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E-commerce could save used car sector billions and reap real dividends for dealers, new research shows

Time 3 weeks ago

Car dealers could cut transaction times by three-quarters and costs by 45 per cent if they put more emphasis on online sales.

That’s according to new research from automotive e-commerce specialist GForces, which says a blend of online sales and physical showrooms boosts profits.

Its data also indicates that the used car industry could save £9.5bn each year, based on an annual market of 6.75m sales.

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Even with a more conservative and phased 30 per cent switch to greater online selling, the sector could save £4.7bn.

GForces looked at the current costs of traditional car retailing, projected costs of going fully online, and a ‘hybrid online model’, based on 30 per cent of sales being carried out on laptops and smartphones.

It said that because buying a car was such a major purchase, many people still wanted a human element, often including being able to see a car and talk about finance and part-exchange details in person.

As such, blending a physical showroom with an online sales platform – an omnichannel approach – was becoming the new normal.

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By moving to a 30 per cent online sales strategy, a 50 per cent pure transaction time saving could be achieved, along with a 23 per cent cost of sale saving – down from £314 to £243 per unit – according to the GForces data.

GForces cost and efficiency table

Source: GForces

Tim Smith, chief commercial officer at GForces, said: ‘We have already seen how Covid-19 has accelerated the shift to online within the automotive sector.

‘New and used car online purchases made through UK franchised retailers using GForces’ platform NetDirector Auto-e increased by 1,228 per cent during 2020.

‘This has been quite rightly hailed as positive news for customers.

‘However, what can get overlooked is the significant cost and efficiency benefits the cultural shift to online buying, and the technology of the digital platforms that facilitate it, can deliver for retailers.’

The data was compiled by head of e-commerce Paul Stokes, who said: ‘The automotive retail industry is undergoing a paradigm shift, with customers showing very clearly that they are no longer comfortable within the traditional retail environment.

‘This does not spell the end of the retailer as a physical entity, which will be here for the long term.

‘However, retailers can no longer expect to engage successfully with customers if they choose to remain with the same sales model and expect the customer to visit a showroom to conduct every aspect of the sale.

‘The middle ground is the key to success.

‘By blending virtual online capability with physical showrooms and combining “bricks and clicks”, retailers can create an omnichannel experience – a seamless and enjoyable journey for customers to engage with, allied to a robust and profitable business model.’

John Bowman

John has been with Car Dealer since 2013 after spending 25 years in the newspaper industry as a reporter then a sub-editor/assistant chief sub-editor on regional and national titles. John is chief sub-editor in the editorial department, working on Car Dealer, as well as handling social media.

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