What happens if Amazon gets involved in selling cars? Should dealerships simply hang up their businesses and hope the real estate is worth something? While it seems certain that online retail giants like Amazon and China’s Alibaba will eventually enter the car-selling business, experts say that dealerships will still have a role to play, but they need to understand that role and excel in it. Continuing to operate like it’s 1999 won’t be a viable option soon.
According to August Joas, Andreas Nienhaus and Fabian Diaz writing for Forbes, the challenge for both manufacturers and dealers isn’t only about selling online, but rather to improve flexibility and transparency to meet consumer expectations both online and offline.
“Car companies and brands need to capitalize on the strengths they have that, say, an Amazon doesn’t,” wrote the Forbes contributors. “Thus, the question about the future that the automotive industry should be asking is not whether the dealership model will continue to exist, but rather what role it should play to give automakers an edge in the new, more exacting retail environment.”
Car shoppers will still want to look at and touch the vehicles and features they’re considering. They’ll want to drive the car. They’ll want to smell the interior of the car, fiddle with the knobs, kick the tires and check the cargo space, and these are activities they can only do in a dealership. Essentially, dealerships need to figure out how to remove the pain points from the car-buying exercise.
This might include:
Simplifying the F&I process. Consumers today often aren’t equipped to compare financing offers or models of ownership, particularly if the information is presented in a way that compares apples to oranges. Dealerships could make the process simpler and more transparent so it’s worth it for customers to visit a dealership if (for nothing else) a chance to get a brief education on paying for insuring the vehicle.
Working with social media. The percentage of Americans who use social media now stands at 81 percent, according to Statista, and many users wouldn’t consider making a large purchase without gathering opinions from social networks. Dealerships should consider implementing apps that allow shoppers to virtually “build” their ideal car and share it with their social networks to solicit comments, recommendations and opinions.
Forging a relationship with Amazon Vehicles. Following the “if you can’t beat ‘em, join ‘em” philosophy, many dealerships are likely to partner with Amazon in the future to ensure they get a piece of the virtual car-selling pie. Originally announced in August 2016, Amazon Vehicles is aiming to become a marketplace for car shoppers. Though the service isn’t actually selling cars yet, it’s being positioned as a convenient and trusted way for shoppers to gather information, compare models, and read reviews on all types of consumer vehicles.
The percentage of purchases made online is still smaller than many people think, and for a high-ticket item like an automobile, there will always be a function for dealerships to serve. The trick is figuring out exactly what those functions are.