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6 Advantages of Automotive Ecommerce 5 minute read
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August 30, 2021

6 Advantages of Automotive Ecommerce

Brian Dearth
Brian Dearth
Head of Strategy and Growth
6 Advantages of Automotive Ecommerce

The global ecommerce automotive aftermarket is expected to reach $143.9 billion by 2028, which means a CAGR of 14.6% over the next six years. Add to this the new players disrupting the market, such as Rockauto, Tire Rack, Alibaba, and even Amazon, and we're looking at nothing less than a paradigm shift in the automotive industry.

Like many industries, the rate of change for the auto industry has accelerated during the past year. COVID-19's forced confinement prompted people to do almost everything online. This benefited the earlier adopters among automotive ecommerce companies and significantly boosted the ecommerce automotive aftermarket shopping trend that was already underway.

Ecommerce players are continuously challenging traditional aftermarket retailers by penetrating the market more effectively. But it is NOT JUST the aftermarket companies that are jumping on this shift . . . Ford, recently announced IT’S shifting more sales to a model where buyers can custom-order from the factory online and then receive the delivery at the dealership rather than choose from the available cars on the lot. 

In this article, we’ll take a closer look at six advantages of ecommerce for the automotive industry across the entire value chain, and provide a few tips for how to forge an automotive ecommerce strategy.

Related reading: Digital Commerce Business Models – The Current Landscape

The 6 Advantages of Automotive Ecommerce

Expand Your Customer Base and Become Location-Independent

Ecommerce breaks down geographic barriers and allows sales in places that can be challenging to reach with traditional models. With a conventional car sales model, where people come to a showroom to test drive cars and pick out their favorite, your market share is very much tied to your location. With an ecommerce model, location is no longer an issue; you can have clients order from you from all over the country. It becomes easy to expand into new markets and segments, offering parts and automotive products in multiple languages, different currencies, and location-specific payment options.

Cut Costs and Streamline Operations

Let's take Ford as an example. The company recently announced that it's increasingly shifting to a model where people custom-order straight from the factory online and then pick up their order at the nearest dealership. Ford's ecommerce strategy cuts inventory costs for Ford and its dealers and also helps the company deliver the vehicles that customers actually want. Of course, there's always some resistance, and some traditional dealers may worry that a strategy like this could put them at a disadvantage to competitors stocked with vehicles that are ready to go [the point above]. But in fact, this business model provides a better experience for the end customer, who will be able to choose any vehicle they prefer from the Ford range. 

Digitize Operations to Future-Proof Your Business 

With the emergence of disruptive platform companies such as RockAuto and Tire Rack, and established companies such as Alibaba and Amazon increasing investments in the automotive aftermarket sales segment, investing in a solid ecommerce strategy is a way to prepare for what's coming. The pandemic has also shown us clearly that the brands and merchants who are agile and able to quickly change and adapt to new circumstances and challenges are the ones who manage to thrive in times of uncertainty.

Re-Imagine and Improve the Customer Experience

The general ecommerce trend is affecting all aspects of consumer behavior, as people have come to expect the same convenience they get from ecommerce frontrunners everywhere. Consumers increasingly prefer digital channels for research and exploration, as it gives them more control over the purchase experience. Especially substantial investments like purchasing a car which usually involves extensive research or some aftermarket upgrades, and consumers are doing more and more of that on their own. 

Improving the customer experience can be done in many ways. One example is through personalized sub-sites or independent storefronts, all emanating from one branded ecommerce platform. This allows you to create personalized experiences and marketing funnels, target specific verticals, or create separate destinations for distributors and resellers.

However, the physical dealer experience is still important and necessary. It will be a long time, if it ever even happens, before physical dealers become entirely replaced by ecommerce. A good portion of car shoppers will likely always want to see, touch, and test-drive cars before placing their final order. To get the best results, the digital and physical brands should be seamless. Digital can provide powerful purchase triggers but can also be used to enhance the experience when the customer walks into a dealership.

