As digital technology continues to develop and new generations of consumers hit the market, more and more industries have begun selling their products through e-commerce. The modern consumer wants convenience and has begun to not only expect, but demand an online shopping experience for all types of purchases—even for something as significant as a vehicle.
It’s also no secret that many consumers feel as though buying a car at a dealership is a confusing, high-pressure process that often takes too long. They are seeking a simpler, quicker and more transparent experience in which they’re in control—and the Internet is the perfect avenue.
In fact, an Accenture survey revealed that three-quarters of consumers said they would consider completing the entire car-buying process online—from financing and negotiations to paperwork and delivery. Similarly, 72% stressed that they wanted to complete credit application and financing paperwork online.
While some automotive industry experts say dealerships are a year or two out from being able to complete an entire vehicle transaction online, others predict that by the end of 2017 the online auto market will reach a rapid-growth stage, and by 2019 up to 10% of vehicle sales could happen online.
So, how will this shift to online automotive sales affect OEMs and dealerships?
OEMs and dealerships need to adjust to this new consumer experience
This industry shift will require OEMs and dealerships to work together in order to meet the needs and expectations of this new online market. They will be required to define new legal and commercial framework for online vehicle sales. They will also need to make some significant process and IT changes, while still complying with regulations regarding the security and privacy of customer data. The biggest concern, however, is finding ways to manage important consumer experience touch points—such as test drives, negotiations and trade-ins.
To manage those touch points, OEMs and dealers will have to find a new approach to delivering services that traditionally happen at the dealership. For example, perhaps test drives will instead be handled through various test drive centers with appointments that can be scheduled online. Further, because online consumers will skip the traditional showroom experience, OEMs will also need to focus on promoting and communicating their brand during the online research phase through immersive, virtual experiences that get buyers familiar with the features and feeling of different vehicle models.
Subsequently, as the consumer shopping experience changes, the role of dealers will evolve to become less of sales associate and more of a consultative advisor who acts as a single point of contact for the consumer through their shopping experience. These advisors will be there to provide detailed vehicle information and advice, as well as additional services and support through the lifecycle of vehicle ownership. These interactions can even happen online via e-chat or over the phone.
Who has already started making the shift?
The online car-shopping experience has already taken off in the used car sales market, and websites like Carvana, CarGurus and Vroom allow consumers to buy, sell and trade used vehicles almost completely online.
This trend indicates that OEMs will have to strategically collaborate with their dealerships to figure out ways to offer consumer buyer solutions like price validation, trade-in options, accessory selection, financing options, F&I product selection, as well as pickup or delivery options entirely online. Due to some state laws, dealerships will be required to close the deal with a physical signature at delivery, which could very well be the only in-person interaction the consumer has. However, by offering this more consumer-driven and consumer-friendly experience as an option, dealerships will be able to enhance their reputation and improve owner loyalty.
Some auto giants like Ford and Toyota are starting to support these e-commerce capabilities through their dealerships—using platforms like Express Storefront and partnering with financial software companies to support a comprehensive online shopping experience. The good news is automotive OEMs and their dealerships still have time to position themselves as one of the first companies to make the shift to online sales.
How can OEMs, dealerships and F&I managers begin moving into online automotive sales?
First, there are the big challenges to overcome regarding the consumer experience.
Automotive OEMs and dealerships need to be able to deliver virtual experiences in order to support consumers during the research and decision-making phase. From a price standpoint, they need to establish offers that are attractive to online consumers, yet still generate profit. OEMs also need to figure out how to integrate those consumer touch points (drives, negotiations, trade-ins) into the process, using their existing dealership network.
Secondly, OEM-franchised dealerships need to consider introducing F&I products and vehicle service contracts into the online shopping experience. Many after-market providers like AAA Auto Warranty and Forevercar.com are beginning to sell vehicle service contracts (VSCs) online. By partnering with the right provider who offers the right technology tools, dealerships can, at a minimum, provide consumers with beneficial F&I product information online.
This will further empower dealerships to consider different digital marketing strategies to increase sales of vehicle service contracts post vehicle sale. For example, dealerships can create hidden landing pages that keep pricing from being public-facing, but can be sent directly to consumers and allow them to complete the purchase of a VSC online. This type of technology already exists through Budco Financial, including a dealership sales tool that empowers consumers to customize and finance VSCs through a simple mobile interface.
No matter which strategies you are considering for moving into online automotive sales, it’s clear that the time to start making the shift is now.