DETROIT — While consumers purchase many items online without a second thought, the prospect of a "click to buy" button on dealership sites "scared consumers to death," says Cox Automotive COO Mark O'Neil.
"They weren't thinking of it as 'quick and easy,' but 'handcuffs and shackles,' " he said. They feared getting locked into a deal or having $30,000 withdrawn from their bank account seconds after clicking on it, he said, citing the company's research.
So if Cox wants to help dealerships take more of the buying process online, particularly the parts consumers don't enjoy doing at the dealership, O'Neil says, Cox needs to introduce consumers to this experience gradually.
It starts with awareness.
O'Neil said Kelley Blue Book is doing this by highlighting how consumers can initiate the trade-in process online with its Instant Cash Offer program. The site launched a TV ad campaign in April that showed a consumer getting a trade-in offer from KBB.com on his phone.
After a person enters their trade-in's details on KBB.com, the site presents them with an offer that must be approved later at a dealership participating in the program. Once the vehicle's condition has been verified, KBB says, the person can keep the money or use it to buy another car.
KBB says 3 million consumers received Instant Cash Offers in 2015 through its site and Autotrader, which also uses the feature. If no dealership approves the offer, Cox purchases the vehicle for the agreed-upon price and sends it to a Manheim auction, also owned by Cox.
KBB's cash-offer program depends on people giving truthful descriptions about their trade-ins, and O'Neil said consumers are doing that, with only 3 percent providing inaccurate information.
O'Neil said the wording used to walk people through a digital purchase is critical to building comfort in the process.
Asking for a Social Security number right away can scare off a customer, he said. It makes more sense to get their name and ask if they live at the given ZIP code before seeking more information.
Letting consumers know the steps they're taking online will save them time in the store is key, O'Neil said.
"These are things we're testing. These different concepts of how much to ask for, how to phrase it? What order? Should we do a trade first? Because they're more comfortable getting the value of their trade than they are telling you about themselves personally," O'Neil told Automotive News on the sidelines of a media event here last week. "We're building a menu of best practices."
Cox Automotive's Digital Retailing solution relies on several properties to bring car shopping online.
Dealertrack is tied to lenders, providing the nuts and bolts behind the retailing process so shoppers can get their credit pulled. The integration of online-messaging portal MakeMyDeal lets consumers negotiate the terms of a deal. Dealership employees can make counteroffers via the messaging tool, adjust financing terms, update the value of the trade and change the amount of the cash down to reach a desired monthly payment.
Dealer.com serves as the user interface for these tools.
Amazon's recent purchase of Whole Foods should be welcome news for dealers wondering about the future of online auto retailing, O'Neil says.
Although Amazon is a giant in the digital retail space, he said the purchase shows it still needs supermarkets as distribution points to ship food to people locally.
This could signal the future role of dealers. Even if vehicle transactions move online on a large scale, O'Neil said dealers will still have a place.
"We think the role of the retailer becomes the role of the distributor, the role of delivering the retail experience," O'Neil said. It'll be "very necessary to be physically close to the customer as they think about buying mobility, trading it out, servicing it and taking care of it."