Related reading: Ecommerce Personalization: Benefits, Tactics, and Best Practices


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Embrace and Leverage New Ownership Models

Not only are the ways people buy cars rapidly shifting, but also the ways people use and own vehicles are also quickly changing. More and more customers are becoming more open to the idea of not owning their vehicle, which can mean moving to a leased vehicle or other forms of offerings like ride-sharing. The sharing economy is coming, and with that, more sustainable and efficient ways to have car access will be in high demand. 

Leverage Smart Vehicles and Big Data

Consumers are becoming more comfortable with digital payments across a number of surfaces, including the vehicle. Future smart fleets' connectivity, data, and intelligence can generate incremental revenue streams and enable transactional capabilities across all digital touchpoints.

3 Tips When Implementing Automotive Ecommerce

When you decide to integrate ecommerce into your automotive operations, there are some things you need to keep in mind. Digitizing a physical business model takes planning and thought, and to reap the rewards it’s important to work through all parts of the organization. 

As you venture into the wonderful world of ecommerce, we advise you to keep the following three things in mind: 

1. Address the Communications Gaps

Seamless consumer experiences are essential to happy customers. But today, there is often a significant gap in the buyer journey, handoff processes, and connections between brand campaigns, marketing, sale, and service after the purchase in the auto buying experience. This currently breaks the customer journey into different parts and can create unnecessary friction and frustration. Silos are forever the worst enemy of great customer experiences, so focusing on breaking silos and enhancing internal collaboration is always a wise investment. 

2. Address Organizational and Technological Issues 

One of the things holding many traditional automotive companies back as they attempt to modernize and digitize is legacy technology and rigid, old-school organizations. Those things are incompatible with delivering high-quality customer service online, and a transformation of the whole company is sometimes necessary. 

All parts of the organization must work together, and take pages from other successful transformation playbooks where internal competition within dealers has paid off to win clients from digital and vice versa. 

3. Be Mindful of Data Ownership

To be able to serve your new digital customers best, you need access to their data. Make sure you retain ownership of that data, so you can use it to deliver a great customer experience across the entire customer lifetime. This cannot be stressed enough. Capturing customer data from all of your digital touchpoints generates a tremendous amount of insight, and if you're coming from a brick-and-mortar mindset, this is new. Having a strategy in place for all of this data, whether from smart vehicles or QR code promotions on window stickers, will greatly enhance any automotive businesses up and down the value chain as they move into the new, digital paradigm. 

Related reading: First-Party Data Strategy: 2021 Trends

Key Takeaways

While it can feel challenging to transform and digitize a traditional car dealership, the pros outweigh the cons. The benefits of doing so include that it allows you to:

  • Expand your customer base and become location-independent
  • Cut costs and streamline operations
  • Digitize operations to future-proof your business 
  • Re-imagine and improve the customer experience
  • Embrace and leverage new ownership models
  • Leverage smart vehicles and big data

The automotive ecommerce market will just keep on growing, aided by the general increase in automotive sales combined with the increasing presence of new automotive players. In this context, the question for automotive merchants is not if it makes sense to go digital and adopt an ecommerce model but when to do so. And as always, the key to getting ahead is getting started. 

How Vaimo Can Help

At Vaimo, we're constantly thinking about and exploring strategies to help our clients build new revenue channels while complementing and even furthering their current, traditional streams. Automotive ecommerce is no exception. At Vaimo, we're experts in digital commerce, and we work with brands, retailers, and manufacturers all over the world to create winning customer experiences. We'd love to help you implement a more personalized approach to take your business online and your sales to the next level. 

Get in touch with our team of experts to learn how we can help you optimize your ecommerce business and help you stand out from your competitors.

 

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At Vaimo we help brands, retailers, and manufacturers all over the world to drive success in digital commerce. Reach out to us if you want to hear more about how we can improve your customer experience strategy, go to market plan or explore how technology can enable success.