Embraching Online Selling Offers Advantages Far Beyond the Obvious
By Jack R. Nerad, Writer, Author, Radio Host, North American Car of the Year Juror
Feb 3, 2020 | Dealer Ops & Leadership, Trending Industry News
Car buyers are more sophisticated than ever before, and with that added sophistication has come higher expectations. Many car buyers want a complete end-to-end online buying experience. Millennials, who have recently vaulted to the top of the car acquisition “generations,” have difficulty understanding why they can’t buy a car the way they buy everything else — with a few clicks of a mouse or a couple of taps on a smartphone. And they aren’t the only buying group asking that question.
Many traditional car buyers who plan to visit a showroom, kick some tires, engage with a salesperson and complete the transaction there would like to get a head start on the process by doing much of the dreaded “paperwork” online at home before visiting the dealership. And pretty much nobody — even the oldest Baby Boomer who fancies himself a great negotiator — wants to spend hours in the store getting the deal done, especially when they know it doesn’t have to be that way.
Making things simple for the consumer has always been a magic formula for retailers from the days of the 5 and 10-cent store and the self-service “supermarket” to Amazon and eBay.
Now, finally, that realization is hitting car retailers, and they are making the turn toward online retailing, some jumping all in, some hedging between a fully online buying experience while retaining some traditional processes.
This environment of change has been a difficult one for most dealers to work through. And in many instances, the “if-it-ain’t-broke-don’t-fix-it” philosophy has prevailed. But one place where the most hidebound, old-school dealership cannot avoid crossing over into the online retailing world is the use of third-party lead-providers, classifieds, and aggregators. If that dealership uses any of those services, that dealer is not only online, but the odds are the dealership’s ads contain price quotes. So, whether it wants to be or not, that dealership is in the online retailing business.
Of course, there are thousands of stores that have an online presence — their own website, subscriptions, and affiliations with third-party sites, and an internal process for online-generated sales. They might think of themselves as progressive, and in many ways, they are, but they haven’t embraced all the aspects of online sales that will change their in-store business for the better. They are represented online in numerous places, and often their inventory is listed online with accompanying prices and terms.
While that has its advantages, it can also provide problems. Why? The prices and terms are inaccurate or don’t represent a deal the dealer wants to consummate.
“Most of the time, the payments that are quoted online through digital retailing companies aren’t remotely similar to the payments that are presented to the consumer when they enter the dealership,” said Rusty West, co-founder of Camarillo-Calif.-based Market Scan, a leading automotive data and retailing solutions’ provider. “If you talk to any dealership today, and ask them which is their biggest source of heartburn in their online digital retailing efforts, they’ll tell you: “a customer comes in, and the payments aren’t right.”
The reason that it is so important is, in true online retailing, consumers expect to see price and associated terms upfront, right now. And they depend on the fact the price and terms presented to them are accurate and, equally important, that they can complete a deal with the dealership using precisely those terms. You immediately can grasp in light of those expectations how critical it is to deliver real “contract-ready” price and terms (initial payment, monthly payments, number of payments, etc.) In the absence of that degree of specificity, it is impossible to complete a transaction online.
While not every car buyer is a price buyer, study after study has indicated the consumers will pay a higher price for what they see as a better level of service (like saving time, for instance) — in an online selling environment, getting the price right is paramount. Set the price/terms too low, and you’ll get a lot of consumer interest, but if you can’t meet your business goals at those prices, you’ll have to do a lot of in-store negotiation to make sales, and it is likely the customers will be disgruntled, resulting in a hit to CSI, negative word of mouth, and perhaps bad online reviews. Set the price/terms too high and many consumers who might otherwise consider your store will shop elsewhere.