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The Internet & The Retail Environment

It’s possible that the greatest effect that the Internet has had on the retail automotive environment is not even about the Internet or the Internet department specifically.

Regardless of the commitment, understanding or lack thereof in individual dealerships throughout the nation, we are all affected in every aspect of our lives by the advent of e-commerce. No business escaped the impact of this particular medium.

Let’s take a brief look at two dealership models. Model A is the dealership that has embraced the inevitability of the online customer, sees the opportunity and has tailored a process to accommodate this segment of the market place.

Model B is the dealership that up to this point has not completely convinced themselves as to the viability of the online customer.

In 2005, approximately 70 percent of buying decisions were influenced by information gathered by prospective customers via this medium. This number is a somewhat conservative one and is only going to increase as future generations reach their prime as consumers.

In model A, we have an understanding and commitment – from the dealer principle and general manager down through the management team and entire sales force – which sees the opportunity that a measurable market place brings, which influences a minimum of 70 percent of prospective consumers. This dealer understands the importance that e-commerce has on every aspect of his day to day operations.

He and his management team have developed a strategy, earmarked a budget, and dedicated talented human resources and a proven process. The payoff is that every aspect of his business is benefiting. Walk-in traffic, often influenced by information gained online, has increased by dedicating resources that reflect what the prospective consumer is looking for online. His Internet department is a viable, independent profit center. Service business has increased, and his special finance business has increased. Parts revenue is up, body shop business has increased and if he has a rental car department it has even benefited.

Model B for all of the conceivably right reasons, in most cases under the heading of an initial lack of understanding coupled with the “our market is different” outlook, has failed to embrace the opportunities that the online educated consumer brings to our industry. At the end of the day it’s all about understanding what the prospective customer is looking for or what they think they are looking for.

Then, once you understand what it is that they are looking for – and it’s not all about price unless we make it all about price – provide an e-environment that caters to that client, remember that 70 percent. Put yourself in the client’s shoes; don’t give them a reason to go any where else for anything. Help them make an educated buying decision. We know that they are going to make a buying decision it just needs to be with you.

We do not have to be a large dealer to benefit from the e-marketplace, forward thinking dealers in every conceivable demographic market have leveraged the internet to their benefit. Each one of us can probably name several in our own market.

I had the opportunity some eight to 10 years ago to travel the country as a consultant under contract to major manufactures introducing the concept of e-commerce in the retail automobile industry. It was not all wine and roses. Not every dealer or member of his management team fully embraced the concept. In fact some were totally against it, until they started selling units and making money. Then the best rose to the surface and became the innovators in this aspect of the business.

Some dealers dipped their toes in the waters of e-commerce eight to 10 years ago, and some took the plunge knowing that this business of ours does not stand still. The forward thinker will always be at the head of the pack.

It’s difficult, if not impossible, to fight progress. One thing about progress is it’s inevitable. As one of my favorite mentors once told me, “The thinking that got you where you are today will not get you to where you need to be tomorrow”..

What will it take to make dealer B an A? First, does he want to be an A? Is he convinced that approx 70 percent of his prospective customers are influenced by the Internet? Does he want to sell more units? New and preowned? Is he prepared to make the commitment that his peers have?

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