This Time It's for Real

In the late 1990s and through most of 2000 there were great expectations about the potential of e-commerce for automobile dealerships. In hindsight, some of those hopes were unreasonable.

The backlash, as seen in 2001 and 2002, led many discontented dealerships to postpone or pull the plug on their e-commerce initiatives.

The reality today is that a growing number of viable and significant opportunities in e-commerce actually work and deliver real value to dealerships.

To realize the full potential of e-commerce in the 21st century, dealerships finally need to accomplish the long-sought goal of integrating all of the information within their enterprises.

Without this integration, many of the e-commerce solutions available today, such as Internet sales and service appointments, will not reach their potential to drive extra revenue.

Some of the challenges of integrating the entire automotive retail sector include linking multiple applications and platforms, dealing with multiple business partners, and attempting to leverage existing IT investments.

An effective approach to integration takes place in four key areas:

Successful integration within the automotive retail sector yields obvious benefits:

E-commerce enables a host of automotive retail initiatives. Here are some that can deliver extra revenue and reduced costs today:

Online Service Scheduling:

An analysis of service requests during the first half of 2003 through a major automotive Internet portal showed that more than 35,000 consumers initiated service requests online. Most vehicles scheduled for service via the Internet are out of warranty, possibly explaining the average $300 spent in customer pay parts and labor.

Other studies indicate that 47% of appointments are scheduled after the dealership is closed, 69% are scheduled for vehicle models that are three or more years old, and many of these consumers are new to the dealership. The capability to realize these service business opportunities is now available through several of the leading automotive Internet portals.

Sales Through “Partnerships”:

This is for dealerships that can integrate the multiple applications and systems. Doing that creates an e-commerce sales process with applications that include accessing customer relationship management, credit bureau reporting, electronic credit lending data, desking solutions and e-contracting.

The result is a faster, more efficient sales process that leads to higher dealer gross margins. Both the dealership and consumer get the deal they desire.

Enhanced Used-Car Sales:

The Internet has become an integral part of the used-car department with the ability to access vehicle history reports daily. Though with these systems individual reports can be run at any time via the Internet, integration to the DMS means that all used cars can be provided with vehicle history reports. This is a powerful sales tool, and an excellent way to limit liability from incomplete vehicle titles.

E-commerce continues to show strong potential and growth in the automotive retail environment.

Dealers can increase revenues and reduce costs if they commit to making e-commerce work and focus on information integration across their enterprises and partnerships.

Iain Smith is vice president of e-commerce for ADP Dealer Services.