JM&A Group Blog

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E-Commerce Tips for the Automotive Industry

Dec 18, 2019

Let’s face it, the auto industry has experienced a major shake up over the past few decades. 

The rise of the internet and social media have provided car buyers with a surplus of information on vehicle makes and models, add-on features, pricing options and more. To truly capitalize on the burgeoning e-commerce market, dealerships need to understand how online platforms can meaningfully support their business objectives. 

First, it’s important to point out that automotive e-commerce is a bit of a complex ecosystem, with every link in the supply chain having its own priorities. Vehicle manufacturers want more brand exposure. Auto dealers want more customers. Third-party review sites want more traffic. While these goals are not mutually exclusive, it goes to show how the competition from online retailers has grown. 

With so many different stakeholders fighting for users’ attention, it can be difficult to develop an effective digital retail strategy. 

The truth is, setting up a basic website or a profile on Facebook isn’t going to have much of an impact. Even at the local level, there are likely dozens of new and used auto dealers looking to capitalize on e-commerce platforms. But when you do business online, you’re not just competing with the dealership down the street - you’re also squaring off against every auto seller with a digital storefront. 

Discover new growth opportunities with our Ultimate Guide to Dealership Growth  in 2020

Setting the stage

Before we dive into what dealers should look for in an e-commerce platform, it may be useful to recap why they’re so valuable. According to a research report from Hedges & Company, the U.S. automotive e-commerce market is set to pass $12 billion by the end of 2019, which is more than a 16% increase from the previous year. 

While this projection does include the online automotive aftermarket, auctions and used auto parts are not factored in. 

On a broader scale, the global e-commerce market for all industries is estimated to reach a whopping  $25 trillion before 2020, according to a recent eMarketer study. 

This growth is, in part, a result of shifting consumer preferences and the convenience of digital retail options. But capitalizing on this shopping trend requires a good deal of planning and business development. Dealerships that are unfamiliar with e-commerce strategies should avoid jumping into the fray without a clear direction. With that in mind, let’s take a closer look at how car buyers actually use online resources.

Meeting customer expectations

Selling vehicles isn’t as straightforward as it used to be. 

Consumers now expect dealerships and automotive brands to provide them with all the information they need upfront, without ever having to step foot on a car lot. Independent research has become a way of life, especially for younger generations. 

But what specific preferences should auto sellers try to accommodate? To answer this question, we need to first understand how car buyers spend their time online.

In its 2018 future of digital retail study, Cox Automotive surveyed over 2,500 in-market shoppers about their preferred buying experiences. According to Cox’s market research, around 83% of car buyers want to complete one or more steps of the purchase process online.

This should come as no surprise, as modern customers tend to place a lot of stock in convenient and time-saving shopping methods. In terms of specific activities, the study found that consumers use online resources to:

  • Gather information on vehicle prices, warranties, etc. (71%)
  • Initiate and review their purchase options (51%)
  • Secure automotive financing (43%)

That said, only 11% of surveyed car buyers were interested in a fully digital experience, with most preferring to sign the paperwork in person. This is an important point, as it demonstrates that traditional brick-and-mortar dealerships are still highly relevant to today’s automotive market. 

Auto dealers should focus on integrating digital retail options into their existing operations. This hybrid approach can help you meet the needs of online users without sacrificing the quality of your in-store services.

Think of it this way: The less time your sales reps spend answering basic questions about vehicle makes and models, the more time they have for building customer relationships.

That’s right, automotive e-commerce is about more than just selling new or used vehicles. Close to 56% of car owners are more likely to have their cars serviced at dealerships that offer online estimates and appointment scheduling. Since fixed ops make up a healthy portion of auto dealers’ revenue stream, it makes sense to provide these sort of customer-focused features whenever possible. 

What’s the deal with automotive e-commerce?

Now that we have a sense for how digital retail benefits online shoppers, let’s discuss some of the ways e-commerce platforms can add value to your business. 

Generally speaking, the e-commerce automotive industry is centered on convenience, transparency and process optimization. For example, offering your customers real-time pricing information and multiple purchase channels can help build trust and distinguish your dealership from the competition. 

This may lead to higher sales numbers and more repeat business. But what are some of the other advantages of automotive e-commerce? 

  • The digital-to-brick-and-mortar pipeline: The surest way to drive business to your dealership is to build a bridge between your online and offline shopping experiences. The more useful information you can provide consumers through digital channels, the more likely they are to stop by for an in-person visit. With thousands of auto sellers competing for the same pool of customers, it’s crucial to offer car buyers unique, modern and convenient buying options. 
  • Personalization and profitable relationships: Most e-commerce platforms provide a host of personalization tools that can help your dealership improve its online marketing efforts. For example, sending out targeted service alerts and promotions can help maximize your upselling opportunities and capture new fixed-ops business. This is particularly important if you sell automotive parts through your website, as OEMs like Ford and General Motors have started offering direct-to-consumer purchase options that may impact your bottom line. 
  • Climbing the search results ladder: As noted in the aforementioned research report from Hedges & Company, around 74% of consumers rely on search engines to gather information on vehicles and dealerships. This has created a bit of a digital gold rush, with auto part resellers, third-party review sites and automotive forums jostling for top spots in Google’s search results. This has made it difficult for dealerships to rank competitively, especially if they lack SEO-driven marketing experience and the right automotive e-commerce tools. 

