and pack values for trade-ins. Evaluate case-by-case.
4. Measure What Matters: Track where your inventory is coming from and how each source contributes to gross and volume.

“If you don’t have at least 18 units in your 0–15 day inventory, you’re in trouble.” – John Anderson

Conclusion: Change the Way You Look at Inventory

If dealers want to boost gross in 2025, it’s not about chasing cars harder—it’s about sourcing smarter. That means rethinking how you appraise, how you use your tools, and how you involve your team.

Stop stepping over dollars to pick up dimes. Start treating every opportunity—on the service drive, in your CRM, or at the auction—as a gateway to long-term inventory gains.