According to Andrew Wolfe, co-founder of the Internet referral service Stoneage Corporation, "When a newspaper carries classified ads and customers respond by visiting dealerships, those customers don't become the newspaper's customers. It's the same thing with an Internet buying service." Maybe so. But, then again, the newspaper can't collect detailed information from its shoppers the way an Internet buying service can.
Mr. Wolfe's comments were made during a panel discussion organized as part of a conference on Auto Retailing on the Web, held in Nashville, in November, and were prompted by a question on the issue of "branding" or the efforts of car dealers to establish themselves in the minds of consumers as the place to go for all things automotive. The issue of branding has moved to the forefront recently as it becomes obvious to some auto dealers that certain of the on-line referral services appear to be taking steps to claim the dealerships' customers as their own.
Other members of the panel, including Payam Zamani, co-founder of Autoweb.com, Chip Perry, president of AutoConnect, and Alex Simons of Microsoft CarPoint, had their own opinions about the ability of the Web services to lay claim to the dealers' customers. Some equivocation may be understandable, especially in light of the panelists' responses to a question about who they define as their customers, auto dealers or the retail purchasers. Mr. Zamani's answer was representative of most of the panel members when he said, "Of course the dealer is our customer, but so is the retail consumer. In fact, without the consumer, there would be no basis for our business." He's right. It's the ability to deliver large numbers of prospective car buyers to dealerships efficiently that constitutes the "value" of the Internet buying services.
That doesn't really answer the question "whose customer is it?" But John Holt, chief executive of DealerNet, provided something close to an answer when he noted that trying to take control of a dealership's customers is no way to do business or to build longer term relationships with dealers. Anyway, even if an Internet buying service wanted to brand customers as their own, it's very hard to accomplish given the level of competition and the fact that consumers still have to go to the dealership to complete their purchase. The dealer's ability to build customer relationships face-to-face is a formidable advantage.
The panel exchange on branding led into a discussion of how many buying services a dealer should use. At least one of the major Internet referral services pushes the concept of exclusivity. That is, they offer their dealer customers an exclusive territory in return for an agreement by the dealer to use their service exclusively. Based on the results of a survey of participants at the Auto Retailing on the Web conference, exclusivity may be an outmoded business model. A preliminary review of the survey responses indicated that the attendees were working with two to six services including their manufacturer's Web site.
John Holt of DealerNet commented, "Exclusivity is a dumb idea." And most of his fellow panelists agreed with him. "We don't believe in exclusivity," said Greg Stuart of cars.com. Chip Perry of Autoconnect wondered why a dealer would agree to limit the sources of potential customers. A discussion of the pricing policies of the panel representatives indicated that both cost and common sense are driving the move away from exclusivity. Not only are some of the high monthly maintenance charges going by the wayside, but there is also a movement away from charging for Internet "ups" toward fees based only on successfully closed sales.
One thing is certain. The Internet, as a major factor in the way people buy cars and trucks, is here to stay. The services provided by the Internet referral companies are going through evolutionary steps every six months or so. And at each of those stages, the Web is bringing auto retailers closer to the retail purchasers.
Mike Bowers is Managing Editor of WD&S Publishing, Metuchen, NJ, producers of the auto industry newsletters Dealers Edge, Warranty Dollars & Sense, Fixed Coverage, and Auto Retailing on the Web. WD&S Publishing sponsored the Auto Retailing on the Web Conference and will present an updated and expanded version of the seminars in the spring of 1999. If you have specific questions or require more information about this subject, please check the appropriate box on the reader response form on page 3.