By 2030, it is expected that the global automobile sector will grow to about $9 trillion USD. Despite the pandemic's impact on supply chain concerns and the current microchip shortage, new car sales will contribute around 38% of this total value, according to Statistica (2021).
As a result of the epidemic, digitization of the auto-buying experience has advanced far beyond what had previously been achieved. The age of the online auto dealer is upon us. Because 95% of vehicle purchasers use digital sources for information and 83% of consumers prefer to browse online to save time before purchasing a car, today's dealerships need commerce platforms to get this information to customers effectively. Dealerships need to create a compelling digital buying experience to meet the expectations of contemporary customers.
For these reasons, OSF Digital undertook an automotive industry research study. This market research reviewed numerous aspects that consumers are looking for when buying or selling a car or truck in the US. Get the full automotive e-commerce market research here (free download).
Here are some highlights of this auto ecommerce research.
Disruptors, such as Carvana—the fastest-growing online used vehicle dealer in the United States, have built multi-story automobile vending machines to compete with conventional auto dealerships. Although it may seem excessive, it provides a great way to garner attention and showcase vehicles. They join Vroom and CarSaver at Walmart in their effort to disrupt the auto industry, at a time when other models are hitting the car market. There are also various new companies encouraging users to use, rather than buy. Enter taxi replacement services like Uber, Lyft, Juno, Gett, and Grab. Then there are car-sharing models like Zipcar, Turo, Car2Go, GIG, HyreCar, and so on.
All of these disruptors are putting pressure on global markets of auto dealers—not to mention the huge industry change, with widespread adoption of plug-in electric cars and hybrids. Interestingly, the internet disruption is expected to increase electric vehicle sales to 2 million or more by the end of 2021. As such, it won't just be vehicle types and automotive parts that change, but the go-to-market approach, as well.
Because auto consumers visit an average of 4.2 websites for their purchasing process on multiple devices throughout their buying journey, dealerships must adopt a digital-first approach. Auto dealers need to change their approach to sales by ensuring that their web presence and search engine optimization are fully engaged at all times throughout the buying process. The new auto generation is expanding, and. the savvy new buyers expect to buy a digital (electric) car digitally. Naturally, as an extension this applies to auto parts and services, too.
As an example, after seeing a video of a car they were interested in, more than 60% of auto shoppers said they went to a dealership or visited the dealer's website. In the world of automotive manufacturing, we have long known that an auto sale requires the user to see that vehicle, and even get a feel for it in action. Video is just an example of what to expect in the coming year ahead.
The OSF Digital 2022 U.S. Automotive Dealership Ecommerce Benchmark Study was created to track the growth of the digital-first trend in the automotive dealer industry. This research investigates the competitive impact of ecommerce capabilities on the websites of leading car dealerships, as well as the ability of ecommerce to increase an auto dealer's sales income. With the use of secret shopper observational methods, the research examines whether key website functionalities are present in the top 150 US dealership groups in 2021-2022. This provides dealerships with an exclusive look at their ecommerce performance, to compare their own capabilities against those of other dealership groups. After examining more than 635 data points through 19 important features on each website, a comprehensive picture of the automotive retail sector emerged.
Although this research report did not expressly review the ecommerce automotive aftermarket, online marketplaces are clearly an important part of this solution. For more about online marketplaces, get your copy of the Marketplace Fundamentals Guide. Parts manufacturers will specifically be interested in partnering with dealerships on these expanded opportunities.
The following are the top ten findings for the US dealership market:
1. The presence and simplicity of website capabilities influences vehicle sales at dealerships.
2. An option to search for automobiles near the consumer to determine if a dealer has a car in inventory, is the most important sales driver. Yet only 79% of 488 dealers in the research provide this capability.
3. The consistency of website functioning among dealerships within a dealership group was one of the most important factors influencing the number of new retail units sold.
4. A 360-degree viewer option was available in just 5.5% of dealerships, even though it is the most popular feature among customers.
5. Only 7% of dealerships allowed customers to place a pre-order for a customized vehicle.
6. 40% of dealerships possessed 13 to 14 of the 19 competencies studied.
7. 26% of dealerships lacked 7 to 8 competencies.
8. None of the dealerships in the study had all 19 ecommerce features available.
9. When it comes to asking questions, email is nearly twice as popular as phone calls, text messages, and online chat.
10. Western US states have more than twice the ecommerce capabilities of the Southeast and Southwest. This puts them at the forefront of the automotive digital transformation wave that is now underway.
What the research told us is that aligning and improving website capabilities greatly enhances dealership vehicle sales. It also makes browsing for automobiles simpler for customers. The findings show that the longer dealerships wait to optimize the potential of their websites, the more automobiles will be sold by online competitors who have adopted a digital-first approach.
For dealerships, a typical source of frustration is a lack of IT assistance. By adopting a growth attitude, dealerships can locate an ecommerce implementation partner to help them deploy basic, out-of-the-box solutions, with a managed service option to guarantee that they don't lose out on opportunities or deplete their resources in the process.
For dealerships to consider what a modern-day sales experience should contain, the proper ecommerce platform can unify data, streamline the product discovery path, and provide self-service options for everything, from selling a vehicle, scheduling a test drive, and scheduling a service appointment. High website functionality and simplicity of use are competitive advantages in 2022, and they are the most effective strategy to earn greater market share.
Get a full copy of the research for your review here. Then, let's talk about how we can help your dealership group.