Car-shopping sites could move into sales

Third-party shopping sites are consumer-research havens. Could they one day become platforms where people purchase vehicles -- without visiting a dealership or dealership website?

The digital retailing wave rolls on as more dealership groups embrace the concept of consumers buying vehicles online. Some use shopping portals from tech companies such as Roadster while others, such as AutoNation Inc. and Penske Automotive Group Inc., have developed their buying sites in-house.

Meanwhile, third-party stalwarts such as Autobytel, Autotrader and Cars.com are considering a future where they could go beyond their current roles as inventory hubs and gateways to dealership sites. This evolution would allow consumers to browse listings, settle on vehicles and then close deals using buying tools on third-party sites, without necessarily visiting a dealership's site.

Such a move would require third-party platforms to redo their plumbing and form new partnerships with players such as finance companies, which would be needed to handle the credit-approval process for consumers. And they would have to get dealers to agree to sell vehicles on these sites in the first place.

Still, "There's no reason it can't be done," said Scot Hall, executive vice president of Swapalease, a site that enables consumers to transfer existing vehicle leases. He also is a former dealership finance and insurance manager. "Many dealers will look at it [and say], "Hey, if it's a sale at a price that I've already approved, why would I not want to do that?'"

While this sounds far off, the wheels are already turning. Just look at the company that was there at the genesis of digital auto sales in the 1990s.

Autobytel has staked its claim as one of the auto industry's top lead providers, but the e-commerce pioneer appears ready to revisit its roots.

Back in the web's youthful years in the late 1990s, Autobytel told consumers they could buy, finance, lease and insure vehicles online through its dealer network. It was a lucrative model that generated more than 500,000 requests to buy cars in 1995-97, Autobytel's first two years on the Web.

But Autobytel's early foray into digital retailing later gave way to its current model of funneling leads to stores with the help of its vast inventory listings and a growing roster of marketing tools.

Autobytel COO Billy Ferriolo doesn't want to show all of his cards but said the idea of completing vehicle transactions online is something he's "put a lot of time and energy into lately."

Ferriolo said the transition will depend on consumer adoption and forging relationships with dealers.

"If I could turn our business into one that is sending dealerships checks for vehicles, it probably would keep me on forever. If I could help facilitate a sale for a dealer and allow them to make some money, and create a great experience for the consumer that everybody wins on -- I think that would be the ultimate goal," Ferriolo told Automotive News. "I would say that Autobytel will transact online at some point in the future."

Cars.com CEO Alex Vetter wouldn't confirm any plans for a digital retailing tool. But if the company decided to go in that direction, Vetter said, it would do so in a way that provides a "level playing field for local dealerships," which would still be at the center of the transactions.

Vetter said that adding a buying option to Cars.com wouldn't make sense with its current model, which he says is focused on helping undecided buyers explore a range of possibilities. A "buy-it-now" function, he said, is better suited for an environment where consumers know exactly what they want.

Vetter believes dealership websites are a "more suitable home" for digital retailing platforms.

"If we were to add a buy-it-now button on our website, it would be a little disingenuous to the role we play in the automotive ecosystem," Vetter said. "We're a decision engine that's helping people decide."

If a dealer has an online-buying solution on its site, Vetter said, Cars.com can be the conduit that directs people to that digital experience. Already, online used-vehicle retailers Vroom and Carvana are fighting for leads with traditional dealerships on Cars.com.

Even if third-party sites don't go all the way on a transaction, there are avenues for them to usher along the buying process for dealers, says Jesse Toprak, who held analyst and market intelligence posts for Cars.com, Edmunds and TrueCar before starting his own third-party shopping site last year.

Toprak's site, known as CarHub, lets users pre-qualify for financing without providing a Social Security number. Having a pre-qualified lead far exceeds the typical email address that a store might get from a lead provider.

CarHub is in its beta phase. It has nearly 2 million vehicle listings attained through aggregators.

"I don't think you'll have third-party sites that can have all of the transaction handled online, but third-party sites can do more to automate the process so that once a customer gets to a dealership, the work done [there] is minimized," Toprak said.

Steve Lind, a senior vice president of Autotrader who also oversees Kelley Blue Book, said tools such as KBB's Instant Cash Offer for trade-ins already are priming consumers for transactions. The two third-party giants, both owned by Cox Automotive, also provide opportunities for online shoppers to get vehicle history reports, financing and insurance. 

He said the plumbing is there to complete digital transactions. 

Said Lind: "If Kelley is helping you find the right car and right price, and Autotrader is helping you find that specific VIN, we think that plumbing and experience is set up nicely to go to that next stage where it's digital retailing, where more and more of the experience is done on a consumer site" such as KBB.com or Autotrader, or on a dealership's website.