Dealers need to stop focusing on why online sales won’t work and start focusing on why they can.
That’s the advice from Vanarama CEO Andy Alderson who has been busy creating an online sales experience that sells thousands of cars and vans.
A former car dealer, Alderson invited us to take a look around his offices in Hemel Hempstead (well before the lockdown) and hear how his team makes online sales a success.
Targeting 30,000 units a year by 2023, Alderson has built a clever online leasing platform that uses artificial intelligence and big money marketing to perform.
In an exclusive video interview, he tells Car Dealer how the company has used big sponsorship deals, such as backing the Football League, to push its business in front of millions of consumers.
‘Car dealers need to stop worrying about why online sales won’t work and concentrate on how they can,’ he explains.
He says those that don’t focus on selling cars online now are ‘shortsighted’ and that every car dealer should be investing heavily in building a solution to facilitate online sales.
And he believes CEOs of listed dealer groups have no incentive to invest in an online business as the sums required are huge.
As the second lockdown restricts dealers to click-and-collect and home deliveries only – all of which must be completed remotely – looking at how a business has managed it so successfully for years is inspiring.
Alderson started Vanarama back in 2004 after dabbling in used car sales. He switched the business fully to a leasing broker in 2007.
A true entrepreneur, he began the business after buying a bulk load of Citroens when he worked in a franchised dealership and pounced early on a special campaign offer for C5s.
He realised – when totted up – that dealers could sell them at half price with full margin, so he bought all of them, set up a one-page website and freephone number and sold them in six weeks across the country.
Alderson said he soon realised that people were buying them without even taking a test drive and it gave him the idea for his business.
Now, 90 per cent of buyers on his website never drive the cars and vans before buying. The car and van deals are then delivered by a network of car dealers that Alderson works with across the country.
‘We invested heavily in marketing and you have to do that,’ explains Alderson. ‘It’s crucial when you’re a leasing broker and up against hundreds of others.’
Alderson explains how he spent £2.1m on sponsoring the Football League at a time the company was turning over £700k.
He calls it his ‘all on red’ moment – and it paid off.
What’s in a name?
You might be wondering why he’s stayed with the Vanarama name when he sells just as many cars these days.
‘We invested so much in promoting the Vanarama name that we thought there’s really no point changing it just because we’re selling cars too – customers don’t care and when we realised that neither did we,’ said Alderson.
Vanarama has 45,000 customers in contract with around 13,000 a year coming up for renewal – something Alderson’s team works hard on.
When we visited, half of the team were working from home and a shift-based system saw them swap around regularly so they all got face-to-face time in the office.
In 2019, the business turned over £85m, up from £71m in 2018 – and if Covid hadn’t happened, 2020 would have been better than last year.
The Vanarama website is certainly very slick – and so it should be for the tens of millions Alderson has invested in it.
‘When I started this business I saved up £50k by buying and selling used cars on the side, I remortgaged my house and borrowed from the bank,’ he explains.
‘But it was all worth it. I love doing what I do. Covid has presented opportunities and I think we’ll look back on these six months as the making of us.
‘It’s presented challenges, but as a digital business we’ve been well positioned. We’re looking forward to big growth in the coming years.’
And his parting advice for dealers who think online car sales are a passing fad?
‘The clues are in the past – just look at what happened with Amazon and book stores,’ Alderson explains.
‘People spend so much time trying to stop it happening rather than thinking “should we be investing in this?”
‘People are fearful of it and shouldn’t be. Unfortunately, you get that with legacy businesses.’
Watch the full video interview at the top of this page