Are purely physical or digital retailers at odds with buyers?
The first thing we need to get out of the way is, this isn’t new territory. Manufacturers and retailers have been dipping their toe into the online ocean for some time now, with variable success. This time last year, Hyundai launched a click-to-buy scheme and sold 23 cars in their first month. Ford introduced the UK’s first online purchase scheme in 2010. BMW, Mercedes, SMART and many others have all offered the option to purchase online for some time. So, surely if this was the future of auto retail and such a success, everyone would be doing it, right?
Well, not quite. First off, not everyone has embraced it quite like Hyundai has. The fact that Ford launched their scheme in 2010 was probably news to you, because as with many others, it wasn’t exactly shouted about. It slipped into the ether without fanfare, or fans to be honest. And it’s quite likely that the reason manufacturers weren’t completely behind it was down to fear of retailer revolt.
A survey carried out in March 2017 by CAP, the renowned industry vehicle data firm, revealed that even now, only one in four dealers believe click-to-buy schemes will be a good thing.
It appears that a lack of knowledge is perhaps behind some of the uncertainty in the industry. The same survey revealed that almost half of the dealers (48%) CAP spoke to, were unsure of the potential benefits or drawbacks of click-to-buy schemes. But 54% of them felt sure enough to state they felt they were a threat to physical retail sites, and 45% also believed such schemes would have a negative impact on profitability.
But in the last few weeks, it has been announced that Hyundai’s scheme is expanding to now include the entire Hyundai range. If that isn’t an indication of success, it’s at least an indication of potential. The Tesla retail model too, indicates consumers are streaking ahead of dealers when it comes to embracing buying cars online, as are manufacturers it would seem. Whether dealers accept it or not, we are now a click culture. We buy everything from books and blu-rays to our weekly shop online.
Amazon are a good example of how click-to-buy can really impact industries. When they first arrived on UK shores, nearly two decades ago in 1998, the premise was dismissed as flash in the pan and predicted to fail. The UK site now offers more than 100 million products and regularly receives more than 3.5 million orders a day. They also employ more than 6,000 permanent staff, and an additional 15,000 agency workers in peak periods.
Where other companies, such as Blockbuster and Love Film, failed to move with the times, Amazon were again among the first to offer streaming services.
And in areas such as Swansea and Port Talbot, where steelworks have seen mass redundancies, Amazon have staged some of their largest recruitment drives for distribution centres. They’re more than happy to take advantage of windfall opportunities and to move onto ground lost by other industries.
Amazon.com already has a significant online vehicle information database that lets consumers access reviews, images, and specifications. Do we really think the world’s largest online retailer is doing this just to helpfully inform car buyers, dropping by the site by accident? Amazon have already partnered with Fiat Chrysler to sell Fiat 500s and Pandas through the Italian site. Current rumours are that they are recruiting the industry’s best, seeking partnerships with several German manufacturers, and considering a pilot scheme in the UK.
The point is, Amazon has a track record of transforming pretty much every market it has ever entered. And it appears they have their eyes set on automotive.
The CAP survey showed dealers (43%) didn’t believe consumers were ready to make the leap to buying online. Unfortunately, this is in stark contrast to reality. Research conducted by Buyacar.co.uk in 2016 showed that over a three-year period, the number of consumers who said they were willing to buy online grew by nearly 79%. And more than 20% of those initially against buying online had reconsidered within the same time. Maybe, when those dealers surveyed remove their heads from the sand, they’ll find an eager Amazon still willing to hire them…on a zero hours contract.
Of course, the reality is that it isn’t a black and white, straight cut issue. It’s not a case of clicks or bricks. It’s clicks and bricks. In March 2017, Close Brothers Motor Finance published a report called ‘Britain under the bonnet’. Their findings showed that despite the prevalence of online research, 43% of motorists still turned to dealers for help and professional advice. The Hyundai scheme, for instance, is not only incorporating the complete model range, but also making delivery available through it’s entire dealer network of 165 locations. This suggests consumers don’t want online-only retail any more than dealers do. But they might want to order online and collect at a retailer of choice. Or have their vehicle delivered to their house by one. Oh, and those Amazon deals with Chrysler Fiat? All deliveries are made through the official retail network.
When it comes to automotive retail, Amazon are simply looking for an opportunity. For there to be one, there needs to be a clear consumer demand. And the only thing dangerous about that is dealers denying it’s there. The same opportunity that Amazon, Apple, and others are exploring, is one dealers can take advantage of too. They just might need to think outside the big, brown, and corporately branded box.
