Meeting demand for integrated online & offline car-buying options
The Future Is Here: Digital Retail
Thursday February 22, 2018
- Dealers must get more digital or risk becoming irrelevant. The challenge, though, is how to remain in control of profitability while still providing a delightful buying experience.
- Customers should be able to start their car-buying process online and complete it in the store.
- 85% of shoppers are more likely to buy from a dealership that offers at least one of the major purchase steps online.
Almost everyone in the automotive retail market – and even some Silicon Valley startups – is speculating about the future of how cars will be bought and sold.
Much of the hype in recent months has been about the predicted end of the car dealer and the shift to completely online retailing.
The speculators have good reason to believe dramatic change is coming quickly to the automotive retail buying experience.
Why? For decades, buying a car has been stereotyped by consumers as “the worst experience I’ve ever had.” And the primary source of frustration is the length of the process.
On average, consumers spend three hours in the dealership purchasing a vehicle – more than half of it negotiating and doing paperwork.
The incredible convenience of online buying from Amazon, the ease of services like Uber and even the simplicity the real estate market offers have transformed consumer expectations for how easy it should be to shop and buy just about anything online, including a car.
Considering today’s digital-driven world, anything less than a delightful car-buying experience is a recipe for declining sales, compressed margins and an ever-mounting weight on dealers to operate at a minimum sustainable profit level.
Dealers today face a choice similar to – but far bigger than – the one they faced in 1999 when classifieds first started moving online.
There’s no question dealers must get more digital or risk becoming irrelevant. The challenge, though, is how to remain in control of profitability while still providing a delightful buying experience.
The good news, according to recent Cox Automotive research, is there’s a way dealers can adopt a digital sales process that fits how they already do business: connected retail.
Cox Automotive’s Future of Digital Retail Study debunks the myth that the dealership is going away. In fact, it indicates just the opposite, that the dealership remains central to car buying.
The study shows eight of 10 consumers would never purchase a car without a test drive and seven of 10 would never purchase a car without physically seeing it first, even if a condition report is offered online.
Plus, 89 percent of consumers still want to sign final paperwork at the dealership.
That said, consumers are looking for a much faster, more convenient car-buying process.
The research shows 83 percent of car shoppers are ready to take at least one step toward their purchase online before entering the dealership.
So how can we reconcile those findings?
By enabling customers to start their buying process online and complete it in the store. It’s a new vision for retail, a new era – the beginning of true digital retail.
By digital retail, I mean online tools that help dealers and buyers structure deals with real monthly payments (including price, taxes, fees, trade-in value, etc.), understand and buy F&I products, schedule a test drive and place a down payment online to reserve the vehicle and take delivery.
When customers start the deal structure online, the in-store experience becomes smooth and stress-free, and dealers profit when the payment conversation happens early in the process.
The digital experience then continues in the store with tools to complete the purchase.
Cox Automotive study’s convincing numbers point to a significant role for the dealership, but it’s also clear customers are looking for options to complete portions of the sales process online.
The study found 85 percent of shoppers are more likely to buy from a dealership that offers at least one of the major purchase steps online.
A number of innovative dealers have already begun deploying connected retail solutions to link their physical and online storefronts.
One is Dustin McCue, sales manager for My Auto Advantage in Hendersonville, N.C., who is seeing the advantages of digital and connected retailing – increased efficiency and profitability with improved customer satisfaction.
When customers aren’t pushed on their budget and know their monthly payments before they come to the store, he said, it’s a win-win, as the dealership “kills it in F&I and the customer lands in the right car.”
McCue said one of the best aspects of connected retail is the efficiency and confidence his team gets from not being afraid to walk away from customers with unrealistic expectations.
Another important point is that digital retailing is saving him a lot of time – especially back-and-forth with customers – by smoothing over the historically negative negotiation phase.
“Prosperity is growing as the negativity declines,” he said.
Yes, the auto industry is going through a period of major transformation. But rest assured, the dealership is not dead.
The old way of car buying, however, certainly is.