Call it the Internet Revolution, Page 2.
For car and truck dealers, the question is not whether core retail operations should be connected to the Web. The question is how fast can it get done.
That means sales, finance and insurance, customer relationships, dealer management systems - everything.
For dealers who are dragging their feet in hopes that the Internet will fade away, time's up. The rise of the networked economy boils down to a simple choice: Move aggressively to the Web, or go bust.
'Either that's an opportunity or a death wish,' said Joel Kocher, CEO of Micron Electronics Inc. 'You get to make your choice.'
Speakers at last week's Automotive News Retail Technology Forum in Scottsdale, Ariz., hammered home these points:
Dealers will not go the way of the dodo bird.
The Internet will not reduce dealers to vehicle delivery boys for manufacturers and Web entrepreneurs.
Retailers still own the customer relationship. It's theirs to lose.
But there's a flip side. Online buying services such as Autobytel and CarPoint exist because too many dealers botched the job of taking care of customers. Independent Web services have become a powerful force because dealers and manufacturers were slow to use the Internet to reach disaffected consumers.
The Web has armed consumers with vast amounts of information, giving them more power in the buying process. The Web also has allowed businesses to speed communications, automate many paper transactions and open a new electronic link to customers.
Web retail spending will grow from $20 billion this year to $184 billion in 2004, said James McQuivey, senior analyst for Forrester Research Inc. A whole new generation of Internet shoppers, now in their teens and early 20s, view the Web as a natural place to buy things.
In the future, successful retailers will combine brick-and-mortar operations with point-and-click Web shopping services.
'The future of every retail category, including automotive, is clicks and mortar,' McQuivey said. 'You ain't seen nothing yet.'
The burden on dealers: Do a much better job of customer service. Manufacturers don't want to get rid of all dealers, McQuivey said. 'They just don't want to live with the half who can't handle the customer experience.'
Traditional meat-grinding sales tactics are history, said Dave Thomas, general manager of Thomas Motors Inc. His Dalles, Ore., dealership operates autocost.com, an Internet-direct seller.
Smart and highly demanding Internet shoppers are a glimpse of the dealer's future customer, he said. Dealers who derisively refer to Web buyers as mooches or flakes misunderstand what is happening in the retail business.
'Those Internet flakes are our customers,' Thomas said. 'They are the car-buying public.'
Car dealers came into existence to handle the complex process of selling and transferring legal ownership of vehicles. The Internet has changed the rules, said Chris Denove, director for consulting operations at J.D. Power and Associates.
He warned dealers not to allow themselves to go the way of travel agents and stockbrokers: marked for extinction.
'Don't let it happen to you,' Denove said. 'What you need to do is make yourself more valuable.'
According to Power, 40 percent of vehicle shoppers use the Internet in some way as part of their shopping routine. The number of Web-wired shoppers is expected to grow to 80 percent by 2003.
But no one actually buys a car on the Internet, Denove points out. Shoppers use the Web to gather information, make contact with the dealer, or even hire an online buying service to act as an intermediary.
Boch Enterprises in Norwood, Mass., is getting 60,000 visitors per month on its Web sites, says Vice President Ernie Boch Jr.
The sites feature updated inventory lists, an e-mail link for customers, and even a live camera that pans over the showroom. Boch advocates a do-it-yourself approach, bringing Web design and administration in-house. The dealer, he said, should generate and handle Internet leads, not Web lead brokers.
'If you're signed up with these companies, you're in bed with the enemy,' Boch said. 'The only reason these buying services exist is because the dealer is not doing a good job on the Internet.'
Thomas agrees. Online buying services, he said, bring in customers that often are more informed than the sales staff. If dealers offered Internet customers more empathy - and more information - the buying services would not have gotten a foothold.
'I don't want to call them parasites, but I don't think there's a place for them in our industry,' Thomas said. 'It's the dealers and manufacturers that are going to make this work.'
However, one conference participant argued that online buying services do have a legitimate role. These services act as a 'hand holder' to guide the consumer through the buying process, said Jim Dittemore, director of strategic business development for CarSmart.com, an online buying service.
Next year, dealers will see Web entrepreneurs and manufacturers moving even more aggressively onto the Internet, predicts Mike McFall, vice president of Internet marketing at AutoNation Inc.
Dealers need to focus not on Web technology but on building a 'superior store process' that is equipped to handle Internet shoppers, he said.
'This is too important not to get right,' McFall said.
AutoNation sells 5,000 vehicles per month with the help of the Internet. Sixty percent of those customers live outside the traditional market areas of AutoNation's company stores.
AutoNation buys 1,000 Web leads daily and farms them out to its stores, which are required to follow up. Inventory and vehicle prices are put online.
McFall sees big potential to offer car loans and insurance on the Web. And he is hopeful that dealers and manufacturers will work more closely. Shoppers, he points out, start their Web search on manufacturer sites most often.
Time's wasting, Micron's Kocher told dealers.
'My advice to you is jump in the river and swim like hell.'