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Accelerating ecommerce in the automotive industry

Developing a more customer-centric approach to buying a car

For the majority of automotive companies, the vehicle buying process is still primarily conducted in person and takes about three hours on average.

Living in a constantly evolving, digital environment means consumers now expect to buy things with a click of a button and some pockets of the automotive industry are following suit. Companies like Carvana, CarMax, CarGurus, Cars.com and Autotrader have revolutionised the process of buying and selling a car through ecommerce, creating a seamless, omnichannel experience that simplifies and connects the car buying process.

Are consumers willing to buy a vehicle online?

Ecommerce is no longer just for small ticket items, but for big ticket commerce as well. Over the past year, consumers have become more comfortable with technology resulting in an increase in online purchases of items like furniture, boats and, yes, cars. While statistics show that the majority of purchasers would still prefer to buy a car in person (71% of American consumers), CarGurus found that 61% of people shopping for cars earlier this year were open to buying online.

People still value the in-person aspects of buying a car like test driving, comparing makes and models, and seeing the colours and features up close. That doesn’t mean that old processes like financing, dealing with multiple departments and people, trade-in valuation and paperwork can’t easily be streamlined with online tools.

A customer-centric approach

Car buying is an extremely time-consuming process for both the buyer and seller. A hybrid approach to buying a car is a feasible and potentially cost-effective option for dealerships. This could shorten transaction times, increase the availability of salespeople, reduce the number of negative reviews, drive higher loyalty and trust with shoppers and, perhaps, keep them from seeking other alternatives to purchase or lease.

The future of the car-buying experience needs to combine both online and offline components to adjust to consumer preferences. The 2020 Cox Automotive COVID-19 Consumer Impact Study found that 60% of shoppers want to complete more of the purchase steps online compared to the last time they purchased a vehicle. The study also found that shoppers were happier with their buying experience during the COVID-19 lockdown than any year prior.

On average, someone who is searching for a car will spend more than nine hours researching and figuring out exactly what they want. By the time someone gets to the dealership, they know what they want and want to get through the process as quickly as possible. Making a large portion of the car-buying journey digital reduces many unnecessary touchpoints and allows consumers to go to the dealerships with a get-in-and-get-out mentality.

As many as 61% of consumers did not feel that the car-buying journey has improved since they last bought a vehicle, which gives online platforms like Carvana the upper hand. Its omnichannel solution is more convenient, especially for customers who live far from a dealership. Carvana implements features like interactive vehicle configuration (trim, exterior colour, interior colour, add-ons etc.), reservation tools, store locator and up-to-date inventory. These are all ways in which the automotive industry can start adopting a customer-centric experience.

Taking a digital-first approach

You may recognise Carvana by its “car vending machines”. It makes the online car buying process extremely simple. Search the car inventory, find a car that fits a given budget and reserve the car for purchase. It offers tools to help determine the vehicle trade-in value, a loan calculator and options to either finance with Carvana, pay with cash or finance through a third-party vendor. For added convenience, a purchaser can either have the car delivered to their home or choose a nearby pickup location. Carvana offers a seven-day return policy. CarMax, to keep pace, recently instituted a 30-day return policy – as well as a 100-day limited warranty.

Many traditional in-person processes can be simplified online. Take trading in a car. Traditionally, a person takes their car to a dealership for an inspection and get their trade-in value. CarMax has taken that process and made it possible to complete almost completely online. After the seller has provided vehicle information, answered some basic questions and sent in various photos of the car, CarMax can provide a quick, rough estimate. If the seller decides to accept the offer, they can visit a CarMax location, make sure everything matches the information online and sell their car on the spot, or take seven days (with mileage limitations) to weigh their options.

Perhaps the biggest pain-point of the car buying experience is haggling. Most people find this to be an unpleasant, awkward experience. Dealerships can make the experience less stressful for their customers by moving the negotiation process online. By integrating configure-price-quoting (CPQ), the negotiation process can become much simpler, transparent, and efficient. This approach also eliminates extra time spent at the dealership negotiating price when it can all be predetermined before stepping foot into a dealership.

Looking forward

With AR and VR technology, the automotive industry has many opportunities to enhance digital car buying experiences further. Simple additions like scannable QR codes that provide full vehicle specs, videos and related information can be added to vehicle stickers. VR technology served through devices like Oculus headsets can enable consumers to do virtual walkarounds or even test drives to experience the car without leaving their homes, before making a purchase decision.

Ultimately, modern car buyers are motivated by convenience, value and transparency. With the rapid acceleration of digital commerce, expectations are shifting. Traditional dealerships run the risk of losing business with their outdated, high-pressure tactics and processes. Digital commerce capabilities will continue to force the automotive industry to change the way it does business which will ultimately improve the car buying experience and overall customer satisfaction.

Read more on gorillagroup.com

Katie Fiechter

Gorilla Group

published on

21 December 2021


Commerce Experience Technology & innovation

Related Topics

Consumer behaviour Ecommerce

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