Over the past two decades, the internet and technology have disrupted the sale of consumer products and services across a multitude of categories. Music, movies, television, apparel, home furnishings – even real estate and healthcare.
Innovation has leaped into today’s cars, trucks, and other vehicles, with connected cars and other Autotech. But, it hadn’t touched much of the auto retail experience.
Until now. Before the lockdowns spanning 2020-2021, a said 2% of consumer car sales were online. Today, this has increased to a reported 30% and is continuing to grow – with many automotive makers announcing plans to move much of their consumer sales online.
As with the many categories of the past, the shift has put traditional car dealerships in the crosshairs of digital disruption. Concern and uncertainty is rife among a number of those who buy and sell cars. Many are fearful that innovation will destroy their part in the consumer car market. Many are unsure of what steps to take or when, where, and how to
But, the coming digital innovation to auto retail has the power and potential for traditional car dealerships to survive and thrive.
Changing Tides for Automotive Retail
Online shopping has come a long way since the early 2000s when consumers were in the early stages of retail’s digital disruption. Today, an estimated 80% of Americans shop online. What began predominantly with airline tickets, apparel and beauty have exploded across the retail spectrum, including everyday essentials, groceries, and much more.
American consumers are also increasingly purchasing higher ticket items via the internet today, such as expensive keepsakes, furnishings, art, and jewelry. In the past, these items were commonly reserved for shopping in-store. More recently, it has included five, six, and even seven-figure purchases with houses, boats – and cars. Lockdowns accelerated the progression and moved many consumers into a new online shopping comfort zone.
For car dealerships, it has meant a new business and retail environment that had not significantly occurred before. As consumers increasingly turn to the internet to buy, sell and lease new and used cars, dealerships have little choice but to make the move as well.
But, they’re not alone. Dozens of industries and retail categories have faced the same in the past two decades. As car dealerships and auto retail move into a new digital era, the industry can look to the past for guidance and success.
Lessons from the Past
The early years of digital disruption in retail had a catastrophic, and often fatal, impact on traditional stores. Today, this has changed. While many traditional retailers still struggle as a result of the initial wave of technology, there are a large number of those who have adapted – and leveraged innovation to the benefit of their business and customers.
These retailers blend online and traditional shopping, with the option for consumers to shop online or in-store. Customers can shop online and select from local pick-up or delivery. Fast, free shipping and other perks are often standard to compete with digital competitors, such as Amazon. Physical stores have become more streamlined, or even smaller, with technology integrated into the customer experience.
For example, modern retailers can instantly connect to nationwide inventory as they serve customers at their physical stores. Out-of-stock items can be purchased from elsewhere and either picked up or shipped to the customer’s home within a few days. Self-checkout and other expedited services are common. Sales associates can serve and checkout customers from mobile devices in Apple stores. At Target, customers can self-checkout.
Smaller retailers, brands, and stores have also turned digital disruption to their advantage. Thousands have expanded their sales channels to double-sided marketplaces online, in addition to their own online stores and legacy retail partners.
Few of these approaches are new in mass-market retail. But, they’re not prominent among many car dealerships today. It’s where dealers can learn from the past and present of retail’s digital disruption to adapt now.
A Look to the Future
“Car dealerships can still play a role in auto retail’s future,” said Nathan Hecht, founder, and CEO of the automotive online marketplace, Rodo. Rodo provides a technology platform for car dealers and consumers to buy, sell and lease new and used cars online.
“Dealerships will likely become more of fulfillment and service centers, but that doesn’t mean they can’t or won’t still buy and sell cars,” he added. “There are a number of state franchise laws that protect their business, but they can also use technology and the internet to their benefit as car makers are.”
Hecht recommends that dealers look to technology and innovation partners who can help ease the complexity and burden of adapting to the changing market. Rather than trying to build their own eCommerce platforms or guessing what tools and solutions to use, dealers can rely on third-party resources and guidance. The benefits of taking this approach can make the process easier and more efficient, as well as keep costs low, avoiding costly missteps, and drive customer foot traffic online.
“Technology and online shopping might be relatively new to car dealerships, but it’s not new to the retail business. Dealers have resources and options they can turn to to help them succeed and stay alive.”