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From: Jared Hamilton
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Digital Retailing Is Not A Marketing Expense!

Photo by David Clarke on Unsplash

The last time you were at the supermarket, did you think to yourself, “wow, that cash register really sold me on those cookies!” As silly as that sounds, we see financial statements in the car business every day with items similar to cash registers and shopping carts classified as marketing expenses. If sales decline 5% next year, are supermarkets going to set their shopping carts on fire and go all “Office Space” on their cash registers in the parking lot? No, these assets are part of a system that is necessary to provide an efficient selling and buying experience for cashiers and customers. They aren’t going to show up at your customer’s door and drive them to the store or drum up fantasies of mint chocolate chip ice cream and Cocoa Puffs.

So, why do dealerships classify digital retailing as a marketing expense? Perhaps, as an industry, this is our own doing. So many digital retailing solutions are out there guaranteeing they can increase car sales or multiply current lead counts.  Unfortunately, digital retailing, has become a catch-phrase for all kinds of different things related to digitizing aspects of the transaction. At Roadster, we find that the industry often misunderstands and misrepresents what ultimately is at the core of digital retailing — a platform for customers and dealerships to more efficiently and conveniently conduct retail transactions online, instore, or on the go.

Digital retailing is a platform for your employees to use in improving and streamlining your sales process; it is not going to rain sales on its own.

So, what does a Digital Retailing platform offer? Here is a detailed chart of DR platform capabilities:

When a dealer purchases a comprehensive digital retailing solution, they should expect it to provide most, if not all, of the elements above. While, connectivity to all vendors via APIs and/or web services is not yet possible, in due time we expect most vendors will adopt a more integration friendly position and invest accordingly.

Nowhere in the above does digital retailing claim to drive more traffic to your website or your showroom. Increased sales are a by-product of people using the platform in other budget areas—such as promoting an online buying experience or an expedited experience in their showroom. The customer experience that a full digital retailing platform can provide may lead to future customer loyalty and word of mouth, but so could those cookies you bought at the grocery store or the ability to check yourself out on a kiosk!

DIGITAL RETAILING IS
NOT A MARKETING LINE ITEM

Much like your CRM and DMS are budgeted as operating expenses, digital retailing should be considered in the same light.

Why does this matter? Unfortunately, treating it like a marketing expense leads to short term, market condition-based decision-making. As overall marketing budgets expand and contract, dealer’ s commitment to digital retailing does as well. Conversely, shoppers are increasingly committed to digital shopping in every aspect of their lives. So, while their shopping expectations are consistently growing, automotive retailers are struggling to keep up. In the not too distant future, we are likely to see close to 100% of transactions conducted entirely on digital retailing platforms, so the time to invest is now!

Has Roadster piqued your interest? Connect with us.

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Rudi Thun, COO, Roadster
He has been an executive leader in online automotive for more than 15 years. Prior to overseeing Roadster’s daily operations, Rudi was Head of Vehicles for eBay Motors. Before eBay, Rudi was COO of CarWoo!, a VC-funded new car marketplace. And prior to that, he was VP and General Manager of AOL’s automotive properties. Rudi’s very first job was with Ford Motor Company. He earned a Bachelor of Science degree in mechanical engineering from Cornell University and an MBA from University of California at Berkeley.

 

Bart Wilson

Great stuff.  In your estimation, what percentage of dealers are viewing Digital Retailing as marketing?

Derrick Woolfson

Great Article, this is just as bad, and odd as those dealers that count their CRM as a marketing expense. Its the cost of doing business, it is not a marketing expense. I think, if anything, as things evolved - instead of introducing new categories to the budget, we have just lumped everything under "marketing." 

Michelle Denogean

Thanks @Bart & @Derrik. Sadly, I think that most are viewing it as a marketing expense today. Would love to hear from some dealers who aren't vs. who are and the rationale from each. 

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