Digital retailing is one of the hottest trends reshaping auto retail. Dealers, vendors and automakers all are vying to help customers finish at least part of their vehicle purchase outside a showroom.
Yet despite the energy coalescing around digital — and the Amazon-like customer experience comparisons it elicits — there isn't consensus about what a digital retail experience looks like. That includes where the finance and insurance process fits in and whether it's required to be electronic for a shopper to have truly bought a car online.
Consensus is elusive in part because dealers are adopting pieces of digital retailing at different paces — some are in early stages of turning on "buy now" functions, while others have gone as far as to deliver vehicles to consumers' homes. There's also no uniform solution or strategy in the market, some dealers and third-party providers told Automotive News.
There is agreement generally around the idea that customers increasingly want a car-buying experience that matches what they're accustomed to from nonautomotive retailers — seamless, convenient, quick, efficient — and dealerships have to evolve to deliver it.
"There's a lot of confusion on what digital retailing means," said Jim Houston, managing director of consumer lending and automotive finance for J.D. Power.
"When you talk about digital retailing," Houston added, "you're really thinking, 'How can I engage the customer in the top of the shopping funnel from a digital perspective? What gives you the best experience?' "
On the F&I side, that virtual experience is going beyond payment modeling and financing preapprovals to allowing consumers to select extended warranties and maintenance add-on products upfront, rather than at the end of the transaction in a finance office. Some dealers and F&I product vendors have said anecdotally that this has led to more sales rather than fewer.
There's some data to support those observations. A 2017 Cox Automotive study noted that customers who were aware of F&I products ahead of time were more likely to purchase them and suggested that dealerships increase the amount of product information they give consumers online.
An updated report last year found that filling out paperwork and negotiating vehicle price were customers' top frustrations with the buying process, but less than 1 in 10 customers took those steps online, "likely because access and availability of these options are currently limited," Cox wrote.
"The opportunity there from an F&I perspective is being able to personalize that experience," said Jennifer Reid, a vice president and automotive marketing and strategy lead for Equifax, which rolled out a digital retailing product suite at the NADA Show last month in Las Vegas.
"The value prop of what you're selling in the F&I [office] doesn't change because you're suddenly doing it online," Reid added. "If you're selling the solutions, educating consumers and giving them the option, it shouldn't be an issue."