By now, I’m sure you’ve heard about Amazon’s entry into the automotive world… something I predicted quite a while ago and covered in previous blogs.

For the moment, Amazon is functioning as simply a new research portal where consumers can find information and communicate with each other about vehicle models, features and reviews. However, this is simply stage one. Amazon is a VERY successful and trusted brand and will eventually seek to monetize this operation. How they choose to do that or, better yet, how they choose to EVOLVE this service remains to be seen…. but I have my ideas.

Speculation and opportunity run the gamut from becoming a third-party lead provider, to partnering with OEMs (for example, the Hyundai partnership currently in operation whereby Amazon Prime delivers an Elantra to consumers for a weekend test drive), to perhaps a dealership direct subscription model where dealers pay for branded geographic areas. There is even a scarier platform potential that I won’t share quite yet.

Regardless of which path is taken, OEM and dealer-specific ads are already appearing on vehicle information pages delivered by third party advertising networks. So Amazon is already actively collecting a little money through those partnerships.

However, right now, Amazon is simply in an information provider mode.

Because reviews are an important piece of the information that Amazon provides, I did some research on this and discovered that in fact, reviews for vehicles go back as far as March 2016. As this service was officially launched on August 25, 2016, I was curious to know how these individuals left reviews and whether they are legitimate. Through a quick, brief investigation of reviewers, I came across one reviewer of a 2016 Toyota Camry who also left reviews for a 2012 Chevrolet Volt, a 1989 Toyota Corolla, a 2016 Toyota Camry and a 1991 Toyota Previa, all in a 3-hour time period! Whether this is a case of false reviews, or simply an over-ambitious reviewer, is yet to be determined. Regardless of which, the biggest key here is that everything is done under the Amazon branding. However, I do not believe Amazon would want to open their brand to any criticism if false reviews permeated their platform.

What does that mean for dealers? For many years, Amazon has been the innovator as far as making the whole buying process easier for consumers – from two-day delivery, to next day, to one-hour delivery – Amazon is completely focused on being the go-to source for everything a consumer could want, be it groceries, liquor or restaurant orders delivered direct to their doorstep in under an hour in some cities!

Amazon’s entry into the automotive world is not unlike their disruptive entries into these other markets. I am sure their ultimate goal is for consumers to ONLY BUY GOODS THROUGH THEIR WEBSITE AND APP! So given this fact, wouldn’t it be logical to conclude that Amazon’s long-term play is for consumers to buy cars through their e-Commerce site – even if they choose to own brick-n-mortar stores?

I’ve been tracking this progression and have warned dealers for quite some time now that this was coming down the pipeline. It really is time to get better at the whole online vehicle selling process!

Collectively, we must continue to earn back the confidence and trust of the consumer, or be subject to a massive change in one of the greatest industries in the World. Remember, today almost every business thrives or dies depending upon the consumer demand. Today they demand convenience, simplicity, trust and a friendly environment. Amazon has it all and now, so can we – it’s all about relationships and delivering the experience today’s customers want!

You need more than just a third party app. I believe that a very high percentage of car buyers still want to communicate with a trusted advisor at a dealership. Do you offer your customers an online buying experience that actually converts, that consumers embrace and which enables you to retain your fair profits?

If you want to be competitive, now and in the future, you must give people what they want -- which is very simply an Amazon-like car buying experience. So, I strongly suggest that you get ahead of the competition and, just as importantly, protect this industry for our future generations. Start giving it to them now before Amazon beats you to the punch. It is inarguable that that is the direction.

Cheers to the greatest business in the World today! Let’s preserve it and better yet, enhance it for all.

I frequently talk about the current industry disrupters taking sales from dealers – the Beepis, Vrooms and Carvanas, amongst others. These companies snuck up on dealers and, with little warning, jumped into the spotlight and sucked investors into a future Nirvana of car buying bliss. They are currently blasting feel good messages to consumers portraying car dealerships as inconvenient -- pushing a message of an easy buying experiences which, unsurprisingly, consumers (and investors) have eaten up.

While they may not have yet gained much market share, their strength lies in one simple fact: the message they broadcast to consumers is effective. We have the technology to sell cars in the exact same way and deliver the exact same experience. Yet, deserved or not, sadly, dealers have a perception issue with consumers. So, who do you think consumers will believe first? You got it.

