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23 October, 2020

The Push to Digital Automotive Retail May Be COVID’s Silver Lining

Historically, financial recessions have spawned innovative businesses, and our recent coronavirus-related downturn will be no exception. A look at recent consumer trends shows that e-commerce is today’s preferred medium for purchasing things big and small. Whether having groceries delivered to their front door or upgrading to the latest high-resolution camera for family Zoom reunions, America’s consumers are all in on digital. On the other hand, most automotive sales require purchasers to physically visit a local dealership to complete the purchase. While there are companies dedicated solely to online car sales, most dealerships solely leverage their web presence to drive sales into the showroom and whether due to regulations or a lack of technological investment, are unable to bring the experience full circle to digitally complete the customer journey.

As we enter fall and dealer inventories stabilize, it’s clear that the rise of digital has already transformed the customer experience. Within the successful modern dealership, customer service is evolving from a firm handshake to a video signature. The end goal is of course to deliver a completely frictionless consumer experience by removing barriers and reducing hassle, but most dealerships do not currently possess the manpower or equipment necessary to make the shift, resulting in businesses plateauing at certain phases of the digital retail journey, as shown below.

While some piecemeal technologies can enable a dealership to successful adopt either of the first two phases, only with the right solution can they power the entire transaction and truly deliver what today’s customers are clamoring for. One manufacturer that launched with a fully-baked frictionless sales process is Tesla, which despite selling far fewer new cars than the Big Three has a market cap far in excess. This is no accident; investors and consumers alike recognize positive innovation when they see it. Similarly, though Vroom and Carvana make up the bulk of press regarding digital used car sales, it is Walmart, through its online car buying platform CarSaver, and its network of new vehicle dealers that looks poised to provide a counterweight to well-funded digital newcomers.

Prior to the COVID pandemic and its accompanying disruptions consumers were already shopping online for vehicles in record numbers. One dealership group remarked that “even with fewer overall sales during the pandemic, the percentage of people taking home delivery and test drives grew from about 10 percent of customers before the crisis to more than 30 percent today.” A Cox Automotive survey reveals that “79 percent of franchised dealership respondents said they plan to keep using digital retailing tools even when business returns to normal. Nearly two-thirds of franchised respondents said they were just as likely or more likely to expand digital options in the future.” Digital retail is here to stay, and it does not end at the sale.


The businesses that come out on top from this crisis will be those that choose to think different; from services to appointment scheduling and ongoing customer engagement, deploying the right platform promises to enable forward-thinking organizations to understand their customers better than ever before subsequently make relevant and timely recommendations based on actual need. In the back office, these Big Data tools glean unique insight from unstructured data for a variety of critical business efforts that in the past would have taken significant legwork. Regardless of when emergency orders are lifted, it is unlikely that customers will gravitate back to showroom shopping once they are familiar with an intrinsically more convenient option.

As sales transition to the digital realm and the in-car experience continues to evolve into a smart device of its very own, dealerships must proactively adapt to evolving technologies and consumer sentiment with solutions sophisticated enough to be future proof regardless of what comes next. If you’re looking to audit your digital retail capabilities and are wondering where to start, contact us for a complimentary review.

SHIFTMobility Inc.