@Brandin - I do find it fascinating that the Scion rep who commented on the article "making it like buying an iPad" would soon learn of the demise of Scion as it was consolidated into Toyota. I wonder if their branding was too eccentric? I do believe that customers want more information online regarding their purchase, but will also offer that there are still several kinks that have to be worked out: financing, trade-ins, etc. I know Carvana is the forefront of online buying, but they have not yet been profitable.  

Hi Brandin, this is a great topic and definitely shows you are focusing on the right factors to fuel the future growth of your dealership. Here are my thoughts regarding your questions: 

1) Dealers will still need to handle the customer after the order and the showroom will still be essential for customers to kick tires and test drive. This will still be a service driven industry. Trainers will need to adjust their training as the market and sales process evolves.

2) Alex Bogusky, who has had clients like Coke, VW, Microsoft and Kraft Foods says, "Transparency is not a choice, the only choice is does it happen to you or do you participate in it." As dealers, we have pushed back for 20+ years and the result is that customers are going to 3rd parties to get the level of transparency they want.

We are training buyers to trust 3rd parties like TrueCars, CarGurus, and Carvana, instead of trusting us. At the end of the day, we wind up paying 3rd parties for our own customer. The biggest misconception is gross profit will go down, but at Drive Motors we have facilitated a half billion dollars worth of online orders and gross profit is actually $500-700 higher with online checkout than in the showroom.
 
3) Here are the 3 most important factors that, in my opinion, ensure ecommerce for cars is a win-win for dealerships and customers.

1. Native feeling technology. Dealers must avoid bait and switch solutions that drive customers to a new tab or new website or 3rd party website. If a consumer is on a website and a button opens a new tab or website, the consumer is going to have security concerns and feel like this is a bait and switch.
2. Ease of use is absolutely critical. The more complicated the online purchase process, the less likely the customer gets through it. We have a tendency to focus on all the minutia, but we should keep it as simple as possible.
3. Don't ask the customer to create an account or give personal information upfront. This is the #2 reason for ecommerce cart abandonment. If you go to a website to buy something, and they won't show you a price until you give them your name, email and phone number, what would you?    

BTW, the #1 reason for cart abandonment is price changes or price surprises. This should also factor into the design of any online checkout platform. 

This is definitely the way the market is trending, and forward-thinking dealers like you can be at the forefront of this emerging opportunity. 

@Derrick - thank you for your input. Agree that there are kinks to be worked out. I think financing and trade in values would be fairly straight forward. It may get complicated when it comes to offering warranty. It would be nice to have an alternative, trustworthy platform to move pre-owned inventory other than through the monopolized option of AutoTrader / Kijiji, or the often more expensive route of sending units to auction. 

@Matt - Appreciate the thought and detail that went into your response. I’m curios to see how things unfold moving forward with tech and the impact it will have on dealerships and the salespeople. I agree with your mindset. And the input you had with your 3 most important eCommerce success factors are spot on. Thank you! 

This story is just what it is, a story.  Automobile use in our society embodies several aspects of a human.  Touch, feel, smell, fit, look, sound, ego and many others.  As you can not buy your first kind of any clothing on line or taste food with out trying it, so it is with an automobile.  Clothing companies that sell on line have MASSIVE returns, try that with vehicles.  Nothing else in our world that of this size and often 1/2 a ton or more is being sold on line with out trying it.   Until these things all look exactly like the other one, and people do not wrap everything from their status to their savings in it, its not going to happen. Often the largest or second largest purchase of their lives will not be made on line with out experiencing the product.  Will things change in how its done at the dealer, and aspects of it change, of course, all business transactions change.  Some folks could care less about what they drive and they just call it transportation, they do not dominate the dealers commerce world.   I suggest Brandin open up his CRM and just start reading how customers in it are being dealt with, and then tell us buying on line would fix it.  And yes Im available to show you this if you have the stamina to look.  This is my take after looking in hundreds of CRMs and seeing whats really broken, that this supposed buying online theory would fix. Driving sales posts this stuff, and then sends it to our email as breaking news for what?   Progressive BS.  

RE: "Do we embrace or push back what seems inevitable with consumers bypassing the dealership and purchasing directly online from the comfort of their home?"

