Here's the big picture:
Does Expedia share all the data they collect with hotels and airlines?
Does Zillow share all the data they collect with Realtors?
Does Etsy share all the data they collect with creators?
Does Airbnb share all the data they collect with hosts?
Does Amazon share all the data they collect with brands and sellers?
It's not unique to automotive, it's marketplaces across all verticals.
I would love if we didn't have to spend thousands of dollars every month with third party marketplaces. And I'm sure every airline, realtor, etc would say the same.
Let's look at hotels as an example - hotels would jump at the opportunity to only get direct bookings through their own website. However, the majority still choose to use the marketplace behemoths: Booking.com and Expedia.
Why is that?
They know even with the best advertising, merchandising, website, direct booking discounts and perks, etc, they would be missing out on a huge number of people actively looking for hotel accommodations on these marketplaces.
There are ~100k hotels in the United States. With a large percentage being multi-location chains. Marriott alone has 6k hotels, and even with that economy of scale, they still see value in participating in marketplaces.
United
Now compare that to automotive - there are ~100k car dealerships in the States. With a small percentage being new car franchises and/or part of a dealer group. The largest dealer group, Lithia, only has 291 dealerships. That's only 0.2% of the US dealership rooftop count, compared to Marriott's 6% share of the US hotel count.
So if Marriott with 6% of the hotel count has succumbed to marketplaces, what does that say about dealerships with exponentially lower %?
There are outliers to the rule, as always. In the hotel industry, there are many boutique hotels that only offer their accommodations via direct booking. But you'll find that most had to initially use Booking.com / Expedia marketplaces to get to the point where direct booking demand could consistently deliver the occupancy rates needed.
Marketplaces simply offer a more efficient and better online experience for consumers across all verticals.
The takeaway is like hotels, dealers should be focused on driving as many "direct-to-consumer bookings" as possible by building a great reputation, delivering value, and offering great customer service to foster repeat customers and brand ambassadors. Then use marketplaces as a way to a) supplement the direct business and b) nurture them into becoming "direct-booking" consumers long-term.
