HAPPY NEW YEAR! Welcome to Canadian Black Book’s – The Value. Our goal is to provide our clients and partners with news, event updates, new initiatives and opinions from Canada’s trusted source for vehicle values and automotive insights. In this edition we cover:
By: Cole Reiken, VP Digital Strategy and Product Management, Canadian Black Book
As you know, online shopping has become the new norm. From major retail giants like Amazon and Walmart, to small local shops using the Shopify platform, online transactions are feasting on the bricks and mortar of yesterday. The comfort and convenience of shopping from your couch or from your phone while at lunch, has reset Canadian consumer shopping expectations across the board.
Canada is one of the most connected nations, making us a leader and creating high demand, when it comes to transacting online. Our common familiarity with buying consumer goods online has put a new type of pressure on and has created new expectation for the retail auto industry.
Is the auto industry ready? Can we compare the experience of buying groceries, electronics or even a piece of furniture to that of buying a car? Can the same expectations and buying process be used to purchase those consumer goods and a car?
One thing we do know is that many are experimenting and the online journey is already engrained into the car buying decision. And get this, according to Google, 46% of people are open to skipping the dealer paperwork and purchasing their vehicle online, versus 41% in 2017. Canadian Black Book commissioned an Ipsos poll in 2018, which suggested that 27% of car shoppers indicated that they would complete an automobile transaction entirely online. Looking specifically at millennials, in the same CBB poll, 37% were likely to buy a vehicle completely online, compared to only 15% of those 55 years or older.
Dealers and OEMs need to pay very close attention to the millennial response to that question, as the demographic most accustomed to ecommerce, having grown up with online purchase expectation as the status quo. Couple that with the fact that millennials make up 27.5% of the Canadian population and one could make a strong argument for increasing the investment in automotive retailing online. Oh, and if you required more proof of this, in March of 2016 as study by J.D. Power & Associates forecasted millennials as the fastest growing demo of car buyers and will represent around 40 per cent of new car buyers by 2020. Just to be clear, that is next year!
Believe whatever stats you like, however, the message is clear…Canadians want to be able to purchase vehicles online. This is not news.
As we know, the early adopters do exist whereby individual dealers, dealer groups and OEMs have launched various forms of ecommerce platforms. These are the leaders at the beginning of the bell curve working to provide the right car shopping experience from the comfort of home or anywhere for that matter.
There is no industry standard ‘playbook’ for how to best introduce the optimal automotive online shopping experience. Currently, some early adopters are creating these systems in house, while other rely on enterprise software solutions. Those working in this space now, trying to figure out the best experience, are the ones writing the ‘playbook’ for future adopters.
It will be a challenge to combine the best elements of the showroom experience with the best elements of the online experience. Even over the past five years, the consumer online shopping journey has changed significantly. This space is developing rapidly. Those who adapt must accept the challenge of figuring out ways to either sell cars fully and/or partially online, in ways that meet the expectations of Canadian consumers.
What I believe, is that an omnichannel experience will eventually take hold. An experience that allows total customization, for how and when the consumer would like to transact. Customers should be able to move between the showroom and online in a single cohesive journey as they move through the buying process.
The right mix of showroom and online will be required as there are elements of the process that cannot be replaced online. The test drive is a critical step in any vehicle purchase and simply cannot be recreated virtually. Similarly, the physical inspection for a trade-in must be completed at the dealership or at least in person. It’s my opinion that the rest of the purchase experience can exist within this personalized omni purchase experience allowing the customer to interact online, in the dealership or wherever they choose.
Elements like brand, model, trim, colour, F&I options, booking a test drive, credit checks, financing, final payments and more, can all be integrated into the online portion. A personalized omnichannel experience like this will learn from the existing consumer online purchasing experience and exceed expectations with the flexibility to shop in and out of the dealership and to purchase whatever, whenever and wherever they want.
If your business is selling cars, it’s time to think seriously about the reality of selling cars fully online. How can your operation cater to the needs of a generation that conducts so much of its business on the internet? If you can answer that question and prove the concept in the next few years, you will be ahead of that bell curve.