By Scott Penn, VP Business Development, APCO Holdings LLC

The adoption of digital retailing tools by auto dealers was rapidly accelerated during the pandemic. According to the Roadster Dealer Impact Study (May 2021), 89 percent of dealers have adopted a digital retailing solution and 86 percent of car buyers completed at least some of their transaction online.

The study also concluded that digital retailing is not a do-it-yourself process, as 86 percent of online buyers interacted with someone at the dealership remotely, and 80 percent of consumers who purchased entirely online were guided through the process. This makes sense, as the complexities involved with purchasing a vehicle will never make it as simple as adding a product to a cart on Amazon.

What are the next steps in the evolution of digital retail? Here are a few predictions.

1) Online and in-store processes will converge

Most dealers still conduct a desk-controlled sales and F&I process on-site, while online their process is more customer-centered. As a result, a customer who purchases entirely online experiences a different sales process than if they were to walk into the same dealership’s showroom.

As more dealerships adopt full eCommerce platforms, expect to see a convergence of online and in-store sales processes. Dealers will refine their processes to deliver a consistent customer experience, whether the customer is on-site or online.

2) Dealers will expand beyond PMAs

Historically auto dealerships have sold the bulk of their vehicles to customers within their primary market area (PMA). Due to inventory shortages, however, consumers are willing to drive and even fly long distances for the vehicles they want.

As supply chain issues resolve, this trend will normalize somewhat. But many dealers have recognized that a digital retail process allows them to expand their reach to new customers in new areas. With a strong online marketing strategy, dealerships will be able to expand their sales footprint beyond their PMA to anyone who is looking for a specific vehicle in their inventory.

3) Dealerships won’t become online retailers

From conversations that I have had, dealers don’t really want or need to adopt an approach similar to online car retailers. While they recognize the importance of offering customers the option to research and purchase online, the vast majority of dealers want to operate in their brick and mortar buildings, stay involved with their communities as a local business, and continue to offer service after the sale.

I believe dealers are becoming more willing to take a multi-channel sales approach. This means selling to the customer in the way that the customer wants to buy, rather than forcing the customer to buy via a traditional process. Since most customers still want to see and test drive a vehicle before purchasing, a hybrid sales process is likely to become the “new normal.”

4) Improved tech workflows

The workflow involved with selling a vehicle is difficult to digitize. Dealers must access information from multiple resources and websites to pull vehicle information, licensing and registration needs, as well as F&I product information, to name just a few.

The next step for digital retail is a consolidation of technologies designed to improve workflow and make it possible to deliver a true eCommerce experience. This includes technology that will enable F&I platforms and credit submittal tools to be integrated into Inventory and CRM systems, as well as integrated access to manufacturer and state websites.

While technology is a critical part of delivering a digital retail experience, it’s important to remember that from the consumer’s perspective, the growth of digital retail has been driven by the demand for transparency, information and convenience. Dealerships that can satisfy these demands will be successful going forward, whether they adopt an in-store, wholly online or hybrid digital retail solution.

About the Author

Scott Penn, VP of Business Development, leads APCO Holding’s sales and finance training initiatives for its retail customers. Penn has more than 25 years of experience in the automotive sales, finance and insurance industries.

Author: Christine Corkran

Digital Dealer