Another article on digital retailing? In prior blog posts, we’ve discussed how the modern consumer shops for a vehicle, which research tools are most valuable, and how dealers can win over these consumers during the online shopping process. It only makes sense now, to cover one of the most talked-about subjects in the auto industry, digital retailing.
There has been quite a bit of controversy over how digital retailing will impact the vehicle sales process and whether digital retailing giants, such as Amazon, will wipe out the traditional brick and mortar dealership business model. In a recent study by Cox Automotive, there were overwhelming statistics supporting the finding that the dealership will remain an integral part of the car buying process. As a result, Cox has better defined “digital retailing” as more of a “connected retail” solution, creating a seamless online and offline dealership experience for the consumer.
Below are the answers to three important digital retailing questions:
Why are dealerships still an essential piece of the car buying process?
Which digital retailing features are most valuable?
Which solutions your dealership should consider?
1. Why dealerships still play an important role in car buying
1. Most consumers want a test drive
80% of consumers would never purchase a vehicle without a test drive, according to the Cox study. Though the bulk of the vehicle decision making process can be done online, most vehicle buyers want to sit in the vehicle and take it for a spin around the block, to make sure it feels right and doesn’t just look good on paper.
Some of the top startups responsible for disrupting the conventional vehicle buying business model, including Carvana and Roadster, have been successful in bringing the test drive and paperwork to the consumer’s home, eliminating a visit to the dealership altogether. Some dealerships even offer this service now. However, the overwhelming majority of consumers still want to complete the purchasing process at the dealership for steps such as the test drive.
2. Most consumers want to sign paperwork in person
According to the same Cox study, 89% of consumers want to sign paperwork in person, though 1 in 4 would prefer to review the paperwork electronically before visiting the dealership to finalize the deal. This is one of the many reasons why the connected retail experience needs to be as smooth as possible with the right online tools for quote approval, financing term options, and trade in valuation, as well as highly trained staff and tools within the dealership to pick up where the customer left off online.
3. The dealer’s staff are valuable assets
As mentioned above, knowledgeable dealership staff add value to the car buying process and further cement the need for a dealership, as long as they are not pushy sales staff that are only in it for closing the deal and could care less about the customer.
Also noted in the Cox Study, 62% of consumers still want help from the dealership staff, even if online purchase options are available. They’d like to spend more time learning about the vehicle – and less time on the deal – while at the dealership and want to work with consultative dealer staff who listen to their needs, share their expertise on each vehicle (specs, features, technology, trim levels, etc.) and do not pressure the sale.
Not only should your sales staff be knowledgeable, they should also be armed with the right showroom tools to support the buyers in-store vehicle research experience. This might include vehicle shopping tools within a showroom/waiting room kiosk, or a tablet that would allow consumers to view vehicle details, perform competitive comparisons, and even view all available options and accessories.
2. Important digital retailing steps to today’s consumers
Consumers want a personalized car buying experience that allows for much of the purchase to be completed online. Cox found that consumers are 85% more likely to buy from a dealership that offers online steps to the sales process.
So which steps of the buying process should be offered online, and which steps should be completed in the showroom? Here are some of the core online buying activities Cox identified in their study:
71% of consumers would like to get more information about the deal online, such as:
43% of consumers would secure financing online
51% of consumers would structure the deal online
Agree on price
Put down a deposit
Nearly half of these consumers are interested in completing all steps of the buying process online, aside from test driving the vehicle and signing the paperwork. But digital retailing doesn’t have to exist only on dealers’ websites. 57% of consumers want to complete some of the buying steps digitally on the dealership floor. As mentioned previously, offering the best digital retailing experience means providing great tools on your website AND at the physical dealership.
3. Digital retailing solutions to consider
There are a handful of digital retailing solutions available on the market today that support an excellent digital retailing experience. Here are a few products to check out from some of the top service providers:
1. Dealer eProcess “SARA”
Dealer eProcess’ digital retailing solution, SARA: Smart Automotive Retailing Assistant, is comprised of 3 tools in one: Trade-In Tool, eCreditApp, and Digital Retailing. Both Trade-In Tool and eCreditApp can be used as stand-alone products, however, all three of these tools leveraged as one solution will offer your consumers a smoother end-to-end experience.
2. Dealer.com “Digital Retailing”
Dealer.com’s Digital Retailing product offers many of the same features as Dealer eProcess’s SARA, and is also designed as a connected retailing experience where the vehicle purchase is completed at the dealership. One of this product’s core differentiators is the integrated Finance & Insurance (F&I) merchandising that allows consumers to educate themselves on the dealer’s F&I products before visiting the dealership and spending hours in the F&I department.
3. Dealer Inspire “Online Shopper”
Dealer Inspire’s Online Shopper offers a complete digital retailing experience that allows consumers to finalize the deal online by signing paperwork electronically and scheduling either pick-up or delivery of the vehicle. Even though only 20% of consumers would purchase a vehicle without a test drive and only 11% would sign paperwork electronically (according to the Cox study), it’s still worth offering this functionality on your dealer website(s). Especially since it’s not widely available and therefore will give your dealership a competitive advantage.
4. Other valuable tools
You should also consider leveraging some tools that help connect consumers with your sales staff online before setting foot in the dealership. Implementing a sales team review tool such as Dealer Rater or a live chat/text platform like Contact At Once or Dealer Inspire’s “Conversations” are both great methods for building trust with your customers early on in the sales process.
Based on the recent Cox study, it doesn’t seem like an exclusively digital experience (completing the entire purchase online) will be a more popular option than connected retail any time soon. There are certainly businesses and solutions that support this experience, such as Dealer Inspire’s Online Shopper product mentioned above, and industry disruptors, such as Carvana and Vroom, who have built their entire business around this “buy from your couch” model. However, dealers are still integral to the car buying process, especially towards the final stages.
Make sure you stay relevant by offering digital retailing tools to support the connected online/offline experience with the flexibility that today’s consumers desire.
We would love to hear your opinion on the future of car buying and where the next phase of digital retailing is headed. Please share your thoughts in the comments section below!