Is online car buying ‘the new normal’ and what does this mean for dealers?
Online retail has seen a boom during lockdown, but as consumer buying behaviours shift online, how has automotive moved into the online environment?
If there’s one thing that has seen a boom during lockdown, it’s online retail. From groceries to consumer electronics, it’s hardly surprising that being asked to stay indoors has led to lots of us getting things brought to our doors instead of going out to get them.
But, consumers have become more trusting. A few years ago, anything bigger than a TV or a microwave was scary territory when buying online. Yet in 2020, domestic appliance specialist AO.com reported a £28.8m operating profit, compared to three years of losses during its start-up phase.
The AO.com model works because it’s hassle-free. You place the order, it arrives on a specified date and time, and your old appliance is taken away to be disposed of. And once customers try it, they appear to go back.
There are still over 60 per cent of buyers who won’t part with their cash for a used car until they’ve test driven it, so there’s clearly still room in the market for both buying channels.
A car, then, is in many ways the next step on the ladder. If you’ll buy a £1,000 range cooker without seeing it first and it all turns out fine, then a £15,000 used car can’t be that much of a bigger risk, surely?
It was certainly the type of logic applied by Alex Chesterman when he launched Cazoo in December 2019. Chesterman was the entrepreneur behind housing website Zoopla and film subscription LoveFilm, so was already a pioneer in the digital revolution.
Chesterman raised £80m of capital to launch Cazoo, with which he promised to move the car buying process entirely online. He said: “Used cars are one of the last remaining consumer markets yet to benefit from any digital transformation. Cazoo makes used car buying simple and convenient like buying any other product online today.”
It was a model that was scrutinised intensely by the used car sales industry when it launched, not least because of its potential to damage resale opportunities for main dealers and remove a valuable sales outlet for manufacturers’ ex-rental and central used car stock.
In reality, that hasn’t happened and now there are two more major players in the game. In October last year, cinch – which is owned by BCA and originally launched just as a digital sales platform – is offering ready-to-retail stock and home delivery, the cars themselves cherry-picked from BCA’s own remarketing contracts, mostly ex-fleet and with less than 70,000 miles on the clock.
But the newer kid on the block, Carzam, has gone head-to-head with Cazoo. The two are very similar but Carzam also offers next-day delivery, turning around ex-fleet stock from two giant distribution centres. Carzam’s Marketing Director, Ashley Wade, said: “Consumer buying behaviours have been shifting online for years and as automotive moves into the online environment, we are able to offer our customers the same convenient home service that they receive from many non-automotive retailers.”
Of course, online buying won’t be for everyone and according to a recent study by What Car? there are still over 60 per cent of buyers who won’t part with their cash for a used car until they’ve test driven it, so there’s clearly still room in the market for both buying channels. Indeed, both cinch and Carzam are operated by those who also have physical sales sites, offering the best of both worlds.
The lack of a physical site, though, does reduce the face-to-face opportunity for aftersales, a key additional revenue opportunity – while customers can’t choose the option of something like paint protection to safeguard their investment. Or can they?
The savviest of franchises are realising that if they don’t supply the car, the opportunity is still there. The application of Autoglym’s vehicle protection system LifeShine, for example, only takes around 30 minutes. The quality of the finish will be immaculate, because the valeters will understand the best way to apply.
When a customer buys LifeShine, they are protecting their car’s interior and exterior. Having it applied by a LifeShine-registered dealership means that customer can receive the lifetime of ownership guarantee that backs up the protection. And it won’t be long before the intelligent online retailer realises that it’s another simple thing they can add to their package for ultimate customer peace of mind.
As a LifeShine registered stockist, dealerships not only provide their customers with an exceptional vehicle protection system, but they also partner with the most recognised premium car care brand. The LifeShine team offers unrivalled sales and technical support, and a host of materials to help them maximise sales of LifeShine in and from the dealership.
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