Online Shopping to Online Buying

[joe.pistell]

To my cube-dwelling-never-worked-in-a-store-millennial vendor pals... this post & thread is why DealerRefresh is a priceless research source.

That's a lot of questions. I'll just try and make my point of view as easy to understand as possible. We price our used vehicles using vAuto and it's our strategy to price them aggressively to create a faster turn rather than maximize profit on each sale. We price our new Hyundais pretty close to our bottom. With that pricing strategy we often have customers come to the store to buy a car at the advertised price and it's our pleasure to let them. Amazingly enough something about this is working because we consistently rank top 5 in our region and have above average gross.

Some of these customers that pay the internet price are business professionals that don't have an extended amount of time to spend in our store. There are even certain occasions where a customer may have to make multiple trips to complete a transaction. If we had a tool that allowed those customers who are happy with the advertised price to purchase the vehicle online, I believe they would appreciate that. Furthermore, that tool could be a reason why they buy the car at our store instead of the store 10 miles away with the same price.

In addition, we are reasonably close to Chicago where I'll often speak with people that haven't had a need for a car but now want one. We are also close to a commuter train station. When we're able to do business with one of these people we often complete most of the transaction via phone/email so the customer has piece of mind knowing they'll be able to drive home. It would be great for both parties if we had an online tool that could help facilitate this.

Finally, our BDC sells at least 3-5 cars a month to people out of state. Currently these deals require a lot of correspondence. It sure would be nice if there was a tool that could help.

I'm not looking to force all our customers through this hypothetical online buying tool, not even the majority. However if I can make it easy for SOME customers to do business with us in a way they appreciate, I win and the customer wins. That's not reinventing the wheel, that's merely providing a service that some people want.

Wow! @BHavican knocks it over the fence!! You're reading 100% 'boots on the ground' genius! He's nailed the user story, rich with nuance, nuance, nuance!!! Add Bill to your SME's to watch on DealerRefresh!

Let's pull in 2 other priceless SME's posts from this thread!

Bill's carefully & thoughtfully worded post perfectly aligns with another SME genius @jscole86. aka Josh Cole (of http://www.driveHUEBNER.com). Josh took a lot of time to penn a user review of his needs http://forum.dealerrefresh.com/threads/online-shopping-to-online-buying.4371/page-10#post-42078 It's rooted in common sense, it speaks to a hybrid solution, and has the dealer’s narrative. It aligns with Bill. It's 100% Priceless.

Last is another SME genius, @DrewAment (of http://www.Press1toTalk.com)
Whenever Drew posts, stop what your doing, put on your headphones, slow your mind down and take notes (aka research mode . Your work won't be a winner until it gets past Drew's business logic. http://forum.dealerrefresh.com/threads/online-shopping-to-online-buying.4371/page-15#post-42198 #BAM. 100% DR certified organic genius!

This Dealer Refresh thread has some of the brightest SME's dropping smart bombs on any overly simplistic ecommerce vision. eCommerce in automotive isn't a bullet list of features (heads up @Michia Rohrssen!), it's filled with nuance, nuance, nuance.

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p.s. TY @Jeff Kershner for DR! It's truly the only island of pioneers in our space.
p.p.s. SME is a Subject Matter Expert: http://bit.ly/5WaystoIdentifyaSubjectMatterExpert

 

[joe.pistell]

The 3 keys to Software success:

#1) "Innovation success begins and ends with a very very deep understanding of the shopper.”

-A.G. Lafley CEO of Proctor & Gamble
(#8 of the top 1,000 most innovative companies)​

#2). "Customers often buy things because they have a problem they would like to solve…. If you understand the job, how to improve the product becomes obvious.”

-Dr Clayton Christensen​

#3). “Complexity is your enemy. Any fool can make something complicated. It is hard to make something simple.”

-Sir Richard Branson​

#PutaCherryOnIt

 

[ruggles]

I remained amazed that arbitrarily giving away gross profit up front out of fear of the customer is considered a smart strategy these days. I get the part about pricing most USED vehicles to market. But then, my strategy would be to buy inventory with a marketing plan at the beginning of each ALG book period and advertise a lease payment "too good to be true" while holding gross.

Just because you are around region or zone gross profit average on new vehicles doesn't mean you're doing a good job.

The fundamental problem with our business these days is a lack of gross profit in vehicle sales. Without that, we don't have the money to compensate and keep good sales people. The turnover is to be ashamed of. It is well known that the chances of doing business are increased by a factor of THREE when the consumer isn't meeting their sales person for the first time. But suddenly we think there is an Internet/Tech solution to everything. Our industry has run off an unbelievable amount of talent.

