by Karla Allen on 2017-03-31 4:09pm
Photo image: Houston Free Press
By Karla Allen
It sounds like a really good idea from a customer service point of view - big box stores for used cars. No more having to buy your ‘pre-owned’ car from the small selection on the corner lot or walk football fields of cars searching for one with the exact features you want. Enter e-commerce for cars.
After selecting it on their website, CarMax.com will ship a certified used car from any one of their locations to a location near you. On AutoNation’s site, you browse for a new-to-you or just plain new car by make, model, body type, etc. and only get exactly what you want. Costco peddles cars from kiosks out in front of their stores and online, offering online referrals to dealerships for members. And Walmart, the ultimate big box store, will begin selling new and used cars, similar Costco’s online and kiosk model, in April of 2017 at certain of their locations.
No matter what, the business model appears to take on the ‘elimination of the haggle-factor’ as its anthem. CarMax promises right on their website, “There’s no haggling” and “Zero hassles”. AutoNation claims, “Financing without the hassle” which also implies the same concept - pick your own price, find a car from the massive, nationwide stock in that price range, buy it. Cue happily ever after.
Is buying a used car finally such a delightful fairy tale?
Here’s how it works. Pick the site from which you’d like to buy a car. Perhaps you pass a CarMax everyday on your way to work or an AutoNation just opened on car row in your city (both operate online with brick and mortar stores). But don’t go there! Instead log on with your laptop or smart phone and start shopping one of those sites for the type of car you want.
Getting pre-qualified for financing is even possible from your living room, as well, if you plan to use their in-house financing. Go to the financing page on the website where you found the vehicle, and fill out their online forms. This is very similar to the buy-here-pay-here, BHPH, traditional car dealerships where you pick out a VIN number for sale in the newspaper ad, and then work with the dealership’s financing department once you are on site.
AutoNation and CarMax follow similar business models. Pull up one of their websites and start shopping immediately for the car of your dreams, new or used. Start narrowing down your search by condition, mileage, year, make, model, etc. And at any point if you need immediate feedback or help, open a live chat with an online assistant. AutoNation has the added business goal of getting the customer, when he or she does have to pick up a car, to be in and out of the shop in 30 minutes or less.
How about Costcoauto.com? Even if you don’t have a CarMax in your neighborhood, how about a Costco? At costcoauto.com the shopping concept is the same for the consumer with dropdown menus of car types and models organized by style, price, etc. Throw in the added benefit with which Costco members are familiar, the possibility for a rebate, and you’ve got a similar shopping experience. All of this is available if the consumer is a Costco member, a big difference between Costcoauto and other online auto dealers. Another difference is that Costco refers customers out to dealers with whom they have relationships (and at this stage in the game, reportedly they have dealers lining up to do business with them). So once you’ve plugged in your membership information and Costco knows with which of their members they are dealing, they will refer the member to the autodealer who has the Costco deal.
And their story is that they can get the price down and offer a better price, with the essential no haggling/hassling policy the same way they offer gallons of mayonnaise so cheap even though they don’t store them on site. Volume of sales? 400,000 cars in 2014.
With TrueCar you decide up front whether you want to shop for a new car or a used car and then the process is very similar to what we’ve already described. TrueCar has an added discount benefit offered for USAA Members through their Car Buying Service and that is offered as a direct link from TrueCar’s front page. Again, one of TrueCar’s selling points is “Upfront Pricing from Certified Dealers”. More available information from TrueCar is the “See what others paid” near where you are shopping. TrueCar’s live chat is also available as soon as you work your way into their site, narrowing down the type of car in which you’re interested.
How about the ‘world wide garage sale’ Ebay? Yep, consumers can purchase cars there, following the usual Ebay methods, bidding or Buy It Now, whichever the seller has set up. And the search is as easy as any other Ebay search, or even other car sites, with dropdown menus and multiple options. Start with what type of vehicle you’d like and then just keep clicking down until a picture of the car pops up with bids totaling, for example, $6.50, 13 people watching, and 2 days left in the auction.
While dealers do post listings here, Ebay also caters to the guy with a car to sell, so consumers take their chances with disclosure information about the vehicles. Other online sites offer various levels of verification (and dealers on Ebay generally do as well). Ebay suggests in their tips for buying a certified used car, “Knowing what to look for in the documentation that is provided as valid proof that the vehicle is a certified used car is also something used car buyers should understand as well. It is also helpful to understand the buying process for certified used cars both through dealers and individual sellers.” Unhappy with your purchase? There’s always the feedback option.
Sensing a theme? Shop for a car from your living room, and don’t go to the dealership until the deal is pretty well sealed, or even better, the car you picked online is delivered to your driveway. NO trouble and definitely NO hassles. Fairy tale ending, right?
If it sounds too good to be true, it probably is. Try spending a few minutes reading reviews of various ‘big box’ car sellers, and you’ll see some of the same reports of haggling, hassling, and more. Some who had used online car dealers even publically regret having lost out on the salesman experience, lamenting that had they used a salesman at a dealership, their issues would never have arisen because the salesman would’ve negotiated it away without fear of losing his or her entire commission. Consumers of online dealers complained of everything from broken catalytic converters to refusal to honor return policies to finding Bondo holding parts together to consumers taking too many hits on their credit reports from financing departments. Nothing seems to inspire a bad consumer review like being taken advantage of by an online car dealership, when the expectation was the exact opposite.
However, no matter the aggregate of customer experiences (and there are certainly good reviews as well), online auto sales are more than a trend, with at least one study suggesting that by the year 2020, 5% of all cars will be sold online. Knowing the online competition and knowing how the process works is important to figuring out how as an autodealer you are going to adapt your business to either beat them in the store, or join them online