11 Digital Retailing Automotive Trends Dealers Should Look Out for
A car shopper sees your dealership's website pop up on their Google search. They've clicked through, and they see the promises of digital retailing. They expect to research their options, calculate payments, and get prequalified for financing before speaking with anyone. When they do finally come to your dealership, they want it to be a seamless experience, almost as if they had completed the entire transaction online. It's up to you to generate car sales leads and meet this shopper's digital expectations. Understanding digital retailing automotive trends will help you do just that. So, How to Generate Car Sales Leads?
This article will walk you through the most critical trends and how they can help you sell more cars. As you learn about digital retailing automotive trends, keep in mind that AI for car dealerships can help you put these insights into action to achieve your sales goals.
Digital Retailing in the Automotive Industry
Digital retailing in the automotive industry refers to the use of online technology and tools that allow car buyers to complete most, if not all, of the vehicle purchasing process remotely. Unlike traditional models, where nearly every step happens inside the dealership, digital retailing shifts much of the buying journey online, giving customers the power to browse inventory, build deals, value trade-ins, secure financing, and even finalize purchases through a dealership’s website.
Understanding the Essence of Digital Retailing in Automotive Sales
At its core, digital retailing is about making the car-buying experience more connected, convenient, and customer-driven. It enables seamless interaction between a dealership’s digital presence and its in-store operations, allowing customers to initiate the process online and pick up right where they left off when they visit in person, or complete everything entirely online.
This approach transforms a dealership’s website into more than a marketing tool. It becomes a transactional hub, a virtual showroom where real sales activity happens. Digital retailing is not about replacing in-person sales; it’s about giving customers the flexibility to move through the process on their terms, at their own pace, with fewer obstacles.
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Top Benefits of Automotive Digital Retailing for Dealers
The majority of U.S. car buyers are those who pay cash. A recent CarGuru study noted that 42% of buyers' top frustration with the car-buying process is the lack of available payment information prior to contacting the dealer.
The benefits of digital transformation for dealers address this frustration head-on. Today's digital retailing tools enable buyers to access the payment information they want early in their purchasing process.
Enhancing Trust and Accelerating Sales Through Financial Transparency
The information transparency makes sense, serving as both a trust builder and sales accelerant. The more customers know, the more comfortable they are. The more comfortable they are, the more likely they are to make a purchase. New digital finance technologies go well beyond traditional payment calculators.
Let your lenders present their best offers, and let the consumer make the choice. By changing when and how the shopper is introduced to qualified payment information and dealership financing options, the combination of technology and data enable you and the buyer to come together much faster. The two-way transparency is a trust multiplier.
Dollars & Sense
A growing number of customers are seeking ways to expedite their time at the dealership by locking in their financing before visiting the store. In addition to reducing time at the dealership, there are other reasons why more customers are willing to source their funding elsewhere:
“Consumers want more control over where and who and how they do business.”
New business models and digital finance technologies introduced by lenders and some of the disruptors. Much higher satisfaction scores among those consumers who secured direct financing outside the dealership. Emerging trends like this translate to a higher proportion of customers arriving with financing arrangements already in place, reducing the opportunity to sell them value-added protection products and forfeiting F&I gross.
Optimizing Deal Profitability and F&I Product Sales Through Digital Retailing
The benefits of digital transformation through digital retailing platforms create opportunities to insulate dealers from these risks by getting finance involved in the deal sooner. The deal transparency increases finance penetration- and the earlier finance gets involved in the deal, the more profitably they can be structured.
Digital retailing technologies also create opportunities to maximize PVR by introducing customers to relevant F&I products throughout their buying experience – unlike the legacy practice of presenting all your F&I products after the purchase decision has been made and a contentious step in the process that many worn-out buyers understandably perceive as the dealer ‘selling’ add-ons and extras. When customers are presented (educated) with ‘intelligent’ product suggestions and personalized offers at different points in their journey – they are much more likely to purchase.
Convenience
At the risk of stating the obvious, digital retailing means your dealership is never closed. Your showroom is always open. Buyers can shop late at night, early in the morning, or on Sunday afternoons, when most businesses are closed. And since you are ‘virtually’ never closed, your eCommerce solution should be powering an accelerated and streamlined digital path-to-purchase experience that drives transactions 24/7.
Consumer expectations are forcing dealers to morph the traditional car-buying process into a hybrid of online and offline interactions. The customer values the convenience and speed. Dealers are searching for efficiencies and cost savings. Again, the benefits of digital retailing overlap between customer and dealer.
It’s About Time
As intended, DR tends to streamline and simplify the buying experience, making the process more efficient for both buyers and dealers. The efficiency benefit for the consumer translates to less time spent at the dealership and for the dealer, faster transaction times. In addition to the exceptional buying experience that fosters better customer interactions and motivates employees, the efficiencies for dealers accelerate sales throughput, help reduce costs and increase closing ratios.
Customer Satisfaction
The customer values the convenience and speed of a digital buying experience most. They also value the control, empowerment, and transparency that comes with driving the transaction in a pressure free environment. In a marketplace where customer experience is edging out price and even product quality as a primary differentiator -selling the way the customer wants to buy can pay off big.
