On a previous posting entitled Two Old Timers Teach the Industry a New Trick on October 21, I wrote about 2 dealers in their late 60's that were starting up a centralized buying service company called SunStar, located in North Carolina. Scott Wood, Director - eCommerce/Digital Marketing at SunStar who leads this new company, recently wrote me the below note. With Scott's permission, I'm posting it on the blog with the hopes that others in the industry will provide input and response to Scott's questions.
My second purpose is to connect Scott and SunStar with dealers around the country that are looking for alternative ways to source vehicles. I'm certain that the old way of doing it won't work so well in the coming year. Please feel free to provide Scott with your thoughts and contact him directly (firstname.lastname@example.org) if you think that his model works for you. I have absolutely no personal or financial stake.
Hi Dale -
Glad to hear Nashville went well for you.
After some testing & validation in Sept. and early Oct. with our NC dealership, we've kicked off the centralized purchasing for Don Elliott's TX & NC dealerships and, just as of today, tasked with buying a portion of the cars for Dwain Taylor in KY.
In looking at our "stocking service" as an independent entity, I have spent some time thinking about how the charge to dealers for the service should be structured. I, of course, would be interested in hearing from you on this subject.
Right now I anticipate charging on a per vehicle purchased basis rather than a flat monthly fee. One idea I've come up with is tying the charge to the MDS (Market Day's Supply) of the vehicle purchased. In other words, keeping in mind that the "going price" for the traditional independent buyer is in the range of $100-$200, lower MDS cars could be billed to the dealer at a higher rate ($200?) and higher MDS cars at some lesser amount - essentially a tiered system based on the MDS. Part of the theory rests on the fact that locating, evaluating and buying high demand, low supply cars requires more expertise and time on the part of the analyst than buying higher MDS cars, though there is a place for both. Again, since you've included some "independent analyst" comments on the blog, I'd be interested to know if you or others you hear from have thought about how to charge for the service.
In the "per car fee" scenario SunStar now includes the added services of:
• Arranging transportation - not a biggie, but possibly some slight extra brokerage income via Central Dispatch (?)
• Adding the vehicle to the dealer's website or inventory management tool so that it's out in the market quickly, with a description and photos (when available) within "X" hours of purchase - - that's a biggie to me and I would speculate your average, independent buyer doesn't perform that service, wouldn't you?
Thanks for taking the time to keep in touch and write the blog entries. I can't make Sunday school this time due to the kid's soccer tourney, but would love to come up sometime and get some more of the gospel.