TURBOCHARGING NEW CAR SALES ON EBAY

     I recently came across a news story that illustrates the tremendous changes occurring in the way companies are using the internet to reach out directly to their customer base.  Its something this blog has been promoting since I started writing about creative marketing and sales approaches for manufacturers.  The story comes from the automotive industry, an industry that has been hard hit by the current recession and of necessity is searching for ways to boost their revenue in a down market.

     Since 2001 General Motors and ebay have had a strategic marketing relationship whereby GM lists their entire Certified Used Vehicle inventory on eBay Motors in a classified ad format at no cost to their dealers.(Toyota and Chrysler have similar programs in place)  Now, General Motors would like to expand this relationship to include their new car inventories, beginning with the state of California. Although state laws allow only licenced dealers to sell new or used cars to the consumer, G.M's California dealers could put their new vehicle inventories on the auction site and eBay users would bid on them.  Vehicles would also have a "Buy it now" price for shoppers who don't want to risk losing out in a bidding process.  Winning bidders would then complete the purchase at the dealership or online.

     Listen to what Susan Docherty, general manager for G.M's Buick, Pontiac, and GMC brands has to say about this new intitiative.

      "80%-90% of GM shoppers already spend a lot of time researching their purchase online.....The power of the eBay brand mated up with the four core brands from GM could be a really good thing.  It takes the shopping process online up about 4 notches because you've got a lot more information at your fingertips.  Shoppers will also be able to complete the negotiation process online once they've found the vehicle they want." 

     Its interesting to note the reaction to G.M's online initiative by automotive marketing experts like Larry Freed, CEO of Ann Arbour based ForeSee Results and an advocate of online sales strategies.  He comments:

     " The prospect of selling more cars online would mark a significant break from the entrenched strategy of relying on a broad network of dealers to entice consumers.  Most auto dealers have already noticed a marked shift in consumer's mindset when they enter the showroom.  It's becoming increasingly difficult for sales people to influence consumers' choices, because many customers have done extensive online research before visiting dealerships.  What we've seen is the consumer has evolved.  Three years ago things you thought people would never buy online, now they do.  Selling cars online could significantly slash distribution costs and legacy costs of dealerships.  With the proliferation of mobile communication devices allowing users to access the internet in all locations, consumers can now read online product views while at a store.  The consumer, with the internet, is in charge.  We're knowledgeable, we're informed and there's much more transparency."

     Finally, a blogger's reaction to the plan, which very nicely summarizes some of my own views regarding using the internet to circumvent or help  traditional distribution channels that can no longer go it alone in our wired, on demand world.

     "This is not a new idea.  It's been suggested by me and others for decades.  Face it, like many other industries, the old retail sales model and channel structure is outdated, cumbersome and ill-suited to the needs of a fast-moving, information-seeking, Internet-saavy customer base!  Of course sell cars on the Internet!Duhh.... Thousands of people and dealers have been doing it every day for years.  I myself have sold multiple vehicles for myself and others and purchased two more on eBay. 

     Dealers should have the option of stocking demo units of the brands and models they want to carry and have their sales people encourage customers to order the EXACT vehicle they want online, either with the help of their sales consultant or in the comfort of their home.  These vehicles should then be manufactured in a just-in-time environment and delivered directly to the customer or to the dealer for pickup, whichever is more convenient for the customer."

     Whether you agree or not with comments above, the really key point is that dire times require radical solutions, not only for General Motors but for all manufacturers that are seeing their businesses cannibalized by offshore competition.  G.M. is cutting the number of dealerships and trying new approaches that recognizes the dramatic shift in the way their customers want to buy cars in the future.   THEY ARE CREATING DIRECT LINKS WITH THE CONSUMER.  The other key point is that rather than trying to launch this online format themselves they are leveraging the power of the Ebay brand, which last year sold 60 billion dollars worth of product worldwide, to rapidly grow this intitiative.  More and more companies are finding that it makes better strategic sense to use established online sellers like Amazon and Ebay, that generate millions of visits to their sites daily, than to try and go it alone with their own websites.  In other words, the online tools are already there.  You simply have to plug in. 

     Finally, I hope this story will encourage you as a manufacturer to think about your own sales channel strategy and how it could be changed.   Companies that I have blogged about previously, including Roots, Elmira Woodstove, Cutco, and Kodiak Boot have all reaped the benefits of using different ways of reaching their customer base.  I invite you to go back and read some of these entries.