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11 Digital Retailing Automotive Trends Dealers Should Look Out For
1. Online Car Buying Platforms Are on the Rise
The surge of online car-buying platforms is a significant trend in automotive e-commerce. Companies like Carvana, Vroom, and Shift have transformed the car-buying process by offering an entirely online experience. These platforms enable consumers to browse a vast inventory, secure financing, and complete the purchase without visiting a dealership. The vehicles are then delivered directly to the buyer’s doorstep.
This shift is primarily driven by consumer demand for convenience and transparency. According to a study by Cox Automotive,61% of car buyers in the U.S. prefer an online experience over traditional dealership visits (eCommerce Insights). The success of these platforms is reflected in their financial performance and market share, which continue to grow year over year.
2. Virtual Showrooms and Augmented Reality (AR)
Virtual showrooms and augmented reality (AR) are revolutionizing the online car-buying experience by offering immersive and interactive vehicle explorations. Virtual showrooms enable customers to explore detailed 3D models of vehicles, inspect interior and exterior features, and even participate in virtual test drives.
AR technology takes this further by allowing consumers to visualize how a vehicle would appear in their driveway or garage using their smartphones or AR glasses. This innovative technology effectively bridges the gap between online and in-person shopping, assuring buyers to purchase without physically inspecting the car.
3. Artificial Intelligence (AI) and Machine Learning
AI and machine learning are pivotal in customizing the luxury automotive e-commerce experience. AI-driven chatbots and virtual assistants provide immediate customer support, addressing inquiries and guiding users through the purchasing process. Machine learning algorithms analyze user behavior and preferences to offer personalized vehicle suggestions and financing options.
Predictive analytics, a component of artificial intelligence (AI), helps dealerships refine their inventory management and pricing strategies. By predicting demand and recognizing market trends, dealers can ensure they have the right vehicles in stock and price them competitively, thereby elevating both sales and customer satisfaction.
4. Sustainable and Electric Vehicles (EVs)
The shift towards sustainable and electric vehicles (EVs) is a prominent trend shaping the automotive e-commerce sector. With governments imposing more stringent emissions standards and consumers showing a greater concern for the environment, the demand for EVs is on the upswing. Online platforms are increasingly showcasing electric vehicles (EVs), highlighting their advantages, and providing detailed information on charging infrastructure and maintenance.
Manufacturers are also shifting towards direct-to-consumer sales models for electric vehicles (EVs). Tesla has taken the lead with its online-exclusive sales approach, prompting other carmakers to follow suit. By selling directly to consumers, manufacturers can oversee the entire customer experience, from browsing to delivery, ensuring a seamless and consistent process.
5. Data-Driven Marketing and Personalization
The automotive e-commerce world is witnessing a surge in the importance of data-driven marketing and personalization. Through the analysis of data from different sources, such as:
- Browsing habits
- Purchase records
- Social media engagement
Companies can develop highly focused marketing strategies. Personalization goes beyond marketing and encompasses the entire customer experience.
For example, personalized email campaigns can prompt potential buyers to recall vehicles they previously viewed online, while customized landing pages can showcase relevant offers and promotions. This level of customization enriches the customer experience and heightens the likelihood of conversion.
6. Integration of Advanced Payment Solutions
The incorporation of advanced payment solutions simplifies the car-buying process and enhances security. Digital wallets, cryptocurrency payments, and buy-now-pay-later (BNPL) options are becoming more prevalent, offering consumers flexible and secure ways to complete their purchases. Digital wallets like:
- Apple Pay
- Google Pay
- PayPal
Offer a convenient and secure payment method, thereby reducing the risk of fraud and enhancing the checkout experience. Cryptocurrency payments are also gaining traction, especially among tech-savvy consumers who prefer the anonymity and security of blockchain transactions. BNPL options allow buyers to split their payments into manageable installments, making high-value purchases more accessible.
7. Digital Financing and Insurance Solutions
The fusion of digital financial services and insurance offerings is revolutionizing the vehicle purchasing journey. Online portals provide swift loan approvals and attractive financing choices from various lenders. Customers can analyze interest rates, compute monthly payments, and finalize financing arrangements without the need to exit the online platform.
Digital insurance solutions are streamlining the acquisition of coverage. Prospective buyers can:
- Swiftly obtain quotes
- contrast policies
- Secure insurance online
Frequently, it is an integral part of the vehicle purchase process. This seamless digital journey diminishes the obstacles and intricacies typically linked with vehicle financing and insurance.
8. Subscription and Mobility Subservices
Alternative ownership models, such as subscription and mobility services, are becoming increasingly prevalent in the automotive e-commerce sector. Companies like Volvo Care and Porsche Passport offer subscription services that allow consumers to enjoy a variety of vehicles for a monthly fee, which includes insurance, maintenance, and other associated expenses. This hassle-free model offers a refreshing alternative to traditional car ownership.
