Automotive e-commerce: What’s Working For Car Dealers Online
Buying a car via e-commerce? It sounds unlikely. Auto buyers need to look at the car, take it for a test drive, maybe even smell it. It’s not a product you put it in a shopping cart and pay for it with a credit card.
So how are car dealers using the Internet as a commerce vehicle? In every way imaginable. According to some new statistics from the National Automobile Dealers Association, U.S. auto dealers are upgrading their websites for sales and marketing to both end-buyers and the manufacturers who supply them.
For example:
- 70% of U.S. dealers said they manage some sales transactions entirely online, except for payment and delivery.
- 45% use ecommerce to sell auto parts to car owners (B-to-C) and 25% sell online to other companies (B-to-B).
- More than half of dealers have a designated Internet sales staff.
- Dealer websites generated a monthly average of 320 unsolicited prospects, known in the industry as “surf-ins”.
- Web marketing generated on average of 162 leads per month per dealer.
| Capability |
% of dealers
|
|---|---|
| View stock |
94.4%
|
| View manufacturer’s suggested retail price |
88.0%
|
| Order online |
25.3%
|
| Fill out financial information |
75.5%
|
| Submit payment |
7.2%
|
| Schedule sales appointment |
68.3%
|
| Schedule service appointment |
75.5%
|
| Link to manufacturer’s website |
69.1%
|
| Link to financial, insurance or other auto sites |
25.1%
|
So is the Internet a net benefactor to car dealers? Indeed. According to Jupiter Research, 64% of car buyers research their options online before making a purchase. So, if the buyers are online, the sellers must be, too.
What are consumers looking for online, when researching cars? Interestingly, when visiting a dealer site, they are looking for two things: 1) exact specifications on the available cars and 2) a competitive price. So, to be effective, a dealer site must provide plenty of information, searchable by such criteria as the buyer’s desired monthly payment and down-payment and by car models and colors.
Dealers often find that online shoppers turn out to be their best customers. Because they are doing so much of their pre-sales research online, by the time they come into the dealership, these customers are more likely to buy. And the cost to serve them is lower. Internet media are more efficient, as are pre-sales interactions like web-chat and email.
Coastal Hyundai, based in Melbourne, Florida, finds that 22% of online shoppers who request information convert to buyers, compared to a 12-15% conversion rate among customers whose first contact is walking into the dealership. Their website features such marketing tactics as a pop-up coupon valued as high as $250 toward a car purchase that rewards a visitor for entering an email address or phone number.
Dealers also benefit from the Internet as a market research tool. Web analytics helps them understand consumer needs and preferences, which in turn allows the dealers to manage their on-site inventory more efficiently.
At the same time, the Internet has made the automotive marketplace more competitive, increasing margin pressure on dealers. Large ecommerce sites like eBay and Overstock.com have line-extended into auto sales. Furthermore, third-party auto sites like Autotrader.com, CarSoup.com, GreatCarz.com and GlobalAutoSports.com are all contending to take customers away from the traditional brick and mortar dealers.
eBay Motors Takes Off
While the traditional dealers learn how to use the Internet effectively, eBay seems to have figured out very quickly how to sell used cars online. Having launched in 2000, the automotive division of eBay had already sold a million vehicles by 2004. According to Hitwise, eBay Motors is the second most-visited ecommerce site, with 12 million unique visitors monthly. (The most-visited ecommerce site is eBay itself.) Today, eBay Motors is selling a car every 52 seconds.
That growth is based on eBay’s understanding of online shopping behavior and how to overcome customer fears of making a high-ticket transaction on the Internet. The home page explains step-by-step how the process works. The site search function is easy to use. And they offer convenient services like shipping options for interstate purchases, financing options and introductions to qualified local inspectors who can go out and determine the prospective vehicle’s condition.
Via eBay, dealers can list an unlimited number of vehicles at a flat monthly rate of $1000, plus a $50 commission when the purchase is closed. Already 15,000 dealers are selling used cars through eBay Motors.