How Can Dealers Stay Competitive With the Online Retail Model?

“The renewed focus on the used car department of a dealership” is one of the hot topics at this year’s AADA Convention and Expo in Brisbane.

The idea that the used car market is one of the key talking points at a 2022 convention where the theme is “Future Focused” may seem incongruous, but how dealers source, market and sell used cars is now more than ever a vital contributor to their overall performance and profitability.

So where do dealers sit within the scheme of things where market disruptors like online used-car business Carma are raising millions to fund their expansion, while others such as giant UK digital used-car company Cazoo are posting losses of almost $A1 billion for 2021?

Can Dealers Compete With Online Retail Platforms?

Clearly, in Cazoo’s case at least, the “potential business risks and pitfalls of its online car retail and vehicle subscription model” are glaringly evident. The breakneck speed of Cazoo’s growth is an inherently risky strategy. In addition to more than $A700 million in acquisitions, Cazoo spent north of $A115 million on marketing, customer experience, advertising, and other marketing-related costs last year alone.

Carma is no doubt emboldened by the success of US online used-car businesses such as CarMax, Autotrader, Truecar, and Tred, so establishing itself as the clear frontrunner in Australia is a calculated move.???

But such rapid growth - wherever you are - comes with a formidable array of potential pitfalls. A US Securities and Exchange Commission (SEC) report found “almost 70 potential issues with the (Cazoo) business as it continued to drive rapid growth across Europe,” including the ability of “traditional car dealers or marketplaces [to] increase investment in technology and infrastructure to compete directly with our online retail model or online retail platforms.”

Technology is Your Friend

The thing is, dealers (and OEMs) already have much of the technology and infrastructure required to mount an effective counterattack on the virtual invaders. Or at least, they should have it. Infrastructure aside (such as the showroom and workshop), dealerships have had dedicated CRM and lead management software at their disposal for some time.

Automotive software specialist Fusion SD, developer of the AMS Pro CRM and lead management system, has been innovating in the automotive sales pipeline space for more than a decade.

Online retailers don’t have access to technology any more advanced than modern dealerships. In fact, even before the pandemic, dealers had access to technology-driven tools that have been proven to help them convert 25% more leads than they did before they had access.?

As online retail platforms invest more and more in the customer experience space, established dealers are able to not just keep pace, but stay a step or two ahead. The key to dealers’ and OEMs’ success as our industry transforms is using the technology they have to the full extent of its capabilities.

In other words, actually understanding what Future Focused really entails, embracing change, and using technology to your advantage. Just like Easyauto123's successful CarMax-based business, dealerships are inherently well-positioned to provide the same mix of convenient online shopping experience with the traditional offline showroom experience.

Communication Shapes Customer Experience

Car buyers’ biggest gripe with the car buying experience is overwhelmingly a lack of effective communication from the dealership. Online retailers and emerging market disruptors such as Car Expert look to take advantage of this ‘gap’ between dealers and buyers. But dealerships can plug the gap themselves by simply using the tools they have more effectively.

Tools such as AMS Pro.

Whether buyers are looking to buy used or new, trade-in or not, or haven’t even thought about their next upgrade, dealers are often in the best position to communicate proactively with these prospects wherever they are in the sales pipeline.

In the next article, we’ll look at some of the specific activities your teams can do using a proper CRM and lead management system to maximise their productivity, capture every lead, and convert at least 25% more leads than they are now.

Get in touch with our team today?to find out more about using technology and communication to compete with emerging online retail platforms.