Happy New Year!
We've left behind a turbulent 2020 and many of the disruptions the coronavirus brought, both to the industry and to our lives. The start of 2021 still finds us trying to slow the spread of COVID-19, but vaccines are now in circulation, and we have much more knowledge about how to do business digitally than at this point a year ago. There's reason for optimism.
Our experience last year reminded us that we can't predict with any certainty what lies ahead. But we observed several emerging trends as dealerships found ways to sell more cars online during the height of the pandemic last spring, some of which may become clearer this year. Here are a few.
Expanded omnichannel retailing. Dealers accelerated their adoption of digital retailing tools and processes out of necessity last year, either because their showrooms were shut to in-person traffic or customers were hesitant to visit a store. And it helped them sell cars. While those tools could help customers who want to do most of the transaction online, several dealers told us that many shoppers want to start the process online and finish in person. Expect digital retailing tools to help smooth the omnichannel process, an approach meant to enable a seamless transition between the digital sale and the physical one.
The end of wet signatures? One of the hurdles to a complete end-to-end digital vehicle sale is the regulatory requirement that customers physically sign documents. While auto retail software providers have increased dealerships' ability to collect electronic signatures — including from outside the store — the "wet signature" requirements are one of the last hurdles to achieving a fully online transaction. Could the pandemic create the momentum to change some of these laws? It's possible. There has been some recent activity in New Jersey, for instance.
Online used-vehicle retail to stay hot. Last year, at least three companies followed in the footsteps of Carvana and opted to become publicly traded companies, including Vroom, Shift and CarLotz. Regardless of whether others follow suit, interest in online used-vehicle retail clearly grew in 2020. Expect more of the same in 2021 as the digital retail shift among consumers continues and as investors eye a highly fragmented but relatively hot used-vehicle market.
Disruption ahead for auctions? Wholesale auctions have shown that they can successfully run digital sales, and now major companies are disrupting themselves to stay ahead of the curve. This will certainly continue this year, as wholesale auction companies look to meet customers wherever they want to do business.