Keep in mind that every e-commerce platform has its own benefits and limitations. Knowing what to look for is half the battle, as choosing the wrong digital retail strategy often does more harm than good. 

What to look for in an automotive e-commerce platform

Let’s cut right to the chase… the most important step for selecting an e-commerce platform for your dealership is to fully understand what you’re trying to accomplish. 

Don’t be vague about your priorities, instead, let them guide your decision-making. For example, if you’re trying to break into the automotive aftermarket it’s a good idea to focus on seamless checkout experiences. On the flip side, if you’re looking to drive customers to your brick-and-mortar store, it may be useful to roll out online scheduling options and live chat features. 

Today’s e-commerce platforms run the gamut between general storefronts and industry-focused web applications. Leveraging popular digital retail websites like Amazon and eBay can grant you access to a massive online audience, whereas specialized platforms like Corevis and BigCommerce are better suited to the auto industry. While dealers also have the option to build their own customized APIs, this route typically requires a good deal of technical expertise. 

Regardless of your unique business goals, automotive dealerships should keep an eye out for the following features when selecting an e-commerce platform:

  • Cross-promotion options: Car buyers are notoriously resistant to discussing F&I, especially when sales reps are sheepish about working them into their pitches. Luckily, many e-commerce platforms include cross-promotion features that can help you introduce these products (and others) into the earliest stages of the deal-making process. This can alleviate some of the pressure to upsell F&I during in-person visits, as customers will already be familiar with these supplemental offerings
  • Content management capabilities: Every successful digital retail strategy incorporates content in one way or another. Whether you’re publishing blogs, sending out newsletters or emailing customers about upcoming product offers, a high-quality CMS is essential. Dealerships that want to rank competitively should prioritize e-commerce platforms that have built-in SEO features. Creating targeted content can help you attract new customers and build long-term relationships, which is close to impossible to do through guesswork alone. 
  • Customer feedback mechanisms: Consumer preferences change over time, and auto dealers need to keep on their toes to stay relevant in their market. By outfitting your digital storefront with customer feedback tools (web forms, product reviews, etc.) you can create a more responsive e-commerce strategy. This can also help you identify performance issues with your website that may lead to missed business opportunities if left unresolved.
  • Streamlined order processing: If you sell auto parts through your website, it’s crucial to integrate an intuitive and easy-to-use platform that can reliably process online orders. Customers value their time, especially in the era of same-day delivery. Ensuring your digital storefront is optimized and error-free can help remove obstacles that may prevent visitors from making purchases. 
  • ERP integration: Automotive e-commerce platforms should fit into your existing back-end technologies. ERP integration allows your sales professionals to track orders against your actual inventory, which can help ensure you have the auto parts and vehicles your customers are looking for. This feature also makes it easy to quickly look up product details and client information, identify buying trends and manage pending orders. 

Ultimately, the best e-commerce platform for your dealership is one that delivers the exact capabilities you need to exceed customers’ expectations.  That said, finding out exactly what your online users are looking for may require some additional market research. 

One way to better understand consumer preferences is to send out detailed surveys to your customer base. While a reasonable amount of them may ignore your request for information, any insights you can gather will be extremely valuable for building an effective digital retail blueprint. 

What comes next: Life after automotive e-commerce

Even under the most favorable conditions, it can be challenging to make significant headway in the e-commerce automotive industry. Online marketplaces for new and used vehicles, auto parts and fixed ops services are oversaturated with competition, and nearly every dealership is looking to leave its mark on the market. 

Ultimately, the best e-commerce platform for your dealership is one that delivers the exact capabilities you need to exceed customers’ expectations.

So what can brick-and-mortar vehicle retailers do to cut through the noise?

First, it’s important to make sure all of your sales, marketing and F&I professionals are acutely aware of your e-commerce platform. 

When car buyers come in asking about online prices or promotions, your staff should already be familiar with how to look up that information. This is especially crucial if you allow customers to schedule vehicle maintenance through your website. 

There’s nothing worse than showing up to an appointment and being told there is no record of your request. Oversights like these can not only lead to missed fixed ops revenue, but can also damage your online and offline reputation. 

Another key element of automotive e-commerce is the creation of marketing materials and social media campaigns that support your bottom line. While Facebook might not be the best platform for directly selling products, it can improve the visibility of your business with online audiences. After all, customers can’t purchase your vehicles or auto parts if they don’t know your dealership exists.

Developing a proactive digital retail strategy will become increasingly important as more consumers turn to e-commerce for their automotive needs.

The Ultimate Guide to Dealership Growth in 2020

Topics: Digital Retail

Amanda Pliskow
Written by Amanda Pliskow

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