Why does this seem inevitable?  How exactly do consumers bypass the dealership.  The trend is for consumers to do more research online, but go to the dealership to look at inventory and take test drives.  They then use the Internet more than before to negotiate a deal.  Trade appraisal is part of that.  They then come to the dealership to take delivery, not that that has to happen there.  45 years ago we had people who never came to the dealership to buy the car.  It was done on an archaic piece of technology called the telephone.  The Internet is nothing more than another way to communicate and gather information for car buying consumers.  And the telephone is a big part of the process.  I find it strange that the industry is evolving back to a place it was decades ago while people are claiming its the Internet that's causing it.  The Internet is enabling it.  But to think consumers will be able to buy a large ticket item, with trade-ins with negative equity, with less than fast track credit, is a pipe dream.  A better question is, "Why would sellers even be interested in that?"  Consumers consistently show they don't want to take a car deal from start to finish. Recall "Shop, Click, Drive?"  But there seems to be a group of self serving vendors trying to sell the idea.  What's up with that?

@William - Thank you for your feedback, every bit of it is welcomed as I'm open to debate on what appears to be a controversial subject.  I'm more curious than anything.  I do find it a bit humorous though that you complain about Driving Sales posting "progressive BS" stories, yet you seem to have the time in your day to write a detailed, long response. What if you could downsize the risk to the consumer by offering a 7-Day 500km test drive feature the way Carvana does?  That gives the human touch you're talking about.  Oh, and FYI, it's a grind to make money on the initial vehicle sale as it is for dealers, selling online wouldn't be any different.  "Some folks could care less about what they drive" - would be curious to know what that percentage of the market is.  Being on the front line, we often hear clients say they want their pre-owned vehicle to be reliable, been well taken care of, preferably one-owner, etc. versus certain colors or features.  And I'm not suggesting we have to fix anything, but rather give dealers an alternative to selling their pre-owned inventory online and give the consumers who are skeptical of the "used car salesman" an alternative to buying a vehicle.  

If customers TRULY wanted to buy online the experiment with Wal-Mart a few years ago would have taken hold and been at least a moderate success. I would bet dollars to the donut the same 75% who would like to purchase online are much the same ones chiseling the dealers and playing quote against quote in the hopes of saving a couple bucks, then wonder why they get less than stellar customer service. Cars are an emotional purchase and as long as they are and you cannot change your mind in 3-4 days to get another one, online purchase will not be a reality IMHO.

@David - Thank you for your questions.  I say it seems inevitable only because of the advancement in technology and how comfortable consumers are getting with purchasing products online.  It seems that in time, vehicles will be one of those products.  Dealers do it on a daily basis, buying sight unseen used vehicles through Auction Sites, so what I'm suggesting is that if done correctly, and mitigating risk to the consumer, we will more than likely see consumers transition to buying vehicles online.  I'm not suggesting this replaces dealerships or sales consultants, or anything to that extreme.  As mentioned to William, it would provide dealers with an alternative to sell their pre-owned inventory, which as a dealer myself, I welcome with open arms, and provides the consumer who has a skeptical view of the "used car salesman" an alternative to buying a vehicle.  Thank you again for your feedback, it's all welcomed!

@Gerald - Great, thank you.  As like any idea, it will have it's supporters and critics.  I'm a supporter and would welcome the concept should it come to fruition which seems more likely with platforms such as Carvana, and innovative ideas such as Fair.com. I am curious to hear more from other Dealers such as myself on the subject.

Hey Brandin 

Since your Progressive mind wants to get a little personal, lets dance.  I find it humorous that what I have time to write about in my day, or night,  and what my day consists of has anything to do with this opinion you write about that isn't factually based.   Driving sales promotes this stuff as if its fact, when its not which makes it even more progressive BS.   What if, what if, what if.  Carvana has yet to prove its legs, and has not lasted long enough, or gotten off their seed money to know if that model works.  But IM sure you know it will and you think dealers should operate on what if's ?    FYI Im closer exposed to the front line, many front lines, than you have the time to be. Exposed to hundreds of dealers inner workings, CRMs and information on what they all do with their clients,  for many more years than you have. 

Chasing this type of what if , shinny object think, is some often their problem and your promoting it.  

You wanted the debate, your getting it.  I take my time during the day, night when ever I choose to debunk this type of stuff and present what is the obvious error's in it. 

FYI, try a less rambling response thats got NO personal,  and address the issues raised, and we can stay on that track. 

@William Phillips, with all due respect (not meant to be "personal"), you sound like the people who mocked Jeff Bezos when Amazon had lost $2.8 billion dollars in the first 7 years of existence. Retailers everywhere laughed it off saying no one wants to buy clothes or tvs or you name online. Toys R Us and others are not laughing anymore. They are closing their doors because they laughed too hard and too long. 

