Online Shopping to Online Buying

[BHavican]

Coming from a tech/UI background, I think GM's implementation of Shop. Click. Drive. is absolutely awful.

That's a fair statement. I don't mean to say I have tremendous faith in GM, but if a large company like GM has struggled for years to create a system that works what are dealerships like the one I'm at supposed to do to create an online buying process? Are there any real tools that a vendor offers that truly creates an online buying experience?

The really interesting thing is that you can have the best of BOTH worlds (as long as your willing to be a one-price store or a very limited negotiation / market-price store).

With OEMs such as Mazda enforcing limits to the discounts I can advertise a car for, how do I become a one-price store as it relates to online buying where a consumer can buy a new car without any interaction with dealership personnel?

This is a great topic and I love that it gets me thinking of ways to make the buying process easier for the consumer. However, I just don't envision true online buying becoming a reality any time soon. Sure, we can use tools like SCD and get a few sales out of it but no where near the volume needed to produce an acceptable level of sales.

 

[Tallcool1]

I have a great deal of respect for Carvana, and really appreciate @Cullen C being a part of this group. I absolutely love the website and the photos (from a technical side) are amazing.

Through interacting with Cullen on a couple threads, I am aware of some of the things that are unique about their business model. One of the most obvious things is that their stores are in heavily populated areas, and the other thing is that money was no object when their business model was launched. While I believe that I have learned a lot from Cullen (because he directly told me things that I could apply), I have also learned some things that I can't do. One thing that I can't do is build a $10 million + facility/vending machine/website/photo booth. I personally believe that the very reason this business model works for Carvana comes down to commitment. I don't know if any of you have REALLY thought about exactly how Carvana can sell vehicles the way that they do. I have thought about it a lot. Like I lay awake at night thinking about it. The reason is really pretty simple. Because it is the only way that they sell vehicles. You don't have to go to the store and look at the car...because you CAN'T. You don't have to sit down with a salesperson and negotiate pricing...because you CAN'T. You don't get to test drive it...because you CAN'T. You can "test own it", but you don't have the option of just taking it for a drive. If memory serves me correctly, Cullen recently told us that they are selling roughly 1.5% of the used vehicles in their markets. 1.5% is one hell of a number in population base cities like they are in! In my market, that 1.5% gets me somewhere between 3 and 5 units. That won't work as my only revenue stream, but if I can get 3 to 5 ADDITIONAL units with my existing expense structure and average gross, that is $75,000 to $100,000 to my bottom line.

As I sit in the background following this thread (because a great deal of this is above my head), I see a whole lot of people talking about all the failed attempts at doing what Cullen and his crew have succeeded at. This thread keeps working its way around to Carvana because these people have accomplished what nobody else has been able to. I am going somewhere with this, so please hang with me.

Why are we not focusing on eBay and the Texas Direct business model? This is something that we can ALL do and we can do it without having to spend the GNP of a small country in the process. Texas Direct doesn't have an unbelievably extravagant photo process, eBay is pay to play, customers pay the freight on their purchase, and the list goes on and on. This is the business model that is obtainable for every one of us, and it is obtainable right now! Why aren't we debating the practicality of Texas Direct and talking about what we need to do in order to be a part of what they have accomplished? Why have we all just written eBay Motors off as a failure?

Does anyone in this group have any success stories about eBay? Can anyone help me understand what I need to do in order to get a piece of this? I want those 3-5 units per month, but the Carvana business model won't work for me. My pockets aren't deep enough, and if they were I wouldn't dig that deep anyway. I would be all over the eBay deal but as many others here...I have failed with eBay so far.

 

[DrewAment]

OEMs like the programs like SCD that generate "leads" on the dealer sites because it is something that they can track and quantify. Do they close better? DUH, we all know that our website leads close at a better rate, and when you get a commitment (like a deposit and credit application) that close rate jumps exponentially.

ISMs like the programs like SCD and OnlineBuying tools, because they generate leads and it "protects" them and their departments. Most ISMs payplan are set up based on sold leads...well duh, anything you can do to "get me more leads" -- I am in!