Mobility services such as car-sharing and ride-hailing are becoming increasingly popular. Platforms like Turo and Getaround allow individuals to rent out their vehicles, while Uber and Lyft cater to the growing demand for convenient transportation options in urban areas.
9. Blockchain for Transparency and Security
Blockchain technology plays a crucial role in improving transparency and security within the automotive e-commerce sector. Through the use of a decentralized and tamper-proof ledger, blockchain guarantees the authenticity of vehicle history records, encompassing ownership details, maintenance records, and accident history. This transparency fosters trust between buyers and sellers, minimizing the chances of fraudulent activities.
Blockchain facilitates secure transactions through the utilization of smart contracts. These self-executing agreements autonomously enforce the terms of a deal, ensuring that all parties involved fulfill their respective obligations. This technological innovation proves particularly invaluable in the context of high-value transactions, such as vehicle purchases, where the preservation of security and trust is of paramount importance.
10. Enhanced Customer Experience through Omnichannel Strategies
An integrated approach across various channels is essential for providing a seamless customer experience in automotive e-commerce. By merging online and offline platforms, dealerships can create a unified journey that exceeds consumer expectations at every interaction point. For example, customers can initiate their research online, visit a physical showroom for a test drive, and finalize their purchase online.
Customer relationship management (CRM) systems play a pivotal role in facilitating this integrated experience. These systems monitor customer engagement across all channels, offering valuable insights that enable dealerships to personalize communication and enhance customer service. By harnessing data from multiple outlets, dealers can cultivate stronger connections with their customers and elevate overall satisfaction.
11. Rise of Mobile Commerce (M-commerce)
As mobile devices become the primary tools for online shopping, the automotive digital retailing sector is seeing a surge in mobile-driven transactions. With improved mobile interfaces and responsive websites, consumers can now research, compare, and purchase auto parts or vehicles directly from their smartphones.
Companies are investing in mobile apps that streamline the purchasing process, offering features like push notifications for price drops and mobile-friendly checkout options. This trend is powerful in emerging markets where mobile penetration is high, making M-commerce an essential part of automotive ecommerce growth.
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5 Ways to Prepare Your Dealership Team for Digital Retailing
1. Embrace Deeper Customer Engagement
Digital retailing enables dealers to engage with buyers who are ready to make a purchase. This technology enables customers to initiate the buying process online, meaning they arrive at the dealership already familiar with the vehicle they want to purchase and ready to finalize the sale details.
This also means they may have specific questions about their trade-in, financing, and the vehicle they want to buy. Digital retailing enables dealerships to create a more seamless process for customers, which not only enhances their experience but also helps dealers generate more profitable sales.
Preparing Your Dealership for Digital Retailing
To prepare for digital retailing:
- Start by improving your online customer engagement today. For example, hold VDP activity review meetings with your sales, BDC, and management teams. Suppose they consistently track the inventory that generates the most VDP activity. In that case, they will be best prepared to effectively connect with the callers, walk-ins, and leads generated by those key vehicles.
- Document your entire merchandising strategy, share it with your teams, and ensure that you are operating efficiently.
- Recommit to focusing on your broader website performance with analytics.
- Once digital retailing is up and running, your entire website solution will perform in new ways.
- Get a head start on the conversations you will have by reviewing your performance based on your:
- Website
- Advertising
- Inventory
These three are key because once digital retailing is live, it will create improvements and opportunities for keen insights in each of those three categories.
2. Meet with Your Team
Digital retailing is technology that can impact your whole team. Make it a positive impact by keeping your team members informed. Create awareness of the upcoming change and share some of the benefits that have made you a digital retailing believer.
When you share your motivations, your team will have a much clearer picture of what has driven decisions and what your path forward looks like. Even your service team can benefit from knowing that, for example, customers can begin the appraisal process on your website. And don’t just meet once. Make communicating about digital retailing a part of your regular meeting cadence.
3. Build and Market Your Digital Retailing Brand
It’s a tired cliché, but simply building a better mousetrap won’t drive traffic to your door. You will need to message, promote, and help shoppers create tangible emotional connections to the time savings and convenience benefits of digital retailing.
Remember these four key points:
- Brand your experience
- Promote
- Promote
- Build upon successes with subsequent promotion
Consider the in-store point of purchase.
4. Refrain from Thinking of Shoppers as Leads
Remember, shoppers who provide you with their trade-in information and credit application are far closer to purchasing a lead. Please don’t tread them like one. Make it clear who owns the contact, ensuring it is confirmational and focused on connecting the dots for shoppers so they don’t feel like they are duplicating efforts or missing out on the full benefit of starting their deal online.
5. Include Your Entire Leadership Team in the Digital Retailing Setup Process
Digital retailing should evoke “all hands on deck” attention, especially for your leadership team during the setup process. If one of your managers doesn’t have the opportunity to see behind the scenes and get excited, then he or she is at risk of being less on board than the rest of the team.
Know that the dealership business may go on. Let your team know where you are and what you’re doing. And if there is an interruption, pause the conversation and address your dealership question before continuing the setup meeting.
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See how Pam outperforms both human agents and competing AI solutions by scheduling your personalized demo today. Implementation takes just one day.
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