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BREAKING news! Carvana & Vroom is bleeding cash. Is Ecommerce in auto DOA?

Well Joe in so many words I guess you can say that. Except I see myself as a part of that movement along with Carvana, I'm removing dinosaurs from this industry every day. I put myself on the fast track.. It would just finally be nice to have a conversation with someone a little more progressive than most of the management I interact with on a daily basis, I hate having to slow shit down.

Honda Dealer Get's it.... But again, it's like why are we having to break this topic down to it's core repeatedly....
By the way, MY dealer is doing great thanks.... Learned the entire industry in less than a year and a half, and had another dealer invest 100% 6 months later. My numbers are so solid, they have my competition investing in me.
 
Again, this is a positive for the dealer, not a negative.

@hondadealer, we're in agreement, if we were in person, we'd communicate this better. Sometimes, the written word gets things all crossed up. My thoughts attempt to create a lens to see the problem and create solutions.

If the above was true, we wouldn't have seen the massive increases in closing ratios over the past 10 years. Speaking of numbers, are you really going to argue that the reason that closing ratios have risen from 20 -25% to 40 -50% (higher on used than new) over the past 10 years is due to the better job that our salespeople are doing?

Agreed. The rise in closing ratios is not better sales reps, it's a better Internet experience. The rise in closing ratios parallels the "# of stores a shopper visits prior to purchase" (we all know that's fallen from 5-6 to 1.5) This observation connects to:

Most customers who come in on a used car, have done their homework and have far fewer questions (other than is Stk#1234 still available?).
And you really believe that the average customer feels that the only place they can find the answers to their questions are on the showroom floor? All evidence shows the opposite.

We both agree that the internet has a direct effect on the shopper's path to a sale, and, the internet car shopping experience must be getting better because shoppers are visiting far fewer stores prior to purchase. So it's logical to presume the next step in the evolution of internet car shopping is a shopping cart. But, that's not happening today...

I'm trying to explore and discover WHY so few car shoppers use the carts.

We forget that we're insiders, we forget how complex it is to buy a car. So... it's really interesting to observe that when you add a cart to TODAY's internet shopping experience, how few shoppers use it. This happens because shoppers don't want a cart... yet. Why? IMO, it's because they have too many unanswered questions.

It is my opinion that if you identify these unanswered questions and create a web experience that leads the shopper thru these questions, cart penetration would rise significantly*. I use the term 'web experience' because I believe we'll discover that the car shopper would like his very complex car shopping journey rolled into a very personal digital car shopping assistant app that is aware of the shopper's unique criteria**, and the marketplace (the dealer network, trade-in & FSBO options, and the lending marketplace).

What I do know is this "personal digital car shopping assistant app" must be dealer centered, or it'll fail.

Just some rambling Sunday morning DealerRefresh coffee thoughts.

*if Seller offers purchase protection (i.e. Amazon Prime), cart use will rise again.

**Personal Car Shopper App knows the shoppers financial info, all about the current vehicle (YMMT, miles, what they like about it, what they don't like about it, payoff, services done, services needed, etc), what vehicles they're interested in now (and similar units they're unaware of), new or used or no preference, any brands they won't consider, it's aware of all incentives, it can look at the marketplace by payment (lease or buy, new or used) and on and on... I call this 'Pull shopping'. All of this is data that exists out there now, this concept PULLS the internet info to the shopper (vs the shopper going out to the internet)
 
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Fair enough. I just feel that it is more the case of dealers not willing to make the online process simple, easy, and secure with a money back guarantee, than it is a lack of interest by the average buyer. If rather than our BDC's asking the customer "what day would you like to come in today or tomorrow" and deferring price and product questions, we actually proactively asked the customer "would you like to continue the process online so that we can make the process quicker and easier?", a lot more customers would find themselves engaging and completing much of the sales process online. If the customer is hesitating due to unanswered questions, I just think that this is more of a design flaw of the online process versus a genuine question about the car. Selling online is much more than just adding a shopping cart.

To your point about it being a very complex and complicated transaction, I wholeheartedly agree. I also think that vendors have underestimated the complexity needed to walk through the entire process. There is a lot more to it than just shop, click, and drive.

