Peter Brandow has carefully thought through this Internet phenomenon. And the results at his three Philadelphia-area dealerships reflect that pondering. His three stores initiated a total of 1,085 vehicle sales on line in 2000.

His definition of an Internet sale is strict. Any sale that could not be done on line because of some aspect of the process is not considered a true Internet sale. So it's no surprise that in 85% of the dealerships' Internet sales, the customer never sets foot in the store.

“Every part of the process is conducted on line, except for delivery. We deliver the vehicle to any location they specify,” Mr. Brandow says.

The other 15% of Internet customers want to test drive and to talk to someone face to face — but their deals are pretty much done by the time they walk in the door.

Mr. Brandow's focus is not so much on the technology. Rather, it's on how that technology is changing the dealer-customer relationship.

He says Internet customers are people who are courageous enough to try something new, or are frustrated with the overall traditional experience.

He thinks many dealers are unsuccessful on the Internet because they view it as merely a way to advertise. To Mr. Brandow, those dealerships' Internet staffers are trained phone operators telling prospects, “Yeah, we got that, come on in.”

Dealers who understand the Internet is changing the nature of the consumer are the one who will provide a successful alternative experience as e-dealers.

“In bricks and mortar, we barter information for control. The traditional experience is adversarial in nature — the first one to give up information (such as how much a customer says he or she is willing to spend) loses control,” Mr. Brandow argues.

“Every part of the process is conducted on line, except for delivery. We deliver the vehicle to any location they specify.”
— Peter Brandow

His philosophy is to allow customers to feel in control of the information flow so that they enjoy the buying experience. The Internet allows the dealership to provide that information. Non-negotiable pricing is one way to change the experience.

Mr. Brandow says, “Letting them know the price up front helps to create in the customer's mind that we are providing an honest experience.”

His dealerships offer Internet pricing 1%-3% lower than the traditional price. “We picked a point that would maintain profitability,” he says.

Mr. Brandow and his Internet manager, Eva LeaGace, developed an in-house system that allows them to provide customers with a guaranteed price for their trade-in.

“It's not a sophisticated system,” says Mr. Brandow. “But it does work for us. And customers do use it.”

The web site explains that the system depends on the honesty of the customer. An interesting aspect of the trade-in process is that customers must take time to fill out and submit on-line forms. That, in turn, creates qualified leads. Customers who take the time to fill out the form are serious buyers, says Mr. Brandow.

Proper management of employees is part of the e-process. Matching employees with the appropriate job is essential.

Traditional sales people often do not do well with organized tasks required of Internet sales people, he says.

“They are hunters — they are action-oriented. Meanwhile, the person who is successful in the Internet arena, is more organized, better able to follow up regularly on the customer,” says Mr. Brandow.

His dealerships maintain totally separate Internet facilities, staff and support. But Mr. Brandow envisions hybrid business development centers as a model of the future to screen serious Internet buyers and traditional customers who may just be dabbling on line.

The business development center will match customers with the right department, depending on what stage of the process the customer is in and how serious he or she is about staying on line throughout the sales process.