Tracking the Digital Retailing Debate

June 20, 2019

In my previous life as a magazine editor, I always enjoyed clicking or walking into a digital retailing debate between a car person and some tech vendor. The discussion always played out the same. The tech vendor would tout Carvana’s ecommerce capabilities and the car person would always respond the same way: When is the last time Carvana generated a profit?

Checkmate, right?

In fact, Carvana’s losses have expanded since it announced a $64.5 million loss in 2018, and the latest word on the online used-car retailer is it’s at least two years away from breaking even. But something happened in April that changes that discussion: Carvana debuted at No. 8 on Automotive News’ list of Top 100 retailers based on used-vehicle retail sales.

And, well, it didn’t take long to see how this news impacted dealers, as the feat came up during a recent interview with a general manager for a case study I was assigned. He made it clear Carvana‘s and even CarMax’s digital retailing exploits had spurred him to act.

And this was no “modernist” car guy. This was a general manager who cut his teeth in the business in the late ‘90s, is a traditionalist who has no love for TrueCar, and admits he’s not great with computers but believes he’s a quick study. He is also “open to change” in a “business that’s forever changing,” and he is just now dipping his toe in the digital waters.

That means the GM is asking the tough questions these days. Should he move to a one-price, no-haggle pricing strategy? Will he need less salespeople? What about the F&I office? Does a move to digital retailing mean promoting incentives on his site, a practice his store has stayed away from to avoid customer misunderstandings and any regulatory entanglements? And how does he align his showroom process to seamless take the digital baton once a customer hits the “Buy Now” button?

More importantly, this GM is wondering how to get it all done while keeping the metal moving over the curb.

To me, the questions he’s asking and the concerns he’s raising tell me the industry is making significant strides toward the Digital Age. In other words, I’m hearing less “why” and more “how.” While I plan to address the “how” in upcoming blog posts, I need to clarify my attempt to explain the “why” in a recent article I wrote for Dealer Magazine.

See, I called digital retailing a dealer website’s “greatest conversion tool — a payment calculator on steroids that can turn internet shoppers into showroom buyers.”

I still believe that wholeheartedly. The problem with that description is it cheapens what digital retailing really is, and that’s an experience. The beauty is you, the dealer, get to define what that experience is.

Should it be restricted to only your website? Should it be more of a blended experience, where deals started online are completed in the showroom? Think omnichannel.

The GM I spoke with also touched on something else I think fits under the “why” category. He had only been on our platform for a couple of months and had yet to promote his site’s new ecommerce capabilities when he noted: “Right now, it looks like I’m getting a lot of people using the tool, but I’m not getting any leads from it.”

Folks, this isn’t “Field of Dreams,” where if you build it, they will come. This is a new experience for everybody, customers included. In other words, they also need time to digest this new and developing reality.

Now, consider that only about 10% of shoppers are going to complete whatever digital retailing process you employ, at least that’s what every digital retailing provider will tell you. Hey, if consumers were really ready to buy cars online, your website would be exploding with completed credit apps. I’m guessing that’s not the case.

And that’s why digital retailing needs to be judged by the activity it generates, not the leads or sales it serves up. That’s because every deal a customer configures puts him or her closer to your showroom — at least for now. I know that’s a tough pill to swallow in an industry that coined terms like “be-backs” to describe indecisive customers. Hey, this is a results-driven business for which every dollar is accounted. But just like our store processes, consumers need time to get comfortable with this new reality.

So what’s your take? Email it to me at [email protected].

This content may express opinions and ideas that are not intended to be official statements from DealerSocket, Inc.

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