General Motors is testing sales strategies in Minneapolis that could transform online auto retailing.
The automaker wants to determine if three concepts - building to order, basing upfront e-prices on local transactions and pooling dealer inventories - will work when GM launches a joint-venture Internet site with dealers next year.
'It's giving us the opportunity really to validate many of our order-to-delivery and our online capabilities with our consumers and learn more,' said Ed Vogt, director of GM e-sales in North America.
The test, which involves seven Oldsmobile dealers, is small but significant, particularly for the build-to-order concept. GM and other automakers realize build-to-order could reduce inventory and speed delivery of vehicles to consumers.
This is GM's first online test of build-to-order and involves only one model, the Oldsmobile Alero, and one plant, in Lansing, Mich.
Under the build-to-order pilot, which began Wednesday, Nov. 15, and continues through Feb. 15, a consumer in the Minneapolis area can place an online order for an Alero and get the car in 15 to 20 days, Vogt said. Custom orders now take 55 to 60 days.
'Our primary goals are to be faster in our production times and more reliable in our promise of delivery date,' Vogt said. 'We are setting up track-and-trace capabilities to allow us to track these orders.'
The dealer will send the order to the plant. GM would not reveal volume goals but did say the impact at the plant will be minor because the test is limited to one market.
'But it is allowing us to test the capabilities that, on a larger scale, will be very important to us,' said Tony Koblinski, GM's executive director of order to delivery.
GM built 146,329 Aleros in 1999.
2 OTHER CONCEPTS
GM also is testing online pricing, called e-pricing, and pooling dealer inventory on a market level. Those programs began Oct. 2 and will continue through Feb. 15.
Consumers access the pilot through www.gmbuypower.com, GM's national buying site. They are diverted automatically into the pilot program if they use a ZIP code that is within the pilot area.
After selecting the model, color and trim level, the shopper will see a list of models that match, or closely match, the specified vehicle. The system searches inventory of participating dealers and displays the sticker price and the e-price, based on transaction prices in the Minneapolis market.
After picking a model with an e-price, the consumer is asked to choose a preferred dealer.
'If a dealer needs to pull a car from someone else's inventory we would all cooperate and work together,' said Tom O'Brien, sales manager at McCarthy Oldsmobile-GMC in Roseville, Minn.
MAKING PROCESS EASIER
By pooling inventory, GM is trying to make it easier for the online buyer to find a match by giving the consumer a broader look at vehicles in a specific market.
O'Brien is optimistic about e-pricing but said the structure must be fair to customer and dealer: 'I truly can see where e-pricing is going to be a good situation.'
E-pricing and combined dealer inventory are key parts of locate-to-order, often shortened to LTO. Forrester Research Inc., an Internet research firm in Cambridge, Mass., calls locate-to-order the next phase of online car buying.
'It was very interesting to me that we have come basically to the same conclusion on what the next effective model will be,' said Mike Gluk, director of business development for e-GM.
GM already makes dealer inventory transparent. Gmbuypower.com has 1 million units of inventory. But GM wants to offer consumers an independent Web site to buy GM vehicles.
'I think the joint venture's also going to take that identical step - putting that GM inventory online - as well as a vast majority of the GM dealers,' Gluk said. 'So consumers will have two opportunities in what is conceptually an LTO model to access GM inventory.'
The Web site is expected to go live by the end of March. It will be an all-makes, all-models site though initially will include only inventory pooled from GM dealers
'But you would envision that if the site's going to be as good as it can be for consumers, it would eventually have the inventory of non-GM vehicles as well,' Gluk said. 'But initially I think GM will be the manufacturer that brings the entire selection of inventory to the site for the first time.'