Avoid letting Internet cut profits, customer satisfaction Internet sales have been a profit-margin and customer-satisfaction cutter for most dealers, but could become a major plus "if the players align their operations to meet expectations of cybercustomers."

So says a survey of the initial stages of the "eTailing revolution" by Andersen Consulting, of Chicago and Detroit.

The survey flatly calls Internet auto selling efforts so far "a losing proposition for everyone involved." The survey was conducted before Ford and GM opened pilot online sales Web sites this year in Minneapolis, San Diego and Ontario, Canada.

"Customers who have plunged into automotive electronic eTailing are less, not more satisfied, despite receiving lower prices," says survey director Randolph Barba, a 10-year Andersen veteran.

"Dealer margins have decreased as informed customers base price negotiations on dealer cost, not suggested retail price.

"OEMs have lost valuable customer interactions to third parties that have inserted themselves into the process, jeopardizing the primacy of the OEM/franchised dealer network."

Mr. Barba finds some rays of hope in the Internet models being pursued by top megadealers AutoNation, Sonic Automotive and UnitedAuto Group, as well as Internet-linked awards programs like DaimlerChrysler's Five Star and Ford Division's new Blue Oval.

But he bluntly states that cybershoppers will not be satisfied by shopping restrictions imposed by state franchise laws, such as those passed in Arizona last year and those in effect in Minnesota, where GM is conducting its first BuyPower direct sales pilot at seven Oldsmobile stores.

Under Minnesota law, all paperwork must be completed at dealerships, though the GM BuyPower.com pilot - like FordDirect.com - allows shoppers to select a vehicle of his or her choice and agree on a price with a dealer.

"Dealers and manufacturers need to rethink the end-to-end sales process. This means shifting specifications, finance application and other activities to the customer," says Mr. Barba.

He declares that unless dealers avoid customer "net-lag" between online and in-store, they will continue to experience poor results from their own web sites or any third-party sites they use, such as Auto-By-Tel, Carpoint, Cars-Direct and Greenlight.

Two other "imperatives" are recommended by the Andersen study on automakers and their dealers desirous of succeeding on the web.

These are replacing "ill-equipped" sales personnel with cyber-shopper-focused men and women, and making sure that dealer personnel get rid of "old and often outdated product binders, and replace them with business simulators containing the latest information and state-of-the-art sales training."

Manufacturers and consolidators who spur their dealers to accomplish Internet objectives "will lead this revolution," says the Andersen study. "All others will be quickly swept aside."