Internet Sales
Where We've Been, Where We Are, And A Look At The Future
By John Holt
As the dust clears from the Internet landrush, it's becoming increasingly clear that the dealer is the winner of the online automotive battle. While skirmishes continue around the edges of the Internet frontier, a partnership between dealers and manufacturers has emerged as the dominant business model for online automotive retailing in the 21st century. Both dealers and consumers are learning how to use the Web successfully, but there's an exciting road ahead in the development of both expertise and technical capability. In this issue, I'd like to take a closer look at where we've been and where we're heading.
There is a three-phase evolution of dealer web sites that roughly corresponds to past, present and future.
Phase One was the "show and tell" phase. In this phase, dealer web sites were an extension of the dealer's marketing plan, and served only to brand a dealership and/or a manufacturer while supplying basic information to Internet shoppers. Minimal attempts were made at e-commerce (the online consummation of the buying process) or managing the relationship with the customer after the purchase of the automobile.
Phase Two–the present, is the interactive phase, i.e. sites with links, personal pages, e-mail forms and other dealer tools that are creating an online dialogue between dealers and customers while streamlining much of the browsing and buying process. This interactive phase is helping dealers attract more shoppers, convert a higher percentage of them to buyers, and retain them as dealership customers for years to come. In addition, dealers and manufacturers are now able to mine valuable customer information and pursue direct marketing strategies with greater efficiency and greatly reduced expenses.
Phase Three–the future of dealer web sites, will see a mutually beneficial digital integration between dealers and manufacturers, with a coordination of supply and demand data that will revolutionize the business on both ends. This evolutionary phase of dealer websites will usher in more efficient business systems and practices with significant benefits to dealers working closely with manufacturers.
The coming Phase Three advances in integrated dealer/manufacturer online business promise to significantly strengthen brand awareness while improving operational efficiencies, profitability and the customer experience. As the technology facilitating the integration of dealer and manufacturer data continues to evolve, the partnership and interdependence between dealers and manufacturers will become closer, leaving automotive disintermediators further and further behind.
While current configuration technology allows consumers to generate highly customized vehicle inquiries online, this is only the tip of a much larger technological iceberg. The next couple of years will see a digital integration between dealers and manufacturers where data sharing, data enhancement, as well as as-built information, electronic parts catalogs, and other essential data will be available to the dealership to further improve sales efficiencies, buyer satisfaction and customer retention.
Digital shopping, purchases and service records at dealerships provide both the dealer and the manufacturer a wealth of information about consumer needs and wants. This information can be used to improve strategic product decisions, production processes and manufacturing timelines. In turn, manufacturers can supply dealers with production and inventory data that will enable dealers to serve consumers with ever-greater responsiveness and efficiency. (For example, a vehicle coming off the assembly line could be immediately logged into online inventory as vehicle available for sale and shipped to a dealer in a region where that particular make and model is in particular demand.) The inherent benefit of this mutual exchange of information is clear: the closer the coordination of supply and demand, the greater the efficiencies. The greater the efficiencies, the higher the profits for dealers and manufacturers alike.
As dealer sites evolve from Phase Two into Phase Three, the integration of dealer/manufacturer data will strengthen the crucial role dealers already play. It will also underscore the importance of the dealer as the center of the consumer/dealer/manufacturer relationship. This, in turn, will continue to amplify the limitations of disintermediators. That's good news for dealers.
John Holt is the president and CEO of The Cobalt Group, Inc., a leading provider of Internet solutions and business-to-business services for the automotive industry. Cobalt operates the automotive industry portal MotorPlace.com and the PartsVoice.com parts locator. jholt@dealeronline.com
