Beepi and Vroom and Carvana - will they make a DENT?

[Cullen C]

RE: "It's not what they know @ruggles it's what they consistently do. It isn't a question of knowledge it is a question of execution."

Not to split hairs, but they have to "know" it before they do it. But I'll bite. What exactly do they do that auto retail doesn't do, other than to sell gadgets and amusement rides without having to worry about the major challenges of auto retail?

They have managed to create a scenario where they control the supply and calibrate that to demand. Try doing that in auto retail without changing the FTC first.

All of this has no bearing on the challenges of building and retailing cars where starting and stopping assembly lines to meter supply in the marketplace, as well as parts from suppliers, is horrendously expensive. They don't have to deal with issues like "production smoothing" and "inventory buffering." They don't have to deal with reams of paperwork per transaction, the complexity of financing, etc. etc.

Apple and Disney could learn a lot from auto retail, but why should they? The businesses are completely different. But if any of you guys wants to invest your own money to create a Disney/Apple type store, we'd all like to see the results, ESPECIALLY if you do it with your own money. That's when reality comes home to roost.

You proved my point exactly. Not one mention of the customer. You would rather focus on all of the challenges the automotive industry presents. You spend your energy worrying about production(which last I checked are completely out of your hands),supply chain issues, complexity of paperwork, etc.

All Disney and Apple(and a lot of good dealers) worry about is the customer. Their experience. Not yours.

 

[joe.pistell]

What do Apple and Disney know that we don't already know?

David,

You're saying that we know everything???

 

[ruggles]

RE: "You're saying that we know everything???"

Why would you feel it necessary to try to put words in my mouth?

I'm saying we know a lot more about what we're doing than they do. I'm saying what they do doesn't have a lot of application in our business. Their prices aren't negotiated. We have to accomplish a lot before we get to the smile part even though our OEMs generally want us to provide a lot of frills that consumers love but don't want to pay for.

Maybe that's clear this time.

 

[WillMcG32]

This thread is exhausting but I can't stop reading...

 

[ruggles]

RE: "You proved my point exactly. Not one mention of the customer. You would rather focus on all of the challenges the automotive industry presents."

Your "point," whatever you think it is, is certainly far from proven. Its all an abstraction to you. Trying to draw a correlation between two completely different businesses is a farce, but as I said, I'd be thrilled for you to learn the lesson the hard way, with your own money.

RE: "You spend your energy worrying about production(which last I checked are completely out of your hands),"

I'm not worried about it, OEMS are.

RE: "supply chain issues, complexity of paperwork, etc."

If you don't think these observations are pertinent differences between auto retail and these to other businesses, I can't help you.

RE: "All Disney and Apple(and a lot of good dealers) worry about is the customer. Their experience. Not yours."

Now this is truly an inane statement. No business succeeds without customers. That doesn't change the fact that it is crazy to try to compare businesses that have so little in common with each other. If you want to do some apt comparisons, perhaps you should find a business more closely related OR do something to bring the ones you want to compare into closer alignment.

Not there is a particular way I'd like to see auto retail change. Apple makes HUGE margins and pays their retail sales people little of it. They manufacture using dirt cheap labor in Asia. Apple was able to develop its own outlets as its margins allowed for that. The auto business is much more capital intensive and dealers were required to finance OEM expansion. As a consequence, Apple can fix prices without running afoul of the FTC. And its huge margins and low retail sales compensation allow for new and glitzy retail venues. Give auto retail those advantages and watch what happens. The only way that happens is if OEMs manage to get rid of their dealers so they can control the consumer experience from beginning to end including the fixing of prices. But instead of trying to pressure the dealer to absorb those costs, they'll have to do it themselves. And we know how wonderful OEMs are at auto retail. Do you even want to go there?

 

[Tallcool1]

This thread has pretty much turned into a big pissing contest.

It is too bad that it can't continue and maybe some of us could learn something.

What do Apple and Disney know that we don't already know?

Rather than take this in the context of "we know everything" (which it may have been intended...I don't know) what is the answer to that question?

You proved my point exactly. Not one mention of the customer. You would rather focus on all of the challenges the automotive industry presents. You spend your energy worrying about production(which last I checked are completely out of your hands),supply chain issues, complexity of paperwork, etc.

All Disney and Apple(and a lot of good dealers) worry about is the customer. Their experience. Not yours.

Yes Disney worries about Customer Experience. They damn sure better, that is the only thing they are selling. Well, plus the occasional Mickey Mouse hat. Now, the production and supply chain stuff I agree with you on. At least Apple is selling a product. Sure, that product's selling price is comparable to 1 or 2 monthly payments on our product but there is a tangible product.

Am I missing something here, or do you all really believe that selling cars is no different than selling iPhones and Amusement Park tickets? I am certainly not saying that we can't learn from these businesses and other industries as well. But really, are there really that many similarities that we should be modeling after these two companies? Maybe there are, and I need to open my eyes. Legitimate question!

 

[skutchhenks]

This is all good stuff, great insights, opinions.

On the original question... sites like Beepi and Vroom are inspiring for me, I like their approaches to merchandising their inventory, simplicity of the site design and function. It makes me re-think things about how we do things now. I think in some ways the industry is moving in the direction of improving convenience and customer experience, not very fast in comparison to tech, startups, some other retail industries, but that's okay. I don't see them making dents though. This business is way over-saturated now with franchise dealers, we could easily stomach a 20% reduction in dealers across the board for all makes and not skip a beat in overall sales. I didn't even mention Independent dealers.

