Digital Dealer - March 2019 - 38

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D E A L E R O PS & M A NAGEM ENT: Em e r g in g Tr ends & D i sruptors

Automotive and
the Amazonifcation
of Everything
Every piece of software
I've ever designed is
built around my belief in the
resiliency of the middleman.
With each technological
boom, from the industrial
age, through the dot com
boom, the middle man
has faced and overcome
existential threats. Casualties exist; however, middlemen remain, because they
add value to the supplier
and smooth the purchase
process for the end buyer.
I believe what we are
experiencing now, the "Age
of Amazonification," will be
no exception. Middlemen
will thrive if they continue to
prove themselves nimble,
adaptive, and connected
with buyers. But I am very
concerned about auto
dealers.

THE RACE TO BE
"MORE LIKE AMAZON"

Having worked with thousands of auto dealers and
most of the major auto manufacturers, I can't help but
think that the auto industry
is blindly stumbling into a
trap of its own making. In
the race to adapt to changing consumer expectations
in the Age of Amazonification, the solution across
auto dealerships is to be
"more like Amazon." On
38

MARCH 2019

paper, it makes sense - for
example, digital retailing
solutions now allow you to
buy a car without stepping
foot in a dealership. That's
great.
But if you look at the
seeds of disruption, at a
Netflix or an Uber, you see
they start by making an
incremental improvement
to an experience. Netflix
exploited Blockbuster
making money off late fees
to introduce a "no late fee"
model that gave them the
customer acquisition to
upend the video store. Uber
made improvements to the
taxi experience by showing
you where your car was and
removing the awkward pay
as you exit experience. The
ultimate output in both situations? One or two sellers.
There are not thousands
of online video streaming
subscription services. There
are not endless ride sharing
apps.
It's common knowledge
that the car buying experience is not traditionally
considered a pleasant
endeavor; however, up until
relatively recently, it was
still a relationship sale. But
in racing to respond to the
changing consumer, auto
dealerships have failed to

D I G I TA L D E A L E R . C O M

prop up their people, and
have unnecessarily left
themselves exposed to
potential disruption. The
modifications that auto dealerships are making to their
processes have discounted
the relationship behind the
sale. I would argue this is a
short-sighted mistake.
Ten years ago, auto dealership inventory was still
poorly represented online.
This made the salesperson
the information conduit.
As websites and inventory
display have improved, the
buyer no longer feels compelled to visit multiple dealerships in person, (hence,
the most overused stat in
automotive presentations
that the average consumer
now visits 1.2 dealerships
when buying a vehicle) and
can reasonably do their
shopping and decision-making online. This is all good
for the consumer. Dealerships, however, have failed
to equip their sales staff for
this changing environment
and are now coddling inefficient, underequipped sales
teams.
While the physical showroom has mostly moved
online, the auto sales stuff
is still stuck in 1999. In
2019, a salesperson must

FEATURED SPEAKER
By David Steinberg
Co-founder & CEO,
Adpearance

make significantly more
calls, emails, and texts to
reach the same number
of consumers. As a result,
dealerships are struggling
with record salesperson
turnover as salespeople
are being asked to do
a job that feels fruitless
and ineffective - hardly
anyone wants to talk to
them anymore. Logically,
dealerships are embracing
their own Amazonification
because they are intoxicated by the idea of a
slimmed down staff and
the increased profits.
The problem with this is
the closer the dealer is to
being "more like Amazon,"
the easier they are to disrupt. Amazon is a lot better
at being like Amazon than
the auto dealership. Big
tech can spring up an Amazon-like business model
faster and more efficiently
than an auto dealership
can without the baggage
of a bloated business
model. In a world where
cars are sold online, there
will not be thousands of
dealerships. Period.
Contributing to the
blindness of the auto
dealership is the fact that
a clear disruptor has not
yet emerged. Carvana is
doing interesting things,
but they are refining their
business model in 100%
used vehicles (which is
smart). Dealerships feel
protected by legislation,
powerful special interests
and franchise agreements;
however, as we saw with
Uber and taxis, these
protections only last until
it makes sense to get rid
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Digital Dealer - March 2019

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