Maximizing Margins with Ecommerce Trade-ins and Direct Acquisition
Ecommerce gives you the opportunity to unlock new markets of shoppers and vehicles to help you succeed in an ever-changing supply-and-demand market. But it’s vital to build a strategy and consistent processes around trade-ins and acquisitions. You strategy should help set consumer expectations, deliver an easy online experience, and build trust and confidence that can strengthen your brand.
Let’s explore some key considerations from our early adopters to creating the right strategies and processes for successful ecommerce vehicle acquisition.
Educating the Customer
You handle trade-ins and direct acquisitions every day, but the average consumer likely has no idea what to expect from even a traditional brick-and-mortar transaction of this type, much less an ecommerce one. That’s why it’s vital to help your customers understand in detail:
- Why they need to create an account and provide the requested information.
- The benefits of saving their trade-in information to the account, such as lower payment and tax rate calculations.
- How to describe and document their vehicle’s condition as accurately and completely as possible.
- How long it takes for various steps of the process to occur.
- What the trade-in return/cancellation policy entails.
- How and when to drop off their vehicle (for trade-ins) or expect pickup (for direct acquisition).
Trade-ins are often part of the shopping flow for ecommerce as well. Including this early in the shopping flow will help the consumer understand their deal and personalized payments in more detail. The more education and transparency you provide the customer, the more likely they are to move forward with the trade or acquisition.
Vehicle Targeting and Quality Control
In this section, we’ll separate trade-ins from direct acquisitions because although they both result in additional used inventory, you probably approach them with slightly different goals in mind. Whereas trade-ins help stretch consumers’ buying power and encourage purchase, your direct acquisition objectives may be more focused on targeting specific makes/models and price points across markets.
For ecommerce trade-ins, it is vital to have confidence in the condition of the trade-in vehicle. With trade-ins, you reduce your acquisition costs by buying directly from consumers who are ready to transact. Data shows that From May to October 2023, approximately 24% of ecommerce site transactions included trade-ins. With this in mind:
- It’s important to be very specific about how the consumer discloses vehicle condition. Your trade-in ecommerce content, whether separate landing pages or part of the trade-in workflow, should give detailed directions for the customer.
- Including: Pictures, video, detailed descriptions of damage, imperfections both inside and out.
- The more information a customer can provide, the more accurate their valuation will be. Any disclosure issues that arise will ultimately slow down the process for both you and your customer.
- There should be a set range of acceptable variance. We recommend $500 per trade as a reasonable standard.
For direct acquisition via ecommerce, you have the opportunity to:
- Leverage target market data to identify vehicle demand.
- Take advantage of pricing variances across markets to purchase in low-demand areas and sell for a profit via ecommerce to a wider audience.
- Keep in mind how Autotrader market extensions can be used as an ecommerce tool for targeting inventory type through direct acquisition.
- Build relationships with consumers prior to them being in-market to purchase and establish your brand as trustworthy through marketing campaigns, personal communication and response times.
In both instances, an easy, turnkey consumer experience with proactive follow-up is vital for a smooth transaction.
Making Things Happen
It takes planning and support to facilitate desirable trade-ins and direct acquisitions. Here are some additional best practices to make these transactions successful:
- Utilize staff with acquisition experience to maximize Kelley Blue Book Instant Cash Offer Buying Centers and auctions, particularly in ecommerce where vehicles are acquired remotely and sight unseen.
- If you have limited resources that cannot support ICO Buying Centers, leverage marketing to let the public know that you buy vehicles.
- Finally, don’t place the cost of transporting trade-ins and acquisitions on the consumer.
Seizing the Opportunity
Ecommerce enables you to acquire and merchandise inventory to meet demand across any and all markets, providing a great opportunity to maximize margins. With careful planning, it can provide you unmatched opportunity to build relationships with consumers while broadening their used vehicle offerings.
Your Digital Commerce Manager will reach out to discuss how you can maximize margins with ecommerce trade-ins and direct acquisitions.