Here at Drive Motors have over half a billion dollars in cars ordered through our platform in the last 18 months. It grows every single month. 

Wall Street thinks Carvana is worth 2.74 billion dollars in spite of their losses. BTW, I was driving through Atlanta today and noticed 2 Carvana license plate holders. 

Bottom line is the customer wants the car buying process to change. Dealers are not going to have a choice. 

Alex Bogusky (clients like Coca Cola, Microsoft, Kraft Foods and VW) said, "Transparency is not a choice. The only choice is, does it happen to you or do you participate in it?"

This is happening whether dealers like it or not, just like internet leads and websites happened. TrueCar and CarGurus are worth billions because dealers are not giving the customer what they want.  If you don't give the customer a more transparent, faster, convenient online shopping experience, they will find someone that will.

Many orders will happen after the car buyer goes to the showroom and then goes back home. Certainly the dealer is still critical, and the buyer wants to touch, feel, and smell the car, but they are tired of the current buying process.

Warby Parker CEO, Dave Gilboa, put it well when he said "We don’t think retail’s dead. We think mediocre retail is dead."

Dealers need to find the right mix of retail/showroom and online processes. 

By the way, the dealers that are doing this using our platform are seeing an INCREASE in PVR, not a decrease. 

I'm done rambling............... for now :)

What WP said! Transparency? What is that? Transparency leads to an "efficient market," which leads to "disintermediation." That's elimination of the "middle man." That's Dealers and their sales people. Is that what you're trying to sell them? What do YOU get out of that, other than a short term paycheck?

Matt   SO many flaws and assumptions in your thinking and opinions that is transparent why your pitching this Progressive mistake.    Yeah Matt dealers have a choice.  MANY do it wrong and still make great livings, this economy is a big place. 

Amazon is vending products that can be delivered at the door on the tax payers back of the money loosing organization called the USPS, but maybe you don't know that.   Try that one with a car.  True Cars and Carvana have, and read the caps,  NOT MADE ONE DOLLAR PROFIT,  its all stock market emotion driven.   They are not worth one dollar in the real world of profit and loss.  You have obviously not spent enough time in stores recently to see dealers jumping off TC in droves, and the former Auto Trader exec,  begging for them to stay on.  Not relevant what a few have said, they DON'T vend cars or a product like automobiles with all the complexities that dealers deal with.  trades, ect ect ect 

We only agree one thing and that is that the process and methods of dealer vending is in need of change.  Transparency as a total solution is BS, producing the invoices online YEARS ago did nothing, presented that to  consumers and they still negotiated.  Remember CARS DIRECT???  (wow 2 car plates)  saw many Cars Direct trucks delivering and plates, where are they now??

You can quote as many people you don't personally know as you want, pimp your product on this venue and others in the name of Transparency, and it wont change the way consumers want to buy.    Consumers are impulse driven and they buy when they see what they want, and experience what they like.  If they can experience what they like at a Dealer they will buy at the dealer, not at home.   

Your product nor any other increased PVR , it by chance may have caused a dealer to get out of the way of his poor process  and practices, then the consumer bought on his own.   Its the same consumer that would have done it at the store if the situation was correct.  

The Auto industry changes slower than most because its different then most.  It involves elements of humans others don't.  Some think its transportation, many see it in a much different light. 

My Ramble for now :)

Congratulations on your success Matt!

@David Ruggles

The middle man right now are the 3rd parties, not the dealers. They are getting between dealers and their customers. 

You and your dealers can keep paying the 3rd parties. Mine are eliminating them. 

The cost per sale according to NADA is still over $600 just like it was in 2005. Why is that when the internet was suppose to drive advertising cost down? 

@William Phillips 

I'll start by pointing out that I'm in a dealership almost every single work day, including dealers in 4 different states this week alone. I also come from working retail in dealerships for years. I've been talking dealers off 3rd parties for more than 10 years and I have been in the business long enough to remember when AOL faxed us leads with no email address on it. So who is making flawed, poor assumptions here?

Second,  you called out Brandin for his tone and suggested he made it "personal". Your sarcastic tone when you write things like "wow 2 plate holders" is not any better. For the record,  I'm not offended by your sarcasm,  nor do I care, but I did want to point out that you were quick to violate your own suggestion. 