What we have yet to talk about is who the future disruptors will be. We can’t prepare ourselves if we’re not constantly looking on the horizon. Well, guess what? The horizon is staring us right in the face and if you thought Carvana, Beepi and Vroom were scary. These will give you a heart attack!

Google. Apple. Microsoft.

Any one of those entering the automotive industry would be a powerhouse -- but all three?

You may discount their efforts with arguments such as, “it will be a long time.” Or, “it will just be autonomous cars,” (which nobody wants). Or, a number of other excuses to ignore them. However, the fact is that these companies did not get to be industry giants by making things people don’t want. Remember the iPhone? When Apple first developed it, all of the other phone manufacturers predicted a flop. Well, we know how that went!

Let’s take a look at some of the recent events that have occurred with these companies:

• Google: Google is already testing driverless cars and have partnered with OEMs to assist in their manufacture. The company even plans to open a facility in Detroit to be near their “partners.”

• Microsoft: While Microsoft recently said that they were not personally entering the automobile business, they expressed their support and encouragement for other companies to do so and have offered to assist automakers.

• Apple: Probably one of the worst kept secrets is the Apple Car. Of course, Apple denies that one is in the making -- all while hiring automotive-related experts, investigating charging stations and filing patents that would suggest otherwise.

Two of these tech giants – Apple and Google – are already fortifying their positions within the industry through the integration of their software via Apple’s CarPlay and Google’s Android Auto.

While Apple is notorious for being uber-protective of its operating system, with the popularity of iPhones and consumer demand for integration, automakers are adopting and installing this technology into vehicles. Apple will decide what features, updates and apps will be allowed and automakers are already seeing a loss of control of their own vehicles.  

And we can’t forget Tesla, who are already fighting tooth and nail for its direct-to-consumer sales model. And in some places… winning. Now they’ve partnered with Nordstrom to build showrooms within Nordstrom locations!

Why throw Tesla into this mix? Do you really think that Apple or Google are going to start car franchises? Could they perhaps be waiting patiently, allowing Tesla to fight the battle over direct-to-consumer sales so that their path is clear when vehicles are ready to be sold? Let’s just say you won’t ever be seeing a Google or Apple car sitting on a FCA dealership lot.

So, we can sit back and dismiss the current companies disrupting our industry, taking sales and winning customers with easy online buying experiences. And, we can also ignore the threat to come from tech giants with deep pockets who, I guarantee, have no plans to lose in this market place. Or, we can take action now to stem the bleeding and take back what is ours by using the very same tactics that they’re using to win our customers while making sure our eyes are open to future threats that are certain to come.  

Automotive Online Retailing (ARO) is just now gaining inroads into the retail automotive space. And it is important to recognize that. We do not have to challenge or reduce our margins. As a matter of fact, we can gain margins. Customers will buy more, and they will buy more often, if their confidence is high and if their experience is pleasurable. Enough facts and research studies have been released to prove that.

We simply must gain consumer confidence and smooth out our processes while protecting our margins. For the majority, I promise you it is all about the process, the ease and simplicity, the transparency, the relationship and the enjoyment.

I write this article simply to offer you a look into a potential future. There is no doubt these tech giants have earned consumer confidence and, if they follow Tesla’s lead with their autonomous cars, our OEM’s and our dealer brothers and sisters will have their hands full.

I say “start now!” The future is clear and consumer demand is overwhelming. We can become better dealers in a myriad of ways. We can and must earn consumer confidence. I talk with Owners and GM’s coast to coast and know that dealers are making record profits today, and that is wonderful.

However, I specialize in peaking around corners and searching for trends with teeth. ARO is here to stay and the Amazon-like or Apple in store experience should be our goal as dealers -- along with becoming more efficient -- and yes, even more profitable. Have you seen the profits these tech giants make?

Enjoy your record breaking profits today. But know….this too will pass. Prepare for the inevitable.

Today I want to talk to you about a potential future I believe is rolling towards our industry at an alarming speed. You see, what I do, is I peek around corners looking for trends that have potential teeth and which could impact the automotive industry. 

