Trade-ins and value-added products (VAPs) are proving to be the biggest hurdles for dealers rapidly adopting online motor retail technology in the post-lockdown used car sector, iVendi is finding.
James Tew, CEO, said that many retailers, who had been forced into adopting trading models that combined an online journey with reserve-and-collect, were facing a steep learning curve when it came to choosing new solutions.
“This is no reflection on the dealers themselves but the coronavirus crisis has meant that many have had to effect a transformation into becoming digital-first businesses in a matter of weeks. Decisions are being made very quickly and, while the vast majority of what is being implemented appears to be working extremely well, we are also hearing feedback about problem areas. The two that stand out are trade-ins and VAPs”
He explained that the issue with most online trade-in technology was that it dealt with the part-exchange in isolation, generally providing a very conservative valuation.
“If you were in a dealership talking to a sales person, this almost certainly wouldn’t be the approach. The part-exchange value would be worked into an overall finance calculation that was designed to get as close as possible to your monthly budget.
“Online, what tends to happen is that a valuation is presented as a single, often disappointing figure, and not as part of a comprehensive deal. There is evidence that the buyer drop-out rate at this point in the online journey is very high.”
James said that dealers needed to look at the online trade-in tools that would work best for them but, in many cases, the best currently-available solution was simply a form that allowed the dealer to make a human assessment.
“Some of the solutions available work well for some dealers but there is a very strong argument that taking the part-exchange offline is the most effective answer for many retailers and their customers. While it disrupts the purity of the digital journey, it also removes what is a significant issue in many online motor retail journeys.”
Problems were also arising with VAPs, James said, although this was a problem that was probably more easily resolved and for which proven expertise existed.
“In many used car sales, VAPs are the source of much of the profitability, so preserving levels of penetration when sales switch to online is very important.
‘The issue for most dealers is that, where VAPs are offered digitally, there are simply displayed as a product and a price. There is no real attempt at making a sale, at showing their advantages and how they apply to a specific consumer.
“This is really a matter of presentation and something that can be much improved through better web site design and integration into the overall sales process.”