The distance between Dallas — where mobile marketplace startup 5miles is based — and the headquarters of the National Independent Automobile Dealers Association in Arlington, Texas is about 20 miles, give or take.

But the path that 5miles took to the auto industry was serendipity.

The startup soft-launched the local marketplace app in August 2014 before a full-scale launch in January 2015.

After its first full year of operations, the company analyzed activity on the app, where individuals can buy and sell everything from reptile tanks to steel drums, while also browsing listings for jobs, housing and services.

5miles wanted to figure out how, exactly, people were using the app.

What they discovered was unexpected.

“Much to our amazement, we went from becoming, really, a ‘clean out your closet, clean out your garage app’ to noticing more and more cars being listed and sold,” Rick Cantu, general manager at 5miles said by phone Wednesday at the NIADA Convention.

“So, being inquisitive data analysts that we are, we dove a little deeper into the numbers and we started noticing that a lot of independent dealers were using our app — some exclusively, others in conjunction with other marketing channels to move their inventory,” he said.

“And then we started running some more numbers and we realized, ‘Holy Toledo, we have over 150,000 searches for cars on our app every day,’” Cantu said.  

At that point, he said, the 5miles team realized they needed to learn more about the car business, given the traction it had made among independent dealers and car buyers, alike.

“We’re a mobile media company. We don’t know anything about cars,” Cantu said.

So, following this organic growth into the car sales community, 5miles put together a team to conduct research, focus groups and begin talking with dealers to learn more. 5miles, Cantu said, wants “to be a part of the industry.”

The company added staff with experience in the car business to reach out to independent dealer community.

By hiring people from the dealership community, 5miles sought to find out how a dealership’s operations work. Heck, they also wanted to learn the lingo (alphabet soup, anyone?). The 5miles team also checked out auctions around Dallas to learn more about how dealers acquire inventory.

Cantu said that one of first dealers 5miles met with had sold 140 cars through the app and had 40 listed.  The dealer, Cantu said, was actually selling a non-automotive item, simply as an individual, and the lightbulb went off.

“And he thought, ‘what would happen if I started listing my inventory on the app?’” Cantu said. “And lo and behold, he started getting offers.”

It was the chance to meet with dealers that drew 5miles to the NIADA Convention. They posted up in a booth to get dealers’ thoughts on what was needed in the app and what was beneficial about the app, which has had nearly 9 million downloads to date.

Room to grow

As far as expansion, 5miles started in a few markets in its home state of Texas before implementing a “bicoastal” strategy, moving into San Francisco, Los Angeles, Miami and Tampa.

The company first focused its marketing in the South and Southwest and plans for its next area of growth to be the Eastern Seaboard and the Midwest.

“I like to call them the Southwest Airlines cities, where there might be an NFL team there or they’re big enough that they have good sized airports, and then we kind of fill in with adjacent markets or connecting markets beyond that,” Cantu said.

He said people have realized that they can use 5miles to not only sell that old set of golf clubs, but pricier items like cars, as well.

“I believe that this user base that we have may have included a whole bunch of salespeople from the car lots who realized here’s yet another marketing channel that’s available to me and I don’t have to take pictures and transfer them to a laptop and upload them to a website,” he said. “I can do everything from the power of my smartphone.”

Making it safe

The world of peer-to-peer buying has the potential to make one feel uneasy or even unsafe. However, Cantu said 5miles has implemented measures to keep the app “clean and healthy.”

How exactly?

A company spokesperson that users are “triple-verified” through email, phone and social media, and this verification is shown on the user’s profile. There are also peer-to-peer ratings and reviews incorporated into the app “to help users feel more confident that the people they are trading with are real, not scammers,” the spokesperson said.

Additionally, 5miles takes measure to protect the privacy of users. It limits the amount of personal information shared by the seller, the spokesperson said, and the in-app chat feature gives users the option to communicate without sharing personal contact information.

There are also features currently in the works to give users some reassurance when they meet face-to-face for the transaction.

‘Transact with their neighbors’

Cantu said part of what sets the app apart is that it is “multi-category,” offering products, services and jobs. It is also “hyper-local,” in that the goal is to transact within a five-mile radius (hence the name).

That said, you can expand the parameters of a search beyond five miles.

“If you want to drive across town to find something, go ahead,” Cantu said. “But our belief is that people want to shop close to their neighborhood and transact with their neighbors as much as possible.”

At this point, the company is getting 5,000 additional car listings and 1,500 cars sold each day. And there are 150,000 vehicle searches per day.  

“We’re here because we have a tidal wave of demand from our users,” he said, “and we want to connect those users with the independent dealer industry.”