Online Buying Cuts Dealer Costs

Launched three years ago, the Chrysler Group's MarketCenter has eclipsed $100 million in total sales and finished 2003 with approximately $54 million in sales — a 46% increase from 2002.

More than 3,200 Chrysler, Jeep and Dodge dealers use the online procurement service with 80% of the dealer body purchasing at least two products or services each month, according to Geoff Edmonds, manager of the dealer service.

Chrysler says MarketCenterhas reduced procurement expenses by $8 million in 2003.

“There were some huge cost inefficiencies,” says MacKenzie.

Dealers have access to approximately 30 companies that supply such items as fuel, shipping, office supplies, computer hardware and job recruitment services.

“The key to MarketCenter's success is how these suppliers service our dealers' needs,” says Edmonds. “And dealer guidance is how we select those suppliers.”

The suppliers bill MarketCenter, which then bills the dealers. Because of the increased volume Chrysler dealers bring along with the simplified billing process, MarketCenter can negotiate for lower prices with each participating supplier.

Dealers are encouraged to notify Chrysler if they find a product at a better price somewhere else. “Then we can go back to the supplier and negotiate a better deal,” says Christine MacKenzie, Chrysler's vice president of dealer operations.

Chrysler lately has added four new suppliers. Two really took off.

Dealer Concepts sold 150,000 customer-retention key tags in two weeks through MarketCenter. CallCommand, a company that provides communication solutions to dealers, started seeing significant momentum on MarketCenter because of the new “Do-Not-Call” legislation.