While we might not ever know with SCD, I can tell you from a dealers perspective that these online buying programs are hardly ever worth the time money and effort spent. You can't only look at the cost of the program, but the training and new process for your salesperson and manager, the systems that don't integrate with your existing CRM and/or DMS -- need I go on? You are also normally just adding "another button" to your website, taking away from other leads. If you go all in and only have the "buy now" online process on your site - you alienate the other higher funnel customers from submitting requests for information.

IMO - the programs are a pipe dream that wont work in my opinion, as least not now - we are probably 20-30 years away. Maybe they/OEMs have a LONG term plan, maybe they are just grasping for straws in a "new way" to sell cars. If I was a multi-generational dealer with kids for succession, I would be more worried about the OEM takeover/control of the buying process - and the push to move the dealer out of the process with programs like SCD.

Internet leads don't sell cars, people walking through the front door sells cars. I know that if I can increase a dealers website traffic with engaging in-market shoppers by 20%, I can increase their floor traffic by 15%

In the end we need to look at market-share - what did the $XXX or sometimes even the $X,XXX investment get me -- Did it sell me more cars, as a percent of market?? If I was 10% of my OEM market-share before, and months later after adding additional expense, training, personal, headaches, another "system" to update, etc, etc, etc -- I am still at 10% - was it the right move?

 

[joe.pistell]

I don't know if any of you have REALLY thought about exactly how Carvana can sell vehicles the way that they do. I have thought about it a lot. Like I lay awake at night thinking about it.

Morning Clint,

You're not the only one walking the halls at 3am Use DR's search feature and you'll find some rich strategic insights. Here's a summary that may give you some new info http://forum.dealerrefresh.com/threads/whats-in-a-name.4618/#post-40410

About 1-2 yrs ago, Carvana (& it's leadership) so impressed me I conducted a full analysis of it.

IMO, Carvana dies without

1. a highly skilled team of phone reps (callers are stunned when they can't see it before buying it)
2. A 7 day unconditional refund promise.

You'd think the photo booth was epic part of their sales. Nope, Scratch and Dent visibility universally blew shoppers away. For the first part of the visit, most shoppers think they're looking at a stock photo and I watched shoppers get lost in the photo navigation (it's a totally new UI so there is a learning curve).

Carvana has many site UX gaps. Shoppers need tradein solution assistance, search faceting is average at best (that includes that new home page search box) But, month over month I see them tweaking, changing, improving, so most all of this will be gone soon.


Clint, ebay sales success isn't easy. For one thing, the ebay buyer is unlike any buyer you're use to, they're a PIA. For an idea, check out the creative team at http://www.carsense.com/home-delivery/ They've been doing this for years.


You can do this too!

 

[joe.pistell]

Dammit Drew, You crushed it again!

@Jeff Kershner, Drew's business review is front page material!!!

Wow. Just wow.

OEMs like the programs like SCD that generate "leads" on the dealer sites because it is something that they can track and quantify. Do they close better? DUH, we all know that our website leads close at a better rate, and when you get a commitment (like a deposit and credit application) that close rate jumps exponentially.

ISMs like the programs like SCD and OnlineBuying tools, because they generate leads and it "protects" them and their departments. Most ISMs payplan are set up based on sold leads...well duh, anything you can do to "get me more leads" -- I am in!

While we might not ever know with SCD, I can tell you from a dealers perspective that these online buying programs are hardly ever worth the time money and effort spent. You can't only look at the cost of the program, but the training and new process for your salesperson and manager, the systems that don't integrate with your existing CRM and/or DSM -- need I go on? Ystou are also normally just adding "another button" to your website, taking away from other leads. If you go all in and only have the "buy now" online process on your site - you alienate the other higher funnel customers from submitting requests for information.

IMO - the programs are a pipe dream that wont work in my opinion, as least not now - we are probably 20-30 years away. Maybe they/OEMs have a LONG term plan, maybe they are just grasping for straws in a "new way" to sell cars. If I was a multi-generational dealer with kids for succession, I would be more worried about the OEM takeover/control of the buying process - and the push to move the dealer out of the process with programs like SCD.

