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How ecommerce is changing the automotive purchase journey

The UK has the most advanced ecommerce market in Europe and in 2020 up to 87% of UK households made an online purchase.  The global pandemic has clearly been a big driver in pushing new audiences online to purchase everyday retail and grocery items. But what about automotive? After getting on the property ladder, buying a car is typically the second-biggest purchase we make. Are buyers willing to navigate the process online, and what are the key drivers and barriers to doing this?

The automotive sector is no exception to the changes we’ve seen during COVID. GForces, who provide ecommerce solutions to a large number of franchised retailers, say that new and used car purchases through their platform increased by 1228% in 2020 and Daimler are predicting that 25% of their sales will be online by 2025.

The traditional car purchase journey is out-of-date

The traditional car purchase journey is outdated and hasn’t really changed in the last 50 years. Research shows that 19% of drivers want a fully virtual experience for their next car purchase, whilst 86% want to complete at least one step of the buying process online.  From this we can see that automotive brands need to start thinking beyond the transactional part of the journey and consider how they can start digitising the full experience.

traditional vs future auto commerce experience diagram

Brands will need to consider audience demographics as they address these changing customer needs. There is a greater demand for online experiences from younger audiences, with 31% of 18-34-year olds saying they would prefer a fully virtual experience for their next car purchase, decreasing to just 5% for the over-55’s. However, there needs to be a balance here. The over-50’s make up the majority of new car purchases in the UK and this audience still prefer to interact with a dealer, even if elements of the purchase experience are taken online. Manufacturers need to start catering for digitally-savvy audiences who will be buying new cars in the next five to ten years, as well as looking after their core audience who continue to expect the traditional dealership experience.

New platforms and new experiences for consumers

Automotive brands are already trialling new platforms and experiences in this space. Jaguar Land Rover have partnered with Rockar, a Sales-as-a-Service platform, and promise to deliver a new car in the UK within 48 hours of purchase. They have also opened a store at Westfield Stratford, where customers can visit the store as part of their shopping trip and interact with the brand, vehicles and ‘Rockar Angels’. They position the team at Westfield as being experts who are there to guide buyers through the purchase experience, and you can even test-drive a car without a salesperson being present. The approach is paying off, with JLR saying that 80% of customers acquired are new to the brand, and they are also attracting a younger, more female-oriented audience.

Investment in content and high-quality production will also be needed to replace the dealership experience and this goes beyond a salesperson doing a video walkaround on the forecourt. In Canada, Cadillac have converted a 10,000 square foot film studio into an online showroom and have dedicated experts aligned to each brand and vehicle. Customers can have live video chats, view pre-recorded sessions and book a live session for a later date. This approach is already being replicated in the UK, with Groupe PSA brands providing similar services.

What does this mean for automotive commerce? Firstly, there is a clear shift towards online, but automotive will lag behind other sectors in terms of the proportion of transactions being made online due to the purchase costs involved. As things stand, the majority of consumers still prefer to interact with a dealer at some point in the journey, but this will decline over time. Brands will need to invest in a hybrid approach to commerce to address the needs of different audience segments and consider how to incorporate the following capabilities:

  • Consider building out an agency sales model where OEMs sell directly to the end customer via all channels. In this model the dealer remains an important channel, but they act as an agent, acting on behalf of the manufacturer. This requires significant business transformation, but can generate huge savings in operational efficiencies.
  • Equip dealers with the capabilities and platforms to move elements of the purchase journey online. This will also involve investment in high-quality content and production to create immersive experiences which replace the traditional face-to-face sales process.
  • Build out a strategy for working with comparison sites. 5% of new car sales are already delivered through CarWow, and these platforms provide brands with quick access to a large in-market audiences.

Digitisation offers valuable data-capture opportunities

Finally, digitising the purchase experience provides a huge opportunity for first-party data capture which can be leveraged to optimise the customer experience. This includes registering for live chats and exclusive content, creating shortlisting capabilities where customers can save and compare different vehicle configurations, and integrating connected car data to provide proactive servicing and usage alerts. This data can be stitched together to create a true 360-degree view of the customer and be used to orchestrate personalised cross-channel experiences based on the needs of each customer. Brands which enable this approach will gain competitive advantage by delivering personalised experiences which drive effective acquisition of new customers as well as increasing loyalty and retention.

If you’d like to discuss your digital customer strategy in more detail, please do get in touch.