Why Dealers Should Embrace Digital Retailing

All indicators point to 2018 as a milestone year for automotive digital retailing.


Manufacturers including Ford, Toyota and BMW are working to develop products that allow customers to buy a vehicle from their dealerships’ websites.


Large dealer groups like AutoNation, Sonic Automotive, Asbury and Penske have developed, or are in the process of developing, online car shopping tools and software for their dealers’ websites.


And vendors are jumping on the digital retailing bandwagon as well.


Consumer demand exists; according to Cox Automotive’s Future of Digital Retail Study, 83 percent of car shoppers say they want to complete one or more steps of the purchase process online.


It seems that the only people who aren’t thrilled about automotive digital retailing are dealers themselves. Many dealers are reluctant to implement a digital retailing solution. Their primary concerns include:


  • Losing control of the sales process
  • Decline in gross profits, especially from F&I products
  • Significant investment required
  • Process changes and training required
  • Integration issues


While consumer demand for digital retailing is unlikely to go away anytime soon, it’s not necessarily going to be bad news for dealers. Most of the digital retailing products in development are designed to keep your dealership central to the vehicle purchasing process. Not all solutions require a significant investment, and integration can be seamless with the right solution.


The vast majority of consumers still want to visit dealerships at some point during the buying process. Car shoppers still rely heavily on dealerships for inventory selection, accepting trade-ins and arranging finance. Most consumers still want the touch, feel and smell experience of buying a car.


According to the Capgemini Cars Online 2017 study, 71 percent of car buyers want to take a test drive and see the car in real life. The Cox study found that 89 percent of consumers said they want to sign final documents at the dealership; although 25 percent of those would like to review the paperwork before coming in.


Additionally, there are many variables such as credit scores and state laws that affect a person’s ability to transact a vehicle purchase online. Some consumers will always find it easier to let dealership staff manage the process.


Bottom line? Even though consumer demand is there, adoption rates will likely be slow.


ELEAD1ONE predicts that within two years, five to ten percent of consumers will complete some of the purchase processes online. In three to five years, that will grow to 20 or 30 percent.


This doesn’t mean dealers should adopt a wait-and-see attitude.


The Time is Now


The faster dealers embrace digital retailing, the more control they will have over the car-buying process by lessening the impact of solutions that cut dealers out of the process.


You’ve probably heard about third-party websites that plan to offer consumers the ability to purchase a vehicle online. Their proposed format is to sell the almost-completed deals as leads to dealerships.


The fact is, car shoppers must complete the transaction at your dealership. They need you. Why bother with a third-party solution when you can have your own?


The reason there’s so much hype about online car buying is that consumers have an interest. Once the tools become available, consumers will start using them. You want to encourage consumers to spend time shopping on your own website instead of relying on a third-party where you won’t control the process.


In the near future, the vast majority of online car buying will be completed with a hybrid approach. The customer will start the process online, reach out to the dealership for help through the process, and finally come to the dealership for a test drive and/or to complete the paperwork.


There will always be a percentage of customers who want to visit your dealership. There may be disruptors threatening to upend our business, but the reality is, the laws are still in your favor.


However, that may not always be the case. Rather than fight the inevitable disruption, embrace it by giving your customers what they want. Digital retailing is not a revolution; it’s simply the next step in the natural evolution of the car sales business.

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