A longer-term view of digital retailing for dealers

By: Dale Pollak

Dealers often have an “all or nothing” view of digital retailing.

That is, to them, digital retailing represents the full monty of selling a new or used vehicle online. You’d have a “buy it now” button on every vehicle details page (VDP) for every vehicle, customers would work their deals, and dealers would deliver “sold” cars to customers at their homes.

These dealers also often dismiss this concept of digital retailing as unrealistic – as something too few customers are willing to do today. In turn, the dealers then make a critical mistake: They put the whole idea of digital retailing on the shelf until the time comes when they’re fully convinced more customers would actually “buy it now” for their next vehicle.

mmd 300x289 A Longer Term View Of Digital Retailing For Dealers This viewpoint isn’t necessarily wrong. In fact, the dealers are absolutely correct that a majority of new/used vehicle buyers today wouldn’t want to buy their next vehicle completely online. Studies show that maybe 10 to 15 out of every hundred people might be ready for this kind of vehicle purchase experience. It does seem a bit ill-advised to invest in an end-to-end digital retailing experience when the vast majority of buyers wouldn’t use it.

But here’s the big miss for dealers who shelve digital retailing on these grounds: The “all or nothing” view is a bit short-sighted. It undercuts your ability to serve the remaining 85 percent to 90 percent of customers who are, in fact, receptive right now to taking part in at least a piece or two of a digital retailing experience.

These are customers who want more convenience, and a greater sense of control as they purchase a new or used vehicle. They don’t want to spend hours in a dealership to complete a purchase transaction. They might even pay more for the privilege of completing some part of a deal – whether it’s negotiating a payment or purchase price or trade-in value – from the comfort of their own homes.

“I’m getting an additional eight to 10 deals a month because I offer the option of working out deal terms online,” says the general manager of a Southeast Volkswagen store. “We do things differently than other dealers and we’re getting better at telling the world about it.”

I hear similar stories from other dealers. Even if they aren’t adding a “buy it now” option to their website, they are fostering a different type of engagement that speaks to the needs of today’s increasingly me-focused and time-addled buyers. In other words, they’re working deals while “all or nothing” dealers aren’t getting any of the action.

The general manager for a Midwest Lexus store notes that his dealership continues to see a growing number of customers take advantage of his digital retailing offerings. He adds that every one of the customers who negotiates a payment or trade-in value online still wants to “come in and take delivery in person.”

Such is the nature of digital retailing today. The vast majority of vehicle buyers aren’t really looking for a “buy it now”-based, end-to-end digital car deal. They simply want to carve out the parts of buying a car that they perceive as potentially problematic and time-consuming and complete them in a way that’s more convenient and easier for them.

The takeaway here for dealers is that digital retailing shouldn’t be viewed as an “all or nothing” proposition. Rather, it’s more of a “have it your way” approach, wherein dealers provide the digital retailing tools, and customers use as much, or as little, of them as they prefer.

I understand how and why some dealers have landed on an “all or nothing” view of digital retailing. I would simply encourage them to consider the business they’re probably missing as they hold out for a complete, end-to-end digital retailing solution that the majority of buyers may never want, and might never arrive.

Bio: Dale Pollak serves as executive vice president for Cox Automotive, a position he’s held since the company he founded, vAuto, became part of the Cox family in 2010.

At Cox, Pollak helps drive innovation across the company’s auction, media and software divisions to help dealers increase efficiencies, sales volumes and profitability. Prior to Cox, Pollak led vAuto to become the premier inventory management solution provider for franchised and independent dealers. Pollak pioneered the Velocity Method of management™. Pollak has written three books that detail the application of the Velocity method for dealers. The latest, Velocity Overdrive: The Road to Reinvention, was released in 2012.

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