|Sam Walton opened the first Walmart in 1962, working with the simple idea that the more products he had for sale, the more opportunities he had to earn a profit. Forty-five years later, Sam’s idea has changed the very way people shop for everything from shoes to refrigerators. The big idea behind the “Big Box” stores is simple – and could be the key to taking your online automotive sales to the next level.|
Big Box stores have succeeded because they have learned to price items just high enough over cost to make a small profit. The low prices help them to sell more products, which in turn allows them to earn more in the long run. The math is easy. If you can sell one product at a $500 margin or two at $300 margins, wouldn’t you rather take the latter?
Until recently, most dealers were too limited by their locations to use the Big Box strategy to drive up profits, but the Internet has changed that. There are 99 million eBay users in the United States right now, and more than 12 million visit the site each month. With that kind of traffic, there are more than enough potential buyers online to reward any dealer ready to list multiple vehicles.
Rule 1: Develop smart listings
Your listing is your one and only sales pitch. Online, as in all sales, customers expect to see strategically-priced, professional-looking offerings. Always include as much content and description as possible, and be sure to offer a number of photos of the vehicle. Buyers who feel they know everything they need to about a vehicle will be more comfortable making a purchase sight-unseen.
For dealers listing multiple vehicles, it is a good idea to develop a consistent listing format or template. This will help ensure all important information is included in each listing and help to establish a brand image for the dealership online. Potential buyers will be able to recognize these listings and will be more willing to put their trust in the business.
Rule 2: Price to move more
The Internet offers your dealership millions of potential buyers, virtually all of whom are using the Web to find the best deal. That’s what makes the Big Box idea so simple for automotive dealers online. There are more than enough customers ready to buy online, so dealers that offer the best value will usually find a customer ready to commit.
The best strategy for pricing a vehicle online is fundamentally the same as pricing a vehicle on the lot. Calculate the price at which the costs associated with the vehicle and your estimated per-vehicle margin break even. Price as close as is comfortable to that point – bear in mind that the greatest rewards in this strategy come from simply completing more sales.
The reason that the Big Box strategy works so well for dealers online is that, as opposed to on the lot where buyers negotiate lower prices, sites like eBay Motors allow dealers to set a starting price and allow buyers to negotiate up. Other pricing options, like the “Best Offer” feature, allow dealers to accept offers from multiple prospects, and negotiate with interested buyers to reach the best deal. Listings with lower or negotiable prices have proven to draw more buyer interest. Listings that start close to the break even price often find enough competing buyers to build in markup with little additional effort.
As the Internet continues to evolve, dealers should also look for new services that simplify selling vehicles online. eBay Motors recently introduced eBay Motors Local Market, a subscription-based service that allows dealers to upload as many vehicles as desired and make them available to buyers within a 100-mile radius of their dealerships. The technology has proven a strong lead-generation tool and is an excellent way to use the Web to find a local audience, boost sales and drive margins.
Rule 3: Manage, manage, manage
As professionals, most dealers know the trends around their dealerships – traffic patterns, average margins, conversion rates, etc. – like second nature. Dealers who have found success online take time to keep that commitment with their Web-based stores as well. Tracking pricing and conversion trends, market and product demand, and other sales statistics will help most dealers establish a strategy for listing more inventory.
Bear in mind that the Web delivers buyers from all over the nation. Events that might impact sales in a local market may not hurt online sales. Convertibles, for example, still sell in January in warmer climates. Web traffic varies daily; in the U.S., more people are online during working hours than evenings or weekends. When getting started, it is always smart to set up a few test sales to see which listings receive the best prices.
Take care also to communicate with each and every prospective online buyer. Answering questions and being open to negotiation will help increase sales, build a reputation as an online seller and ultimately, enhance profitability by encouraging more buyers to bid more confidently.
Mastering the art of coordinating multiple vehicle listings online will help boost your dealership’s online presence to new levels of profitability. On eBay Motors, many of the most successful dealers are also some of the most active sellers. What those dealers all have in common is they know that the effort required to manage multiple vehicle listings online pays for itself time and again in increased profits.
Dealer.com announced the launch of three new capabilities designed to help personalize the digital marketing and car-buying experience.