Automotive

Macroeconomics Driving eCommerce in the Automotive Industry

Young Woman At Home

One of the biggest buzzwords of our day in the automotive industry is eCommerce. All the major auto companies are talking about improving the online shopping experience. They’re all focused on the consumer experience. At the same time, there is an emphasis on direct-to-consumer in terms of commerce. The EV-only companies have started this trend by selling their vehicles directly to the consumers at MSRP, with no haggling on the price. After all, these products are not purely seen as vehicles but rather as mobility devices. All the EV-only manufacturers are creating consumer experience centers and a place where you can get vehicles serviced.

With EV products, there is a ton of education that must be provided to the consumer, from understanding how to install your home charger to charging stations to mapping trips to the best times to charge. Something is absolutely changing in the automotive industry, and eCommerce sits at the center of it. There are also franchise laws in most states that prohibit selling vehicles directly to consumers. Every heritage automaker is committed to at least expanding its EV footprint. This is because the macroeconomic needs around the environment and the microeconomic needs of the consumer are both coming together.

Traditional dealers may not work for EV-only manufacturers because the volume of vehicles produced is much less than that of a heritage OEM. However, that doesn’t mean that dealerships are not critically important to the shopping process. It does mean that we will see some shifts and adjustments. This initial eCommerce change has sped up due to supply chain issues and a chip shortage. This industry issue has necessitated changes for all OEMs because the dealerships just did not have the kind of inventory they had in years past. It is now widely believed that we will continue with inventory issues until 2024, which means we will continue to have a new normal.

OEMs have encouraged consumers to special order vehicles. This is a significant change for both consumers and dealers. Often, consumers must wait until their vehicle is manufactured, and then they can pick it up several months later. However, the consumer usually gets the exact vehicle and specs they want. The dealers are also working with a new normal, helping the consumer with their orders and making certain and ensuring their virtual showrooms are more robust and better connected to the OEM sites for a more cohesive shopping experience.

OEMs are reviewing how consumers can better accomplish online ordering and taking deposits from consumers. As they place online order reservations, how does that tie into the dealer sites and, ultimately, the vehicle delivery mechanisms? Direct-to-consumer does not necessarily mean cutting out a dealer network but rather leveraging that network differently. It is also good for the dealerships not to have to carry such huge inventory supplies and have all those upfront costs. This new normal drives eCommerce and customer experience to help these virtual showrooms.

EV-only vehicles are different from ICE (internal combustion engine) vehicles and require an understanding of both the technology and infrastructure. EV-only companies produce a fraction of vehicles and often at premium prices, so all must be figured out. For the large auto groups or really any auto groups, it will become critical for the consumer to quickly and transparently shift between brands and stores in a cohesive online experience. If companies are going to grow their business in the new normal, their virtual stores need to become seamless with the OEM sites. Consumers will need to navigate quickly and easily, and AI and chatbots must transition from being too aggressive with sales to being helpful partners focused on the consumer.

I will dig into eCommerce in the automotive industry with a series of blogs about best practices, opportunities, and exploring strategies for merging digital technologies within brick-and-mortar stores. Like many other digital commerce industries, automotive merchants are taking an increasingly omnichannel approach to selling, ensuring that customers can use both physical and digital channels to make an educated purchase.

With an eCommerce business model, automotive organizations and dealerships can better mold their customer experience in a universal way and that is less prone to salesman-dependent variances. So, in the coming weeks, we will be exploring customer experiences, expansion of current customers, operations, and the advantages of an omnichannel system that merges the virtual and brick and mortar showrooms to provide consumers an exceptional experience focused on the customer.

At Perficient, we build eCommerce platforms that leverage customer journey science data and align that with in-vehicle data so that we can increase lifetime customer value. It all starts with the customer, and the best companies in the world emphasize not just hitting sales targets but ensuring that the service the customer receives exceeds expectations. We know that eCommerce in automotive is not just a way to get us to achieve OEM goals but, more importantly, to better serve the OEM customers in this new Omnichannel approach.

This all speaks to changes that have been needed in the automotive marketplace for a long time. If anything, the macroeconomic issues may have served as the push many automotive organizations needed to innovate and modernize how they sell their products and reach customers. Together, we will not only understand how to better leverage eCommerce but put our clients into a position of sustainable competitive advantage.

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Keith Tomatore

A long-time senior executive in the auto industry who has held the position of SVP, Retail Marketing at Global Team Blue (GTB, a WPP Company) on the Ford Retail Business. In this role, Keith worked with the Ford Dealer Associations across the country to help them with their Precision Marketing and digital efforts. Also, he served as CEO of iFrog Marketing Solutions, which focused on Automotive advertising solutions for Tier 2 and Tier 3.

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