Furthermore,  I do think it could be perceived as insulting when you suggest that I'm just out too make a buck off of dealers and assume that I have no interested in helping them grow their business and be successful.   

Also,  let's be clear that you have your own agenda as well.  AIM is not exactly the America Red Cross or Public Library. You have a vested interest in the way you are teaching and training process to dealers. In reality,  dealers moving in this transparent direction could be detrimental to your business. I'm sure you will think of way to spin why this isn't true, since in fact you are an expert at training people how to "position" themselves and the dealership they work at. Looking forward to that ramble :)

Cars.com and Cargurus are making millions off dollars in profit. While the only public record off AutoTrader was when the filed for IPO in 2013 and showed $41M in profit off of $563M in revenue. They leveraged that pretty well,  so I'm also not following this idea that 3rd parties haven't been successful. 

I think you will definitely have to concede Carvana 's success at some point (though not today).

Anyway,  only time will tell on some of these topics. I believe you will see some major shifts in this area overt the next 12-24 months. 

Brandin great topic. To spin off of William I have to speak from personal experience that similar to purchasing a home people may "shop" price, location, wants, needs etc online but they just aren't going to hit the "buy now" button on such a large ticket item. The human element is more prevalent now with TOO much information being spewed at them at such at rapid rate making it near impossible to distinguish the real from the fake...que the knowledgeable, trained sales rep.

Thank you for your input Amanda!  As mentioned to William earlier, all feedback is welcomed.  It's an interesting topic and there will be justified opinions from both sides.

Matt

I will dispense with your useless rant and give it to you line by line so I can get back to work

My opinions are based on your flawed theories 

I work for the dealers bottom line not talking them off 3rd parties, if thats your focus as others it is FLAWED.   Called a financial statement, ever read one or study ROI per source?

Your opinion on my communication with someone else is something you should not care about so why contradict yourself in the same paragraph 

If the facts of your own written pimping of your product on these rants isn't enough proof, the fact that you have brought up my company, and I have not, nor mentioned what I do for them is your under developed view.   You on the other hand can not stop talking about what you do.  

Transparency is information, and its all there already, and has never been anything I have to teach dealers to do. They aren't dishonest crooks as you insultingly suggest in their need for transparency.  People like you effect my business model in having to follow one vender after another like you, who try to convince dealers that their product is the be all and will solve their issues.   I don't have software do you?   I train them on what ever they are using can you say the same?    Step in to the kitchen Matt and lets dance if you want to make it about that.  Sure some will be entertained. 

Both vendors you mentioned, which are different ones than you started your tranparent rant about,  are diversifying in to CRMs and data because their basic business model is failing  ie COX purchase????  These vendors you mention developed their markets and models MANY years ago now they are diversifying for profit and information to sell. 

I don't have to admit to some future hoped for success by Carvana or TC.  They are failing in profitability and fueled by investor stock market cash.   Are you delusional or liberal I am assuming.   30% of the leads TC gives dealers are already in their data base.  Another 10 to 20% are false leads that most often are already sold prior to the TC leads arriving.    You left out them from your rant.  You know the one ripping dealers off in the name of transparency 

Till Carvana or TC step up and run a store they are living off the backs of hard working honest dealers.  All this while being told my guys like you, they just arent transparent enough, cause they want to buy cars from home.  Thats BS. 

Wish the car business moved as fast as 12 to 24.  They are still printing documents on paper.   Get real and get back to work as I am.    

This exchange is over. 

Lol. First, once again your arrogance and rudeness at the beginning says a lot about you William.

Truth is you took offense so easily from a harmless comment from Brandin early in this chain, yet you start your post by calling my post a "useless rant." This kind of hostility is representative of someone who is close minded and instead of actually debating resorts to attacks. The reason it's relevant is because it's hypocritical. You can dish it out, but yet you are so sensitive.

As far as ROI, I used to work for a hedge fund ran by the former Head of Research at Goldman Sachs, so yes I've read balance sheets for a living. Maybe you should stop making assumptions, since everyone so far has been "flawed."

I've also trained dealers for years and that is one of my core competencies. In fact, I've trained stores for Penske, Sonic, Napleton,  Germain and many others on sales process. In fact, yesterday I had a top 10 mega dealer in our offices having a conversation about how 17 out of 4002 surveyed car buyers liked the process and how we can change that (in the store and online).

You said the exchange is over? Something tells me you won't be able to resist telling me how wrong and flawed I am. Let's see....