As part of AM's regular '10 minutes with...' automotive retail supplier interview series, Tom Seymour, discussed 2020's rapid shift towards online car retail and what the future might hold with Silver Bullet managing director, Cameron Wade.
What is the USP of Silver Bullet?
We’re linking what happens in the traditional showroom environment and making that part of the online buying process. People forget how complex some of the touchpoints can be as part of a car transaction. Areas such as the part exchange, finance and value-added products all have to be part of building a deal online and our platform facilitates that end-to-end process for sales, service and parts.
What is the biggest misconception about online car sales?
E-commerce won’t sell cars for you. Dealers shouldn’t think for a minute that just by turning on online self service functionality that sales will start flooding in overnight by themselves. Customers will join and exit the buying process at lots of different stages and it’s rare at the moment that there won’t be any interaction with the dealership at all. There still needs to be dedicated processes in place to support e-commerce as part of your business.
What are some of those important processes?
Customers will join their purchasing journey in different places and you need to be able to recognise that, and pick up with them in the right way. Preparation standards for vehicles will be vital, as will be the level of communication from sale to delivery. Some of these elements mirror the traditional model, the same with having lots of high quality images and stocking the right vehicles, but all of this has to be incorporated into the e-commerce side of your business too.
How many dealer groups are you working with now and what is the potential for growth?
We’re currently live with 24 groups. That number did increase when we offered free trials during the COVID-19 lockdown for those who were testing the waters. We’re currently in discussions with a number of dealer groups and car manufacturers about introducing the platform across their networks. The sky is the limit and it’s a very untapped market. The pandemic has turbo-boosted how comfortable customers feel with transacting online and I think the proportion of online sales and how the market evolves will happen very quickly over the next three to five years.
The world has been internet savvy for a long time. Why haven’t online car sales taken off before now?
There was an attitude in the automotive sector in general that it was still better to control the customer journey in the showroom. I think that mindset has been changing and COVID-19 has given dealer groups and OEMs a better understanding that customers want to purchase their next vehicle their way.
Should the Society of Motor Manufacturers and Traders (SMMT) start reporting % of cars sold physically vs online as part of new car reg reporting in the future?
It would be a natural thing to do eventually. As far as I’m aware the OEMs aren’t recording whether a purchase was finalised in showrooms or online, but I would imagine it would be something they would be interested in. It would help inform how dealer groups and OEMs approach facilities and staffing investments in the future.
Has COVID-19 put a pause on investment decisions or has it boosted interest in e-commerce suppliers?
Businesses are evidently cautious, but from the conversations we’re having with prospects, they know that e-commerce is not a luxury, it’s a necessity. COVID-19 has brought that into greater focus. I have no doubt that every dealership in the UK will need to have an e-commerce platform in place, whether that’s through Silver Bullet or not.
What’s to stop dealer groups and OEMs from building their own e-commerce platform?
I’m sure some of the larger groups will invest in their own platforms, but it’s whether they see it as an offshoot of IT or as the actual sales function that it is. Dealers have built their own websites in the past and they had varying degrees of success with that. Building the functionality of an e-commerce platform is complex and it’s whether they have the time and focus to develop their own, or want to go with a supplier who has a solution that meets their needs.
Are online sales a threat to the traditional franchised dealer model?
The transition to online sales is not going to happen overnight and there will still be a place for dealerships in that sales process. Online sales will bring down that cost per sale and that might mean a rebalancing between the number of sales executives in the showroom compared with the resource you invest in handling digital enquiries. We’re offering in-store terminals so customers can order online. Customers might want to order online and collect at the showroom. The supermarkets are still there, but they’ve embraced self-service and so I think there will be a middle ground where there’s a greater mix of the physical and online shopping experience. It’s going to be a natural transition.
Is it more of a challenge to sell used cars online vs new?
Customers will often be doing extensive research for a new or used car. For used I think we still see online sales growth, but consumers might be more likely to stick with dealerships and groups they trust and may have bought through before.
What are some of the trends you have seen from consumers interacting with the Silver Bullet platform?
The most interesting piece of the journey is around affordability. Customers are gravitating towards structuring a deal around the monthly payment. There has also been a large demographic of mid to sub-prime finance business. This could be due to being unsure of their credit position and so transacting online is more attractive, so this could be a particular growth area in the future.
What is the biggest threat to your business right now?
E-commerce is a very fast evolving market and we need to make sure we’re constantly innovating and maintaining our product development. We rolled out version 1.1 of our platform in June and this included an ‘adjust payment’ option which makes it even easier for customers to calculate and adjust monthly payments. Beyond that I think the massive challenge that COVID-19 has been for the automotive industry will only benefit those working in the e-commerce industry.
What do you think is the greatest threat to the traditional franchised model?
There is the immediate challenge of COVID-19 and how electric vehicles will change the market dynamic, but I think generally it will be not being able to adapt the business model quickly enough to mirror changes in consumer demand.