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Digital Retailing Now a Required Reality

Greg Kelly

Selling vehicles online is now a reality and since the pandemic the pedal is to the metal – get on the train or watch it go by. Digital retailing vehicles is the “new normal.”

Consumers have embraced the experience of not only shopping online but completing their transaction and taking delivery of their purchase without going into the store. No lines. No hassles. No heavy sales pressures. One only needs to walk into a Walmart or Target to find self-service checkout kiosks, and the new parking lots with drive-up pick-up lanes for items pre-ordered online.

Digital retailing is the new business reality of meeting consumer expectations. The auto industry is now moving toward providing a revolutionary, easy-to-navigate process that takes consumers from the idea of – “Hey, I want to buy a vehicle in less than four hours in a showroom” to the celebration – “Hooray, I just bought a car online in less than 1 hour on my couch!”

The world, as we know it, has changed. CarMax figured this out 25 years ago. They recognized there was a growing population of consumers who were frustrated and fed up with the traditional dealership buying experience. Recently, CarMax Sold 452,188 units through their retail and wholesale channels combined, up 128% from the prior year quarter and up 31% over a record first quarter in fiscal year 2020.

Carvana has also impacted the industry. For the first time, Carvana posted positive net income in the second quarter of 2021 and delivered 107,825 retail units. Vroom and others are also on the move. Although much smaller (for now) Vroom sold 18,268 retail units for the 2nd quarter of 2021. Part of their explosive growth comes from their car valuation marketing efforts.

The real reason that places like Vroom, Carvana, and CarMax are getting the attention is that their offers for used cars are quick and accessible. A dealer may be willing to pay you more than your buyout price for a leased vehicle, but few take the time to stop in for a trade-in appraisal. Turning the process into a 2-minute web page that prospective sellers can fill out on a whim gives people a quick and easy glance into just how much the car is worth.

Currently, there are 30+ online auto sales solutions now available like Roadster, dealer.com, and Cox Automotive. Most solutions are decent in some aspects and very few really deliver the functionality and experience that contributes to high conversion and close rates.

Automotive digital retailing will never be the majority of a dealer’s sales volume, but to ignore the consumers who seek this experience is nothing less than denial of the obvious. It will only drive that group to the dealers who see the opportunity for what it is: a chance to engage with a new customer base that they’ve never interacted with before, the chance to grow their business with a new subset of consumers yearning for a self-directed, easier, and less time-consuming way to buy a car. And, by the way, dealers make higher profits on this channel.

Many dealers think they are already in the digital-retailing marketplace. But they are mistaken. What is digital retailing? Here is what it is NOT:

  • It is not just having a dealership website and listing inventory.
  • It is not merely a lead generator.
  • It is not to provide a trade-in “ballpark range” value.
  • It is not just offering an app, in-store kiosk, or touch-screen tool to see what vehicles are available.
  • It is not letting customers start the car-buying process online but not helping them to finish online.
  • It is not gaining a loan pre-approval, or simply setting the stage for financing to be arranged at the store.

As forward-thinking dealers embrace the “new normal” world we live in, they will foster new relationships with customers they likely would never have met. The relationships will begin with letting a customer take ownership of the process and continue through repeat and referral business in the future. Dealerships who truly engage in digital retailing will see CSI scores soar, lead-closing rates grow and profitability dramatically rise.