The pandemic has made an impact across all industries. Some have been instant winners, like the tech space where the move to remote work forced the adaptation of work from home tools like Zoom. Other spaces like the events space had to pivot and find ways to deliver engaging online events. More interestingly, though, it has forced some slower-moving industries, like the auto sales industry, to more rapidly change.
To be sure, change was already taking place. The Internet gave consumers endless resources to learn about car models and their costs. It even made it possible for buyers to connect with existing car owners to learn about their experiences with dealers and manufacturers.
What never changed was the intimacy of the showroom experience in the sales process. The pandemic, however, upended that when dealers were forced to close their doors for extended periods. The abrupt shift became a windfall for digital-only auto retailers, creating profit surges upward of 30% for some. It also served as a wake-up call for traditional dealers to embrace a digital change.
For entrepreneurs, this means opportunity. Conventional dealers are looking for partners to help them bridge the digital divide and evolve their sales models. Here are a few areas where you can capitalize, and help you think through ideas for other markets.
Many dealerships have relied on manufacturer-led digital marketing operations that lacked any real connection with local markets. In general, that approach worked well when the only goal was to increase awareness and drive foot traffic into showrooms.
But amid the pandemic, dealers rushed to build out online platforms that could take the place of their showrooms. Some have succeeded, driving up efficiency and per-salesperson output in the process. Still, dealers continue to look for ways to strengthen their online sales capabilities.
One startup, called AutoLeadStar, is already making inroads to help them do it. They offer an AI-powered, automated marketing platform that functions as a digital sales-as-a-service bolt-on for existing dealerships. With it, auto dealers can identify, target, and convert sales leads without having to build their own extensive digital infrastructure. They’re a great example of a startup that’s reaping the benefits of the changing market dynamics and needs.
Digital showroom experiences
Auto dealers are also looking for ways to upgrade their showroom experiences using the latest in technology. One major area that entrepreneurs should set their sights on is how to use augmented and virtual reality to update the showroom.
This is a promising area for startups to exploit because all signs indicate that car shoppers still value in-person sales, but are open to a new approach to the process. According to the analysts at Deloitte, around 71% of American consumers still aren’t comfortable with an all-digital sales model. That means dealers have every incentive to make the in-person experience as inviting and appealing as possible for the foreseeable future.
By bringing augmented and virtual reality systems into the mix, dealers can provide shoppers with the ability to see every model offered in every combination of colors, features, and trim. That way they can cut down on inventory and still give car shoppers the hands-on experience they want. It can also attract new customers interested in a new sales experience, and be a differentiator that digital-only platforms will find it hard to match.
New Financing Solutions
Buy now pay later financing solutions have become increasingly popular recently. More and more e-commerce sites have adapted this payment because it allows them to convert more users. In fact, Affirm, a leader in the space, recently went public and is now worth $25 billion. How can auto dealers innovate financing models to stand out?
One option is to look at distributed finance, or DeFi, which makes use of blockchain technology, to create alternative financial structures. In 2020 it boomed and is poised to have an even bigger 2021.
According to industry specialist Anastasia Golovina, the DeFi lending space has never been hotter. She works with several DeFi lenders and says that such platforms are making “tens of thousands of loans.”
New platforms can help auto dealers by allowing them to accept or finance payment in cryptocurrencies. Borrowing from other popular concepts, they can look at how car payments can be used through crowdfunding. By adapting payment methods consumers have grown accustomed to online, auto dealers can get a competitive leg up.
With the pandemic, consumers have grown used to products being delivered directly to their homes. Items from grocery or local stores are just a click away, and companies like StichFix allow you to try on products and return those you don’t like.
Can auto dealerships adapt to some of the norms that consumers expect from online services? For example, what if within a click of a button, consumers can arrange a test drive at the dealership, or have the car show up to their door for a test drive.
The auto sales industry is a good example of an industry that has been pushed to change due to the pandemic and underscores how it can create new business opportunities. This has happened in other industries too, like medicine, where the adoption of telemedicine is now happening at a fast pace.
What other industries were forced to change or evolve due to the pandemic? Chances are businesses in those spaces are open and hungry for new solutions to help them stay relevant.