Volume or gross, it's a simple mathematical equation, and fair to say that it usually ends up with the same bottom-line results.

You could sell 100 units with an average of $2,000 gross profit, or sell 65 units at an average of $3,100 gross profit. Either way, you make $200,000 for the month. So, which do we choose? Which is the better fit for my organization?

The constraints and circumstances that have given us the for's and against's to make the decision have changed. The way our customers buy cars has changed. Social proof and influence have added their dynamic. No longer does one need to go without the other. 

In the past with my Dealership in England, if I wanted to sell more cars I would need to up my marketing budget. I would need to cast my net further and try to entice customers to travel further to buy a car. I would need to lower my profits and up my expenses.

Counter this today with online sales being more and more the cultural norm for buyers, I can sell further afield and deliver my car to customers I never had access to previously. 

Also impacting my enhanced ability today is the technology that helps me turn my inventory faster without the need to drop my price. Valuation tools that tell me which vehicles will turn quickly and what I need to buy them for to compete in my market and make my target profit.

I used to turn my inventory and capital 6 times a year - now the best dealers who really focus, discipline, and use technology to help them set in stone and stick to process are turning 12-15 times a year!!! What a HUGE difference that would have made for me.

Recon software that not only helps me to get my inventory front line ready quicker but also helps me sell it before it's even ready for sale? 

Current Condition reports that help me show transparency, generating trust so that I can compete with the bigger digital retailers.

Bottom line. I can now hit my target 30-day turn ratio for my inventory and I can still gross strong profit. 

NADA Academy students showed an average turn of 7.6 times per year or every 45 days across the USA. Successful NADA 20 Group members turned their inventory 12 times a year, or every 30 days. These figures were agnostic to volume or gross stores. The difference in the faster turning stores was the focus, discipline, and measurable, scalable buying, and reconditioning process. 

So how do we do that? How do we eliminate inefficiencies? Identify and fix roadblocks? How do I buy better? How do I lower and control my cost in recon?

How do I get my turn down from 45 days to 30? Take 30 seconds to click here to see how much more money your store would make if you focus on the right areas. 

A Dealership selling 75 vehicles with $2500 gross per unit, 7.6 times a year earns $1,4m. By focusing on the right areas and turning 12 times a year the same dealership earns $2.25m.

Click here to see how reducing a few days of your inventory turn would increase your earnings.

Alex Chester is the National Sales Manager for Carketa. He is the last of the famous international hooligans and automotive petrol head. 

Carketa helps auto dealers buy better, turn inventory quicker, and generate trust through recon transparency. 

76% of Car Dealers surveyed believe that advertising online, constitutes a digital selling strategy. 

As of May 2020, Carvana's as-soon-as-next day delivery was available in 261 markets across the USA. In Q2 of 2020, the company reported a 25% increase in vehicle sales, as a result of physical dealership sellers being closed as a consequence of the COVID-19 pandemic. Carvana had gross revenue of $1.12 billion, up 13% for the months April-June 2020. In 2019 the “Amazon of Auto” sold 177,549 vehicles and posted annual revenue of $3.94 billion, making it the third-largest used-car retailer in the U.S.

So, is it the beginning of the end of the road for the traditional dealership? No, it’s not, however, the threat of online sales will not go away, it will continue to grow. Is it a matter of, if you can't beat them join them? “No… Brady Thurgood, Carketa Inc Co-founder & CEO says, you beat them”.

“We are looking at this upside down, says Thurgood; winners don't focus on the opponent's strengths, they study them, improve on them, highlight their own unique strengths and get to work.”

What are the online retailers' strengths and how do we improve on them?

According to NCM associates staff, those strengths are User Friendly, Quality Photos, Customized Financing, Saving Time, and The Longest Test Drive. Which of these strengths can not be achieved by the traditional dealership? Sure, we may need to shorten the time it takes for price negotiation…. slightly… but everything else we can adjust to very easily… right?

Are these the only strengths of the online retailer's model? Let's dig a little deeper. Let’s consider the backbone of their operation and how they make it work? How do they convince a customer to buy a vehicle from a dealer 1000 miles away without them touching or test driving the car? How often does a traditional dealership sell a used car without the test drive? Even the idea of handing over a SSN number on the web causes many buyers to stop in their tracks, however, turn it over they do along with their hard-earned cash and their trust in the dealer and it’s vehicle.

Carketa Co-founder Jason Berry says “the online auto retailers have built their business on two solid blocks. The vehicle reconditioning process and the ability to show transparency, building trust, and confidence in their product through their vehicle condition report.” It's true that companies like Carvana have dialed in the Recon process; it is the key area of their business that enables them to ensure a quality product consistently and build their brand.

The traditional dealership has what the online stores don't have; the dealership. The building, the lot, the handshake, the smile, the popcorn and water bottles from the fridge, the service bay, the test drive, Saturday morning BBQ’s, the kids play area, the family, the personal touch, the experience. The full service.

To compete with this new wave, a dealership can stay ahead of the game by adopting early to the technology available in the marketplace today. Tools that will provide everything needed to perform the backbone operation of an online store will open new ways to market and speak to every kind of buyer, near or far.

“Carketa loves the car dealer, says Thurgood. We know they will work hard through any worldwide crisis or change in their marketplace and come out on top. What is needed to outplay the online retailer is the right process and best practices, marshaled by a solid cutting edge reconditioning tool. Add the ability to cast their nets wide, appealing to the distance buyers with the aid of a robust vehicle current condition report and the dealer is in good shape to take on this new way of transacting business.”