ECommerce Ventures in Retail Automotive
Retail automotive has seen significant investment in new or expanded eCommerce-related business models. While investors see inefficiency in the traditional forecourt-based model, it’s certainly not yet clear how the £100 billion market for new and used vehicles here in the UK will evolve.
Ultimately, the most successful automotive eCommerce propositions are likely to combine:
A logical, effective and "hassle free" customer experience with
Identification of business terms that best serve suppliers, customers and intermediaries.
Lease Brokers - Led by Nationwide Vehicle Contracts, Select Car Leasing and so many others, the penetration of lease brokers in brand-new sales has expanded to the point that at least 1% of the national car parc is now under contract originated by a lease broker.
Though perhaps not the focus of most eCommerce conversations, lease brokers rely on on-line and social marketing to promote manufacturers’ brand-new stock and underwriters’ lease finance. Their distance-based model confirms that customers will eagerly take brand-new vehicles “blind” on an eCommerce basis.
While brokers achieve both a positive customer experience and rational business terms, their success has not extended to cost-efficient nearly-new and used cars due to supply uncertainty around vehicle availability, physical condition and price.
Classified Advertising - In the used market, eCommerce traditionally focusses on classified advertising platforms like market-leading Autotrader, who’s site regularly features over half a
million cars, vans and other vehicles.
More recently, Autotrader’s very success has invited the current wave of investment/consolidation as new ventures seek to address the brand-new, nearly-new and used markets:
eBay Motors Group – Having integrated their Gumtree platform, eBay subsequently acquired Cox’s Motors.co.uk. Dealers and private sellers can now list their vehicles across all three platforms.
CarGurus – The US's largest automotive classified advertising platform, CarGurus has expanded into Canada, the UK and other European markets and acquired the Piston Heads platform.
HeyCar – VW Financial Services established Heycar in Germany and the UK. Their UK expansion included acquisition of customer advice platform Honest John and engagement with Motorway (on-line part exchange), Experian (credit pre-approval) and Silver Bullet (dealers' eCommerce CRM).
Yesauto – China's largest automotive platform Autohome has established the Yesauto classified advertising site in the UK and Germany. Their platform features a game-like virtual car show concept.
Carwow - Though not strictly a classified advertising site and focussed on the brand-new market, Carwow provides a price comparison service in which consumers secure competitive bids from local dealers.
FindandFundmyCar – Established by finance underwriter MotoNovo, FindandFundmyCar allows dealers to advertise their new and used stock for free with MotoNovo quoting on both HP and PCP finance.
More intense competition has created something of a foot race as each of the five principal classified advertising platforms vie for their share of dealers’ marketing spend.
Virtual Dealerships - While classified advertising platforms promote 3rd party stock, 2020 has seen the rise of virtual used car dealerships marketing their own inventory.
Cazoo has been the fastest company to reach "unicorn" status ($1 billion startup) on the premise that consumers would purchase used cars in exactly the same way they buy almost everything else through the internet. Originally engaging BCA to provide operations support, Cazoo subsequently acquired Imperial Cars, the nation’s 7th largest used car superstore.
Auction behemoth BCA introduced their Cinch platform in mid-2020. While BCA has "seeded" the platform with their own stock (essentially constituting a virtual dealership in competition with their lifeblood auction customers), management indicates that they will attract dealer/suppliers to a brokerage paradigm. Under BCA ownership, Cinch sits alongside WeBuyAnyCar offering a seamless part exchange solution.
Joining Cazoo, Big Motoring World, the 5th largest used car superstore, will introduce Carzam, an “Amazon-style” online car retail platform. The attention garnered by Cazoo and Carzam mirror recent IPOs Vroom and Carvana in the US and it seems reasonable that other franchised and independent dealers will similarly expand their in-house eCommerce offering in the very near future.
Conclusion - The development of eCommerce ventures in automotive retail has garnered an enormous amount of attention and investment. Each of the new and evolving models promises a better car-buying experience, which consumers frequently site as unpleasant or uncomfortable.
While new ventures offer some pretty exciting features, success is likely to result from two laser-like focii: provide customers with an efficient, logical and "hassle-free" experience and identify the business relationship (responsibilities, pricing, commission, fees, etc) that best serves dealers, intermediaries and customers.