Internet leads don't sell cars, people walking through the front door sells cars. I know that if I can increase a dealers website traffic with engaging in-market shoppers by 20%, I can increase their floor traffic by 15%

In the end we need to look at marketshare - what did the $XXX or sometimes even the $X,XXX investment get me -- Did it sell me more cars, as a percent of market?? If I was 10% of my OEM marketshare before, and m onths later after adding additional expense, training, personal, headaches, another "system" to update, etc, etc, etc -- I am still at 10% - was it the right move?

 

[BillPlayford]

Man, this thread is a monster! Let's flip this up for the guys still on the retail side.

What if you were able to complete a car deal in 15 minutes? Would it be worth your while to try something different?

 

[BHavican]

IMO - the programs are a pipe dream that wont work in my opinion, as least not now - we are probably 20-30 years away. Maybe they/OEMs have a LONG term plan, maybe they are just grasping for straws in a "new way" to sell cars. If I was a multi-generational dealer with kids for succession, I would be more worried about the OEM takeover/control of the buying process - and the push to move the dealer out of the process with programs like SCD.

THIS. Couldn't agree more.

ISMs like the programs like SCD and OnlineBuying tools, because they generate leads and it "protects" them and their departments. Most ISMs payplan are set up based on sold leads...well duh, anything you can do to "get me more leads" -- I am in!

The problem with GM's push of SCD is that it didn't really deliver a heck of a lot more leads. In May-July of 2014 we received a total of 7 SCD leads and 111 traditional website leads (that does not include credit apps, trade in appraisals or other widgets). So when on a VDP and presented with an option such as "Check Availability" or SCD, the bulk of our visitors chose the traditional route.

Again, this is only my experience and was from 2014 and a whole lot could have changed since then but these experiences are why I don't see online buying becoming a reality any time soon.

However, I'm always open to new ideas and differing opinions. I'd love to hear form any ISMs from new car dealers that are currently succeeding with SCD or any other true online buying programs.

Man, this thread is a monster! Let's flip this up for the guys still on the retail side.

What if you were able to complete a car deal in 15 minutes? Would it be worth your while to try something different?

I'd consider it if I knew how it would benefit me and our stores. My time or the time of personnel at our group isn't a concern right now.

 

[BillPlayford]

I'd consider it if I knew how it would benefit me and our stores. My time or the time of personnel at our group isn't a concern right now.

Glad you're able to monetize every moment of your staff's time. That's a big struggle for the majority of stores we've worked with.

 

[BHavican]

We can't monetize every moment of our staff's time which is why creating more time isn't a priority. If a vendor walked in with a pitch and said "How would you like to complete deals in 15 minutes," my first thoughts would be how I'd sell aftermarket and F/I products and why would I want 15 minute deals.

Not trying to be a jerk or confrontational, just trying to give you feedback from the retail side.

 

[BillPlayford]

We can't monetize every moment of our staff's time which is why creating more time isn't a priority. If a vendor walked in with a pitch and said "How would you like to complete deals in 15 minutes," my first thoughts would be how I'd sell aftermarket and F/I products and why would I want 15 minute deals.

Not trying to be a jerk or confrontational, just trying to give you feedback from the retail side.

I appreciate the feedback, and sorry for coming across as snide. We only have a finite amount of time every day to be productive. If a dealership had the ability to process deals faster on the front end, then they have more time to spend (i.e., making money) on the back end. Creating a more efficient path for certain customers creates more capacity for others. Think of the TSA Pre line vs. the regular TSA line at the airport, or customers who order their Starbucks through the app vs. the people asking "what's a Grande."

I spent six years selling to hundreds of customers I've never met face to face, in three different regions, and in-all, 19 different states. I don't need to be convinced that e-commerce works for some customers. I'd just like to know why more dealerships don't create an easier path (where laws allow) for people who aren't interested in the traditional way. I'd like to know why we continue to try to modify existing showroom processes, with existing showroom personnel, and expect different results. What is everyone afraid of?