Lastly, dealers must accept that whatever their online process, pricing, and negotiation model is, it must mirror the experience in the showroom. As soon as the customer walks in the showroom and is subjected to anything different from the online process, all credibility is lost. Easier said than done and yet another complex problem to solve.
 
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By the way, MY dealer is doing great thanks.... Learned the entire industry in less than a year and a half, and had another dealer invest 100% 6 months later. My numbers are so solid, they have my competition investing in me.

Sam, I'm always glad to see progressive people come (and hopefully stay) in the automotive industry. That said, you may find that the complexity of automotive as a whole might surprise you.

One of the greatest challenges on the tier 3 level is operational consistency given that most don't grow up, go to college, and say "I want to work with a car dealership." It's easy to take a look around and think that everything's broken because in many cases we don't have a universal perceived standard of quality to experience across 17,000 dealers. It's also easy to forget that while a nearly $3T industry may sometimes be slow to evolve-- it's intrinsically not broken or easily disruptable due to scale. We're pretty good at selling a car today.

That said, did you know that the automotive industry may grow 30% ($1.5T) in mobility and connected data solutions (2015 McKinsey study)?

I'm curious if customers that will share a ride or drive for others (ex: Uber, Lyft) will care what vehicle they have-- or simply that the transaction was a simple, trusted one that saves them time. Uber was curious, too, but didn't have the operational automotive expertise to get it done.

When put in that context, Carvana's next evolution and potential market could be a big one. And most savvy mid to large sized dealer groups are intensely focusing on similar investments and initiatives aligned with the operational excellence that has allowed their growth and success to date.

I personally think that companies like Clutch or other auto subscription services will capture the customer who wants to transact online (far greater value proposition to customers and dealers).

If dealers want to beat Carvana, they need to save customers time while providing a better experience (with digital retailing and virtual / augmented reality being strong assets). Carvana has to invest more up-front money to begin bringing test drive elements online and into homes.

Apple's AR glasses are rumored to be about 8K/eye, nearly human vision quality by 2020. MagicLeap will likely be similar and is being worked on by companies like mine today. These devices are coming and will be part of any purchase regardless of overall price.

Will most consumers still want to feel how it rides and be in control? Absolutely. Will the consolidated "winners" in the dealer space have digital retailing options similar to Carvana? Also yes. It's just a question of who gets there first at the right time, and takes the most initial market share.
 
Digital Retailing sellers and buyers take note. There is a ton of gold in @hondadealer observations.

Fair enough. I just feel that it is more the case of dealers not willing to make the online process simple, easy, and secure with a money back guarantee, than it is a lack of interest by the average buyer. If rather than our BDC's asking the customer "what day would you like to come in today or tomorrow" and deferring price and product questions, we actually proactively asked the customer "would you like to continue the process online so that we can make the process quicker and easier?", a lot more customers would find themselves engaging and completing much of the sales process online. If the customer is hesitating due to unanswered questions, I just think that this is more of a design flaw of the online process versus a genuine question about the car. Selling online is much more than just adding a shopping cart.

To your point about it being a very complex and complicated transaction, I wholeheartedly agree. I also think that vendors have underestimated the complexity needed to walk through the entire process. There is a lot more to it than just shop, click, and drive.

Lastly, dealers must accept that whatever their online process, pricing, and negotiation model is, it must mirror the experience in the showroom. As soon as the customer walks in the showroom and is subjected to anything different from the online process, all credibility is lost. Easier said than done and yet another complex problem to solve.


Vendors, Digital Retailing must be built from inside the store then go out onto the internet. If that doesn't make sense, consider spending a few weeks/months working at a dealership(s) and it'll all make more sense.
 
Vendors, Digital Retailing must be built from inside the store then go out onto the internet. If that doesn't make sense, consider spending a few weeks/months working at a dealership(s) and it'll all make more sense.

AMEN! The minute you have a Sales Manager or a Salesperson get on the phone with a customer and say, "Go to xyz.com and I'm going to show you how to figure your own payments," -- and they're RIGHT -- game over.

Funny thing is, it doesn't take Nostradamus to figure-out... that's how it happened with inventory... even websites in the very early days; the personnel who figured out that these properties were TOOLS flourished.
 
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