The internet has revolutionised the way the retail world works, with UK consumers able to buy anything they can think of, from tomatoes to televisions, and have it arrive at their door at a time of their choosing.
But this online whirlwind seems to have bypassed the automotive retail industry almost entirely.
While many businesses are looking at allowing their customers to book services and place deposits for cars, and used car sales online have been pioneered by companies like Autoquake, few franchised dealers have taken the leap of allowing new car customers to complete the purchase in its entirety online.
Online new car sales throw up such a huge amount of questions and complications that entering into them fully really is like venturing into the unknown.
Multi-AM Award winning dealer group Lifestyle Europe is one of the brave few willing to explore the benefits social networks and online new car sales can bring to a modern franchise dealer business.
Peter Isted and Marc Matthew, Lifestyle Europe’s managing director and chairman told AM: “We know customers do a great deal of research throughout the buying cycle, but one stage that no-one has tackled is putting the ‘new’ stock out there for customers to be able to actually browse, click and buy.
“We are introducing a new era in vehicle purchasing and we are realistic that we may be ahead of the game somewhat.
“However, there will be many valuable lessons to learn along the way and we are confident that via feedback we will be able to continue to develop the site into a tangible revenue stream for the group.
"In three to five years we could be seeing up to 25% of our core new car business online.”
If you build it, they will come
Lifestyle Europe’s online new car buying system is based on GForces’ NetDirector Auto eCommerce solution.
This is a platform that has been used for selling the group’s parts and accessories but Isted felt there was a blatant need for selling cars online.
Isted said: “Because we had an existing relationship with GForces via our core web platform, we have utilised the very same software for our parts shops, which to date have given us an uplift on our bottom line profit.
"Fundamentally, we have taken the decision to lead rather than follow.
“It was a logical step to take in using the existing platform, with some re-engineering by GForces to make the solution fit our business.”
The ecommerce website for Lifestyle Europe’s new car stock allows customers to shop for cars in the same way they would shop for a new computer, television or groceries in a completely transparent process.
At the moment, customers pay the full balance owed for the car through a secure online system, but the system will develop to allow customers to arrange monthly finance payments too.
Lifestyle Europe’s Kerridge dealer management system exports its new car stock into a CSV (spreadsheet) format that is compatible with the e-commerce system.
What Car? editorial content is also imported into the system which gives the customer an independent evaluation of each car, including a large picture gallery and technical specification.
The group is starting with the Ford franchise first, but once the full potential of the opportunity is understood, the system will roll out across the group’s other manufacturer partners Mazda, Renault, Subaru and Isuzu.
According to a CapGemini survey of 8,000 customers, 41% want to buy a vehicle online and complete the process end-to-end.
The survey, called ‘Cars online 10/11: listening to the voice of the consumer’, also showed that 90% of respondents research online before buying a car, read reviews online, purchase their accessories online and receive finance quotes online too, all that’s left is the car itself.
Isted said: “Until we make it possible for people to buy cars online, how will we know if a market exists for it? We are trying because we believe our customers are ready for that step.”
Death of a salesman?
Not everyone agrees. An AM-online.com poll asked franchise dealers if they were establishing the ability for customers to complete new car purchases online this year and a resounding 88.9% said no.
One dealer said: “We as franchise dealers need to give prospects and customers every encouragement to visit our dealerships and build relationships, not the reverse.”
It's an important point.
Millions of pounds are invested in facilities, personnel and training.
By cutting the showroom out of the process doesn’t that negate the need for a dealer?
Matthew said: “Customer service is probably the most important factor
and plays a huge part in our company ethos, so we will be working exceptionally hard to provide an experience that is positive, transparent and professional.
“It is actually about matching customer expectations. When you purchase something from Amazon you don’t have any personal interaction – you just browse and buy.
“Many consumers actually see the ability to buy a car without having to interact with a dealer as a blessing.
"Many car buyers will still want personal contact and to test-drive products. It is just about delivering the widest possible choice through the technology and channels you have as a business.”
The showroom still plays a factor in Lifestyle Europe’s online sales strategy as there will always be a mix of car buyers.
Some will want a totally online experience, while others may submit their initial order and then complete the deal within the show-room environment.
Customers will have the option to collect at the showroom or request delivery to their door.
However, at present Lifestyle Europe is aiming to encourage collection, as it still wants customers to build more than an online relationship to try to help enhance incremental business.
A complicated process
The new car buying experience is a complicated one.
Qualifying customers correctly is extremely important, so handing this process over to the computer throws up a lot of com-plications.
Customers will still want to part-exchange their car and arrange finance.
The dealer needs to make sure the customer is right for the deal in the first place.
Isted said: “There is a huge opportunity with regards to finance, but we don’t want to run before we can walk.
“We are well aware that many customers will still want to finance and part-exchange against their purchases, so there is still a massive need for the showroom to play a part in the process. It won’t be for everyone.
“We have carefully considered the upsell opportunities.
"However, at this stage we are keeping it really simple.
"There is a tendency to over complicate the web and clutter up websites with functionality that car buyers really don’t need or can be bothered with.
“We will see how we go with our initial roll out and then evolve.
"We want to do this properly, so despite the fact there is technology available to propose finance online we are not venturing down this route until we have ironed out a tight process that complements the basics.”
Spreading the sales net online across the UK potentially means dealers sell a new car, but they won’t retain the customer for servicing, losing out on vitally important aftersales work.
Lifestyle Europe is willing to take the hit on selling to customers that might not use the group for servicing, but Isted believes that as long as the business keeps its eye on the ball and continues to focus on what it does now, any profit developed by the online shop will be a positive bonus on top.
He said: “On the flip side, by improving search engine optimisation as a result of the shop we stand to create new opportunities, so all in all it has to be a win-win solution.”
Lifestyle Europe will be heavily reliant on organic search within Google and social network channels to pull in customers to its online e-commerce site.
The business won’t be targeting its local database of customers, but the online shop does create the opportunity for customers who have moved away to buy a car from the group.
Isted said: “Depending on how the shop develops we have considered paid for listings, but again we would rather invest in time and build the site strategically and naturally so we can get a better impression of traffic, browsing patterns and potential buying cycles.”
As it’s such an unknown area, Lifestyle Europe isn’t ready to put targets in place for online new car sales.
Marc Matthew said: “We would love to put a target in place.
"However, we are completely realistic that at this stage we need to try a few things to get a reading on customer uptake.
“Ask us that question in three months and I am confident we will be able to put a figure out there for our teams to aim for.”
Dealers can download the online cars report at www.am- online.com/files/CapgeminiCarsOnline.pptx
What future for multi-million pound showrooms?
If online new car sales take off, it could eliminate the need for ever-expanding multi-million pound showrooms or it could even go a step further and cut out the dealer, leaving manufacturers to go straight to customers for new car sales.
Marc Matthew, Lifestyle Europe’s chairman, said: “Buying online won’t replace the need for showrooms.
It simply widens the net and provides another option for purchasing. No-one really has the answer.
You just need to look at Tesco, Sainsbury’s and M&S.
“They still retain the superstores and physical retail footprint, but the customer experience has been augmented by the internet and there is a greater choice of where to buy.
"Our primary focus is to enhance our search engine optimisation (SEO) strategy and to maximise awareness of our business.
"Customers do, and I think will always, desire the option for showroom interaction.”
As for manufacturers cutting dealers out of the equation, Lifestyle Europe md Peter Isted believes anything’s possible, but not always practical.
He said: “Customers like to engage with their local dealer and are keen to continue to build that trusting relationship.
"By having an online presence, we are confident we can still build a customer/dealer relationship as achieved within our physical showrooms.”