I think for a lot of these auto startups, it's easy to get the funding and sell the ideas on the automotive industry and how inept we all are, but reality is I don't think we're that horrible overall. We've come along way as an industry in the last 20 years.

 

[Bill Simmons]

Am I missing something here, or do you all really believe that selling cars is no different than selling iPhones and Amusement Park tickets?

Selling cars is a lot different. Apple and Disney set the bar for what a lot of dealers want to be. And what a lot of manufacturers want us to be. GM actually had several meetings for dealers at the Disney Institute for dealers to learn that model. There is one very huge difference in our employees dealing with our customers compared to theirs, commission. Apple store employees do not have sales quotas. It's the last few days of the month and the Apple employee isn't worried about finding 6 more phone sales to hit bonus or cover a draw. The store manager is not in the position our GSM's and sales managers are having to find another 50 deals to hit the manufacturers stair step program qualifier. Car dealers and car salesman have to make a deal today and sell XX amount of cars by the end of the month to hit any number of different programs that control our income. I hope I am not coming across anti Disney & Apple because I'm not. I just feel it can be an unfair comparison to our model of doing business.

 

[Chris Leslie]

Bill I dont think youre coming across anti Disney or Apple at all. You bring up a valuable point in the fact that compensation is really at the root of it all. The OEM's value is placed in those who sell volume and everyone down that line are all compensated on pushing units out day in and day out. More or less we are dishing out marching orders to be savages to a degree.

We can choose whatever rose tinted glasses we look through to see what we think we provide to folks. But, We train people and ask people to be borderline deceptive and tell ourselves its ok because we didn't lie. We cut each others throat over a possible sale but at the same time want people to think we are transparent. It blows me away.

It's impossible to think you can change anything with the same thought process that got you into this position in the first place.

I don't know man I could just be crazy but I hear a lot of guys in this thread desperately grasping at weak theories of yesterday.

If i've learned anything from watching this thread over the last few weeks its that we have no idea what impact these new companies have. We have no idea how they operate and we have this shameless ability to think and act like we do. It shows how ignorant we are to being different and closed off we are to learning.

I'm speaking very general here and dont mean to offend anyone in particular. So i apologize if I have. But guys C'mon lets start stepping over some quarters here and pick up some dollars. Because every 5, 10, 15 50, 100 million dollars that is being invested somewhere else means more bets against you, against me, against all of us and one day that ball is going to drop on a number none of us expected.

 

[Tallcool1]

Bill I dont think youre coming across anti Disney or Apple at all. You bring up a valuable point in the fact that compensation is really at the root of it all. The OEM's value is placed in those who sell volume and everyone down that line are all compensated on pushing units out day in and day out. More or less we are dishing out marching orders to be savages to a degree.

We can choose whatever rose tinted glasses we look through to see what we think we provide to folks. But, We train people and ask people to be borderline deceptive and tell ourselves its ok because we didn't lie. We cut each others throat over a possible sale but at the same time want people to think we are transparent. It blows me away.

It's impossible to think you can change anything with the same thought process that got you into this position in the first place.

I don't know man I could just be crazy but I hear a lot of guys in this thread desperately grasping at weak theories of yesterday.

If i've learned anything from watching this thread over the last few weeks its that we have no idea what impact these new companies have. We have no idea how they operate and we have this shameless ability to think and act like we do. It shows how ignorant we are to being different and closed off we are to learning.

I'm speaking very general here and dont mean to offend anyone in particular. So i apologize if I have. But guys C'mon lets start stepping over some quarters here and pick up some dollars. Because every 5, 10, 15 50, 100 million dollars that is being invested somewhere else means more bets against you, against me, against all of us and one day that ball is going to drop on a number none of us expected.

Chris-

I agree with you.

The thing with this post is that lots of people are making good points. Some of the points are better embraced primarily due to their delivery.

@ruggles is not a buddy of mine, however he makes some good points. Because of the "abrasive" nature of his communication style, it's easy to miss the message because of the delivery.

I am a business owner. I don't have the money to toss a few million into a project like this and also don't have the means to raise funding to try this either. When I embrace a change and attempt to adapt to it, I need a return. That is what @ruggles is saying....this is a well and good until someone has to spend their own hard earned cash to do it.

So as I asked in an earlier post within this thread, What am I supposed to do with all of this information? What changes should I make within MY business to embrace this shopper that wants this type of shopping/buying experience? My business is small and I can adapt quickly, I simply don't know what to change that is reasonable in terms of short or mid range return on investment.

Shop-Click-Drive....terrible dealer reviews. Price my inventory below all of the One Price dealers in my market....I am already priced lower.

For me, it isn't about a resistance to change or open mindedness. It's about pissing away a bunch of MY money on a venture with no foreseeable light at the end of the tunnel.

I will listen to suggestions. The problem is that I haven't heard any that are within my grasp.....except for one. I picked out a comment from @skutchhenks regarding the simplicity and layout of these websites. This I can use and I will use it.

For what it's worth, I absolutely love this thread. Some may see a bunch of people at odds with one another. I see a group of like AND different minded people that are challenging one another. We are pushing buttons and taking one another out of our comfort zones. This is the battle front folks. This is the incubator for change.