How dealer got on Internet fast track

Canton, Ohio, dealer Doug Waikem was on the golf course one day in 1994 when he took a call on his cumbersome, 5-pound cellular telephone.

It was an executive who had just transferred from California to Cleveland. The man told Waikem that he had shopped for a car on the Internet via Autobytel, one of the first companies to sell new-car leads to dealers. But he had moved before taking delivery of the vehicle and now he wanted to buy from Waikem.

It was a life-altering moment for Waikem, who had never heard of the Internet but was pretty sure it meant that auto retailing had changed for good. He recalls rushing out to buy technology magazines in hopes of learning what he could about the World Wide Web.

Waikem learned quickly and soon was a pioneer among dealers selling cars online.

Today, the Waikem Auto Family, run by Doug, 58, and brothers Chip, 62, and David, 56, owns Nissan, Ford, Subaru, Hyundai, Honda, Kia and Mitsubishi dealerships in Canton and Massillon, Ohio.

The group dominates sales in the area.

"One out of every three new cars sold in our area comes from one of our seven stores," Doug Waikem says.

Last year, the group sold about 7,200 vehicles -- 4,200 new and 3,000 used -- and amassed total revenue of $250 million.

Waikem says the Internet has been instrumental to the 55-year-old group's success. The stores buy about 1,000 third-party leads per month from Autobytel and other lead providers such as Dealix and Cars.com, at a cost of $18 to $22 each. And those are exclusive leads his competitors can't buy, he says.

"I have been in the Internet business so long that I bought all the territories that I could," he said. "I have the market locked up."

He even bought territories in five surrounding states.

He says his store Web sites generate an additional 600 leads a month and that about 17 percent of all leads turn into sales within 60 days.

"That is very good," Waikem says. "Nationwide, the conversion rate is 7 percent."

Waikem should know because he is chairman of the National Automobile Dealers Association's first eCommerce 20 Group, set up last year after "years of begging NADA," he said.

About 40 percent of the company's annual marketing budget is spent on digital advertising, compared with about 25 percent at the typical dealership, according to NADA.

12 smart dealers

Waikem eventually sold a new car to the executive who called him on the golf course.

"I didn't know what the Internet was, but the minute he explained it I knew our industry was done and e-commerce would change our business," he said. "The way we had done it for 70 years was over."

Months later, he signed up with Autobytel and met with founder Peter Ellis.

"I asked him who were the smartest 12 Internet dealers in America," he said.

He visited all 12 and learned that "whether a dealership sold 40 or 400 cars a month, the Internet selling process was the same -- it was customer-friendly and transparent."

Waikem plunged into selling cars online, buying new-car leads and setting up Web sites for his stores.

"We quoted prices, appraised cars over the phone and even delivered vehicles to the homes of customers outside of our area," he says. "It was a unique group of buyers in the early days. They weren't worried about the price. They wanted transparency and an easy way to buy a car."

Soon other dealers were approaching Waikem, asking, "How do I adapt to this new media," he said.

In 1996, Waikem said he teamed up with Tom Vann, owner of Hillsdale Chrysler-Plymouth-Dodge in Hillsdale, Mich. -- one of the 12 dealers he visited -- and Danny Alkassmi, a dealer trainer on the West Coast. They founded I-NET Training Technologies, and ran a school in Canton, teaching dealers how to sell over the Internet. The three-day course cost $495 and about 40 dealers attended every month in the mid-1990s, he said.

"Dealers had never exposed price or what the trade was worth," Waikem says. "We set up a process for them to be more transparent. They came to our dealership and saw how we did it in a real and live situation. Some of the dealers that we dealt with did not have an e-mail address."

Waikem said they sold the school to Autobytel in 1997 and it was renamed Autobytel University.

Family debate

Though Waikem has long been on the leading edge of online retailing, he now wrestles with how far to take it. He is torn, for example, over how much more of the group's marketing budget to put into digital.

"I have seen in my NADA dealer groups that more and more are taking money out of television and print, but not as much as we have," he said. "Right now, we are testing the mix between conventional advertising and e-commerce. We all struggle with it."

Waikem, whose father, George, launched the company when he bought a Ford store in Massillon in 1957, says the debate rages within his company.

"There is a huge divide in our family -- three generations," he said. "Some love TV and radio and others love print. I have a bunch of nephews telling me, 'What are we doing wasting our money on traditional media? We should be spending all of our money on e-commerce.'"

Waikem is betting the younger generation will prevail. Within five years, he says, the group may not be using traditional media at all.

"We will probably try to ride the wave," he says. "We are definitely not going to be behind."