A Digitizing World – e-Commerce and Automotive Retail

Even while the rest of the commercial world has taken a dramatic shift to the online realm, automotive retail has been somewhat slow on the uptick. There are some quite rational explanations for this. First, there is the ingrained instinct that since a car is a major and potentially life-altering purchase, that some extra due care and attention is due. This means the idea of “one-click” purchasing online like that on Amazon doesn’t really fit the bill. Buyers want to see, smell and test the car they are interested in.

In 2020, however, the shift to e-Commerce is accelerating in the world of automotive retail. What’s really interesting about the shift not the move in itself, but rather the forces that are driving it:

Millennials: The New Marketplace

As demographics make their inevitable shift, the current generation of “Millennials” --- those born from 1984 to 1999 --- are now entering their dominant phase of the car buying market. This generation of people is the first to have become accustomed to “doing everything online,” though the older among them still may have an impression of traditional car dealerships. The changing demands and expectations of Millennials and their Gen-Z successors is sure to have a big influence on moving automotive sales into the e-commerce sphere.

Death of a Salesman: The Dealership

The second driving force is the traditional dealership model. For years many have stuck with the idea that when you need information or a test drive of a car, you just “head to the dealership.” It makes sense, doesn’t it? A study from as early as 2016 by the Beepi Consumer Automotive Index found that some 87 percent of Americans dislike at least one aspect of the dealership shopping experience. The majority pointed to buyers feeling anxious or uncomfortable. We are perhaps intimidated by the slick salesmen of the shop floor.

What Changes are to Come?

Driven by these two major factors, what kind of changes will e-commerce bring to the world of automotive sales? First of all, it seems clear that there will be less and less room for the salesman. Improved display photo clarity, along with reviews and test drives on YouTube mean people don’t feel the same need to get up close before they buy. The well-crafted online platform or even smartphone app is doing the job far better than a salesman can, and all without pressuring the customer one iota.

The second big change, therefore, will be a reduction in bricks-and-mortar facilities. Brands will still need locations to at least store and maintain their cars before they sell or ship them, even if the sales wing gets downsized. Locations will likely be consolidated and have their focus put more on logistics and maintenance rather than sales. There would likely still be a "shop window” display of sorts, too.

A Digitizing World – e-Commerce and Automotive Retail

Even while the rest of the commercial world has taken a dramatic shift to the online realm, automotive retail has been somewhat slow on the uptick. There are some quite rational explanations for this. First, there is the ingrained instinct that since a car is a major and potentially life-altering purchase, that some extra due care and attention is due. This means the idea of “one-click” purchasing online like that on Amazon doesn’t really fit the bill. Buyers want to see, smell and test the car they are interested in.

In 2020, however, the shift to e-Commerce is accelerating in the world of automotive retail. What’s really interesting about the shift not the move in itself, but rather the forces that are driving it:

Millennials: The New Marketplace

As demographics make their inevitable shift, the current generation of “Millennials” --- those born from 1984 to 1999 --- are now entering their dominant phase of the car buying market. This generation of people is the first to have become accustomed to “doing everything online,” though the older among them still may have an impression of traditional car dealerships. The changing demands and expectations of Millennials and their Gen-Z successors is sure to have a big influence on moving automotive sales into the e-commerce sphere.

Death of a Salesman: The Dealership

The second driving force is the traditional dealership model. For years many have stuck with the idea that when you need information or a test drive of a car, you just “head to the dealership.” It makes sense, doesn’t it? A study from as early as 2016 by the Beepi Consumer Automotive Index found that some 87 percent of Americans dislike at least one aspect of the dealership shopping experience. The majority pointed to buyers feeling anxious or uncomfortable. We are perhaps intimidated by the slick salesmen of the shop floor.

What Changes are to Come?

Driven by these two major factors, what kind of changes will e-commerce bring to the world of automotive sales? First of all, it seems clear that there will be less and less room for the salesman. Improved display photo clarity, along with reviews and test drives on YouTube mean people don’t feel the same need to get up close before they buy. The well-crafted online platform or even smartphone app is doing the job far better than a salesman can, and all without pressuring the customer one iota.

The second big change, therefore, will be a reduction in bricks-and-mortar facilities. Brands will still need locations to at least store and maintain their cars before they sell or ship them, even if the sales wing gets downsized. Locations will likely be consolidated and have their focus put more on logistics and maintenance rather than sales. There would likely still be a "shop window” display of sorts, too.

A final change to automotive retail will be to the speed that things happen. New UK-based car platform cazoo.co.uk, for example, is using a unique, fast approach to selling used cars. Buyers can do everything in just a handful of clicks, and their car is then delivered usually within 3 days. On top of that, buyers have a 7-day period to trial their car and if they don’t like it, they can have Cazoo come back and collect it. This is a better reflection of modern retail, and it seems now to have found its way to the automotive world.

Don’t Say “It’ll Never Happen”

The changes coming to automotive retail are a stark lesson to us all that no industry is truly shielded from the juggernaut-like progress of e-commerce. As the consumer’s demands change, so too must the marketplace. And so, progress marches on as relentlessly (and excitingly) as ever.