"Disruption" is one of those Silicon Valley buzzwords that I've begun to grow tired of. It's a catch-all word that is used anytime an industry or product is experiencing changes or pop up competition. Perhaps more accurately, we should see terms such as "evolving,” or “maturing.” More simply stated, what many industries or products are experiencing is just new competition.
In automotive, there is a history of disruptors that fundamentally change or alter a maturing market. Remember the minivan craze of the 90s? It was followed by the crossover phase and disrupted the wagon segment to such a degree they almost went extinct, at least in North America.
Now going into 2020, we are seeing the disruption in both segments and distribution. Companies like Tesla are disrupting with fully electric cars that are distributed through a direct sales model. Companies like Vroom and Carvana are offering full digital retailing online, from start to finish with a delivery of the car to your driveway. Yet, these companies have not experienced an “amazon-like” transformation and are still very niche players. Why is that?
Another industry that is experiencing this same kind of disruption is the grocery industry. While stores changed continuously and evolved to keep up with customer trends and tastes over the years, one principal of the business transaction remained constant for decades: People had to come to them to get fresh food and produce.
With companies like Peapod and Amazon Fresh, combined with more meal prep-orientated services like Blue Apron and HelloFresh, that is all changing. Direct to consumers, some with discounted or even free shipping, these services are endangering the rock-solid model of people going to their favorite supermarket for food staples. Is the traditional industry doomed? No, at least not for the ones embracing the competition. Let me explain.
When faced with the prospect of consumers able to shop online for their most common groceries, the incumbent stalwarts of the grocery world (Think Kroger, Safeway, Publix, etc.) have a choice to make when fighting to keep their market share against the online disruptors. My local grocer of choice, Meijer, decided to partner with Shipt to make home delivery from online shopping available.
App-based shopping, with nearly all of the same products and staples you're familiar with at the physical location available for same-day shipping. And for some, within the hour. Instead of fighting against the new model, grocery stores decided to participate. Meijer is certainly not alone, many major chain grocers are now adopting a "we shop for you, and ship for you" model. They also have a great hybrid solution where you purchase your items online, and a store shopper selects all your products for you. Then all you need to do is visit a curbside pickup at the physical store and collect your items, saving you from even having to enter the store. They took the opportunity of the new online model not just as a threat alone, but as a challenge to innovate their business model for evolving consumer shopping behavior.
This got me thinking. Why is it that when I talk to dealers and salespeople in the industry, they deride the online digital retailers like Carvana and Vroom? Why do they insist it's a passing fad or dismiss their importance altogether? For years, I have heard dealers tell me, "Oh sure, salesperson Johnny could do an at-home test drive, we'll gladly go to a customer's house to have them look at a car."
However, the reality is that it never happens. Or, if it does, it is supremely rare. Taking any piece of the consumer transaction away from the dealership is frowned upon, no matter what. This usually comes at the direction of management.
Perhaps it’s the power dynamic that makes dealers uncomfortable. When a customer is in your dealership, they are on your turf, your zone. That can be intimidating for some customers, no matter how comfortable or relaxed going your sales staff is. Perhaps dealers like dictating the way the sales process will go on their home court. Now it’s just salesperson Johnny and me in my driveway, there is no more of the walled office of intimidation. There is no more, "ok, let me run that by the manager while I hide from you, and we talk about you behind your back." Also, there has to be a ton of accountability on Johnny that he won't just give the car away for a song, and his sales manager is not there to hover over his shoulder to approve every pencil and sales move that he makes.
Its accountability that many dealers don't have with their staff or actively don't want. There is no finance office pressure. The upselling of finance products has to be pre-selected or presented, it's no longer in the boiler room of F&I pros, it's a driveway chat with checkboxes that need to be presented. The motivation to sell is in a different environment. I’ve bought several cars over the past four years from established franchised dealers and independent used car lots, luxury cars and economy cars. The experience was the same. Not once was it ever presented as a possibility that they would or could come to me.
Why does the automotive world insist that customers who desire to complete their purchase online, or from the comfort and familiarity of their home, must be forced to visit the dealership?
Perhaps this is why the majority of people still hold the opinion that buying a car is high on their list of stress-inducing and disliked activities. There will always be those who remain traditional, both those who prefer buying products in-store and those who like buying automobiles direct from a dealer.
However, it’s the growing segment of the market that prefers a digital experience which the automotive industry can learn from. How about meeting consumer behavior changes the way grocery stores did? By not rejecting the disruptor model but embracing it.
Dealers have the inventory; they CAN do this. The question is, do they want to? Many people I have talked to are still uncomfortable with completing their purchase without first seeing what they are buying in person. Especially something as expensive and vital as their car. I would love to see dealers begin to promote and market home delivery and online shopping. Let’s make that process easier. If we do not, the market will speak and slowly keep chipping away at established dealerships selling in the traditional model, in favor of those who can evolve with the way consumers want to transact business, increasingly online.
Do you agree with me? How many of you out there have tried one of these online grocery shopping services? Was it a good experience? Has anyone ever had a dealer come to their house to sell them a car? Let me know in the comments below.