 

[BHavican]

I remained amazed that arbitrarily giving away gross profit up front out of fear of the customer is considered a smart strategy these days. I get the part about pricing most USED vehicles to market. But then, my strategy would be to buy inventory with a marketing plan at the beginning of each ALG book period and advertise a lease payment "too good to be true" while holding gross.

Just because you are around region or zone gross profit average on new vehicles doesn't mean you're doing a good job.

The fundamental problem with our business these days is a lack of gross profit in vehicle sales. Without that, we don't have the money to compensate and keep good sales people. The turnover is to be ashamed of. It is well known that the chances of doing business are increased by a factor of THREE when the consumer isn't meeting their sales person for the first time. But suddenly we think there is an Internet/Tech solution to everything. Our industry has run off an unbelievable amount of talent.

I appreciate your concern over our business model and the people we employ. If it helps alleviate your concern, we have a very low turnover rate and are able to recruit quality salespeople. To be quite honest, I'm grateful an opportunity came about for me to work with such an incredible team. Of the 22 salespeople we employ, only 1 has less than 1 year experience and 4 less than 1 year of employment with our group.

In addition, despite your disapproval our owner is happy with our efforts and the money we earn for him. Like any good owner, he's never satisfied but he is happy. In fact, it's that refusal to settle which causes us to look for other opportunities to grow our business like searching for a way to make it easier for some customers to buy our products. If there is an internet/tech solution(which I have yet to see) I would be open to it.

 

[ruggles]

My concern isn't over your business model. Anecdotes are just that, anecdotes. I'm talking about the industry overall. We are in unusual times. Business is booming and there are thousands fewer dealers doing that business than before. At the same time, interest rates are at historically low levels. The pendulum will swing. The current times have allowed substandard practices to survive. For perspective, when I left my first auto sales job, I had the least seniority of anyone on the staff, and I'd been there 7 years. We were a One Price store. This was 1970 - 1977. What's taking place now won't last. To understand it requires some historical perspective.

Consumers were pissed off in 1970 when they didn't get what they wanted. Same today. Our job as sales people is to get them to like what we give them so a balance is achieved between doing business, making gross profit, and customer satisfaction. Things were MUCH more transparent 40 years ago but people weren't walking around claiming it like they are today. Consumers wouldn't have believed it then, and they don't believe it now. But I guess it makes some in our industry feel better about themselves, and vendors have been capitalizing on it. To understand the evolution of "transparency" one needs that historical perspective. Same with understanding the plight of auto retail sales people. If you've only been around for a short time you have no idea what's happened. The markup has been slashed, demos taken away, packs imposed then increased, retail recon established, healthcare insurance no longer provided, etc. etc. It used to be a good auto sales person could make a good career. $30K wasn't unusual back then. That's easily $100K today. But these guys worked for repeat business and their dealers supported them, until suddenly, they didn't. When times got tough, dealers started stealing from their own sales people. They got what they deserved. There are still some dealers who get it. The solutions aren't tech. They are people based first.

 

[joe.pistell]

What's taking place now won't last.

Dude, one day, you'll get it... or, maybe you won't.

 

[ruggles]

Likewise. The only thing that doesn't change is human nature.

 

[joe.pistell]

The solutions aren't tech. They are people based first.

By God, maybe you do get it!

#1) "Innovation success begins and ends with a very very deep understanding of the shopper.”
-A.G. Lafley CEO of Proctor & Gamble
(#8 of the top 1,000 most innovative companies)

#2). "Customers often buy things because they have a problem they would like to solve…. If you understand the job, how to improve the product becomes obvious.”
-Dr Clayton Christensen

#3). “Complexity is your enemy. Any fool can make something complicated. It is hard to make something simple.”
-Sir Richard Branson

​

I mentor young minds. I wedge these rules into every conversation. Technology can't sell cars, until it serves it's users (aka people).

 

[ruggles]

Perhaps YOU understand that our biggest issue doesn't have a tech solution amd vendors can't make money off of the real solution.

 

[joe.pistell]

...Things were MUCH more transparent 40 years ago...

ahh... ok.

[edit] After I published on this post, I reflected and I removed the image because it communicates an assumption that Ruggles is wrong to recall the past. He's not. In many ways, he's correct. Back in the day, sales reps enjoyed a far more prosperous career. Back in the day, sales reps were far more important to the Dealer's balance sheet. Back in the day, sales reps didn't turn over so much.

From a 70's historical perspective, the sales position is taking a mighty beating. That being said, it's not all on the reps shoulders, look at the Near Death Experience that Domestic manufacturers have gone thru. Look at all the factory jobs that are gone.

It's 2016. More change is coming and it's accelerating.
(e.g. Uber, Tesla forcing DC to re-consider the Franchise Dealer model, Computer co's making cheap EVs, millions and millions of Self-driving EV taxi's, etc)​