End of The Wall Wars: How e-Commerce Is Helping F&I Documentation Move From Physical to Electronic Space
By David Sinclair
Those of us in the business of providing useful management information for car dealers are constantly monitoring the development of dealership Internet selling opportunities. Even now, with the hype about Internet selling of cars and trucks reaching a crescendo, actual performance still lags way behind the hype. Perhaps we are still waiting for the "boomers" to get wired. Perhaps the Internet selling theories are simply wrong, and as many older dealers tell us, "customers still want to slam the door and smell the interior." But most likely, dealers in general lag behind the public in their acceptance of Internet retailing, both in the purchase of products via the Web and in the pre-purchase research they feel is necessary when purchasing a new vehicle.
As more and more dealers try to compete in this arena, cooperative Web sites (those listing many local dealers, along with their inventory and combined offerings) are likely to grow in popularity, both with the dealers and their customers. Two such sites that will be discussed in this article are www.dealerlocator.com and www.carsoup.com. Certainly these are not the only two entrants in this Internet marketing segment, but they are good examples of what can be done to help level the playing field for smaller dealer groups and single-point locations.
When we look at dealership Web sites, we are often drawn to the sites of some of the larger dealer groups. These groups may have 10 or more locations and a very healthy combined inventory of vehicles from which to choose. Single-point dealers have told us that they do not think they can compete with these groups, Internet-wise.
The reasons are many, but often center on the limited exposure they can garner for their Web site activity. Large dealer groups that perform well on the Internet have the benefit of large print and broadcast advertising budgets. Promoting their Web activity through these existing promotional channels can bring their Internet activity to the attention of many potential buyers. Smaller dealer groups or single point stores have fewer and more localized existing promotional opportunities.
Larger group dealers also have the benefit of large combined inventories of both new and used vehicles. It is our opinion that both inventories must be listed if the dealer truly wants to be known as truly "Internet-friendly." Single-point dealers often shy away from including their inventory because there is an increased chance that the prospect will not find exactly what they want and look elsewhere.
Cooperative Internet Opportunities
The two competitive problems facing smaller groups and single-point dealers can often be overcome by using some sort of cooperative Internet site to attract customers. Such cooperation can help by pooling promotional advertising, including the cooperative Web address on all member dealers' ads, and by the pooling of inventory. By pooling your inventory with 10, 20 or maybe even 50 other dealers, you could become the one-stop-shopping site for Internet car buyers in your market area.
Some dealer associations are already involved. One that has come to our attention is www.dealerlocator.com, the site of the Chicago Auto Trade Association, discussed in the May/June 1999 edition of DEALER magazine (pg. 42). Another is a commercial venture by an advertising agency in Minnesota-www.carsoup.com. These are very different models, but they have in common the pooling of dealership resources to present a dominant Internet car buying/research site for a specific trading area.
It could be said that the major Internet referral services are also a cooperative of similar structure. This is true, but they are set up as nationwide ventures without the benefit of specific local content. Even the large Internet portal sites are recognizing that Internet users are demanding specific local content more often. Dealership cooperative Web sites could capitalize on that trend. Www.dealerlocator.com is the cooperative Web site of the Chicago Auto Trade Association (CATA). This association is a mainstay in the Chicagoland trading area. It looks like most dealers in the area belong, while not all participate in the Web site. CATA uses the combined strength of the participating dealers to promote the site via normal advertising medium.
Anyone who has ever occupied an F&I office knows the drill. The company that can claim the vast majority of the wall space behind your desk is the organization that, in essence, owns your business, from loan transactions to insurance policies and extended warranties. Regardless of the quality of the product, the responsiveness of the service or the appropriateness of the lending source to the customer's credit history, we remain locked into a relationship with those who have filled our office space with forms. It has simply been too unwieldy to consider alternatives. The tremendous momentum of e-commerce is yielding some surprising benefits in this regard. In essence, e-finance means the end of the "wall wars" as we know it. A new, centralized electronic platform replaces the awkward business model of supplier by virtue of wall space.
Shelving The Past: A Review of The Paper Trap
The very function of credit-to transfer property from those who own it to those who wish to use it-has traditionally required a great deal of paperwork. The risk involved in the granting of loans by lenders to prospective car buyers via the dealership has demanded even more documentation. The same is true for insurance. About half of the states have compulsory laws that require all car owners to obtain automobile liability insurance before they register their cars. Warranties, being contractually binding agreements, have demanded a certain amount of paperwork.
The stories of problems, gaffs and annoyances surrounding the maintenance and transfer of such massive amounts of information are numerous. We all have one "can you believe this?" tale or at least have heard a good one, like the warranty claim that preceded the actual arrival of the information packet from the dealer to the warranty company, or the credit application form that deviates in the smallest, most annoying ways from your own document processing name, first versus last name.
A New Connectivity: The Electronic Platform
Just as car manufacturers are rushing to supply the growing consumer demand for information-based products, so intermediary companies are working to take advantage of the burgeoning business-to-business e-commerce. In the first instance, we will soon see vehicles coming off the assembly line, wired for instant information access from the television to the Internet. In the latter case, documentation companies are riding the e-commerce wave to provide an entire suite of services from a centralized electronic platform.
An Uncluttered Future
What does that mean for you? What can the dealership of the future expect? First and foremost, F&I managers should approach the coming electronic wave with a strong sense of empowerment, not skepticism. The same process that may have been viewed with a wary eye-how can we be sure computerization is helping and not replacing us?-is now proving itself to be an invaluable tool. The new electronic channel can and will serve a variety of administrative and paper-less functions. Not only will it release us from the "wall wars," the new electronic environment will provide unlimited access to lending sources, instantaneously capture sales activities and automatically generate reports. The choice no longer is between managing massive amounts of paper-based documentation and assuming the burden of building and maintaining our own computerized operation. The new path is clearly one of inter-connectivity, where dealerships, particularly F&I managers, are free to retrieve information, services and vendors from an easily accessible and manageable central source.
David Sinclair is President and CEO of e-fin Electronic Financial Marketplace, the world's first fully comprehensive electronic financial marketplace for automobile credit applications. dsinclair@dealeronline.com