Recently I have become very concerned, as there is one particular trend that could be with us in the very near future - as a matter of fact it could be with us extremely soon. Allow me to clarify…

Recently I was at an Oregon Auto Dealers Association meeting as a guest speaker in Hawaii, attended by 300 dealers. As I started my presentation, I explained that I had some exciting news to share. I went on to say that a few hours ago I had received inside information that one of the largest publicly traded dealer groups had just merged with another company. This company was immediately changing its name and the announcement was to be made public in the very near future.

I went on to explain that this newly merged company will be creating a new logo and putting their name on all of its marketing and on all of the acquired storefronts coast-to-coast. They announced they were also going to be searching for even more dealers to purchase over the next 6 to 12 months, in order to expand.

I then hit a button on my laptop, bringing a new presentation slide up on the screen where a fancy logo spun into view, then finally stopped with the new company’s name emerging as:

AmazonAuto

I sat there quietly for about 10 seconds and looked out at all of the 300 dealers. Many sat there with a stunned look of surprise on their face, while others appeared to be more than a little worried.

My wife (who sat in the back of the room) later told me that she had overheard dealers in the background saying “Oh, S**T!”  That would have been my exact feeling as well, truth be told. I waited a little bit to let it sink in before putting them out of their misery by telling them it was not real, but simply setting the scene for the concept and concern I wanted to share with them that day. But one thing was for sure - it was NOT that unreal a concept.

I told them that, while this actually didn't actually happen, (I hope they didn’t tweet it out to the world!) it has a strong potential of happening as soon as today!

Warren Buffett came to this business because he found out our secrets -- that our profits are more than interesting; future profitability potentials are huge; the consumer confidence is low and that there are pain points that can be solved quickly allowing even more profits to be made, all while gaining consumer confidence and even consumer enthusiasm. Wall Street is slipping into our business - it's a reality. This could happen.

So tell me, what would happen, if all of a sudden one of these stores – an AmazonAuto Honda (or any make) popped up right next to your dealership?

We’re all making a lot of money right now. We’re breaking records. Our golden goose is still very fruitful. But wise voices are starting to say “This too shall pass.” Are we, as an industry, ready for that day?

Our industry has the potential of changing overnight. I think we need to prepare ourselves. Consumer confidence is something we need to gain. I invite you to think about preparing for the inevitable. Wall Street thinks we, as dealers, are too slow to change. We are the last business vertical, worldwide, that is still struggling to get into Automotive Retailing Online (ARO).

Online retailing is just now gaining inroads into the retail automotive space. And it is important to recognize that. We do not have to challenge or reduce our margins. As a matter of fact, we can gain margins. Customers will buy more, and they will buy more often, if their confidence is high and if their experience is pleasurable. Enough facts and research studies have been released to prove that.

ARO is a new focus for us as dealers. I believe we can become more efficient. I know we can have a different type of persona -- shedding any stigma of the past. We can think and do business like AmazonAuto, or ZapposAuto would, as Wall Street says, spend less and make more.

ARO also helps our efficiencies. We simply must gain consumer confidence and smooth out our processes while protecting our margins. For the majority, I promise you it is all about the process, the ease and simplicity, the transparency, the relationship and the enjoyment.

As I stated in the beginning, my job for more than 25 years with a large dealer group was to peek around corners and look at potential trends that may have teeth. As a GM, through my use of this technology, and results my team attained, I was able to prove that online retailing is a reality.

It is also one of the reasons I left a job I loved with one of the greatest dealer groups in the country. Because of my love for this industry, and the great people it employs nationwide, I felt it was almost my duty to go out and spread this word coast-to-coast about automotive online retailing and the need to continue to move toward a more efficient platform. I truly believe it is a vertical that is going to potentially be the most fruitful and the most important change within our industry since the Internet.

Contemplate the possibilities and prepare for the inevitable.

Disclaimer:

AmazonAuto.com currently exists as a reseller of automotive parts only, not as a retailer of new/used manufactured vehicles. The creation of the AmazonAuto logo and fictional emergence of Amazon as an automotive retailer is used only for illustrative purposes and does not in any way affirm or deny the possibility of Amazon entering into the automotive retailing arena. The Amazon logo, name and brand is sole property of Amazon.com, Inc. or its affiliates.