7:06 am, November 26, 2023
Another big name with bulging bags of cash thinks it can sell cars.
Marketplace giant Amazon will add new car sales to its platform next year, and I think it’s a development that we can’t ignore.
Firstly, some background. Amazon has long considered itself a company that sells everything, but it’s only really been dabbling with the concept of selling cars until now.
It took a five per cent share in a company called Greenlight.com in 2000, which was an online buying service that eventually operated in 31 states in the USA.
Greenlight bought cars from dealers and sold them to online customers, and Amazon promoted the listings on its own platform.
But just over a year after Amazon’s investment, Greenlight.com was acquired by rival CarsDirect.com – the carmakers were unimpressed their dealers were selling stock to internet brokers, and, probably more importantly, data suggested customers were happy to research their next car online but were reluctant to hit the ‘buy now’ button.
That all sounds very familiar, doesn’t it, despite being nearly a quarter of a century later.
In that time, we’ve seen Jamjarcars and Tesco Cars come and go, to name just a couple, and I can’t not mention the arrival of Cazoo and Cinch in the used car business. Selling cars online isn’t easy.
This time around, Amazon thinks it’s on to a winner.
From next year, users in the US will be able to buy all the things they usually buy from Amazon and have them delivered in the firm’s trademark brown packaging along with buying a brand-new car.
The venture is only with Hyundai for the time being and one part of a wide-ranging agreement the two outfits have with each other, but in just under a year’s time Americans will be able to purchase their new car in the same way they buy air fryers, jewellery and razor blades.
It’s also the final part of a deal that Amazon had with Hyundai several years ago where customers could browse for a new Hyundai on Amazon’s site but the actual sale was conducted offline.
Now, the sale will be managed by Hyundai dealers – Amazon, in essence, is the middle man.
When the news broke of Amazon’s and Hyundai’s cushy partnership, shares in American online car dealerships including Carvana and Autonation dropped by around eight per cent.
It was a bombshell announcement and understandably unsettled the market.
But I’m going to make a prediction – Amazon will make a success of this and more carmakers will come to the platform. In time, I believe it’ll come to the UK, too.
Just think about it for a moment – it’s a very appealing concept for the customer.
We’ve all bought things online because sometimes the idea of leaving home and talking to someone in a shop seems just too much of a faff.
That’s fine for the latest Jamie Oliver cookbook, you’ll no doubt be saying, but a car is different. And I agree, but there’s the power of the Amazon brand.
Tesco thought its brand was strong enough to sell cars, too, but it’s known primarily as a retailer that has physical supermarkets. Amazon is an online marketplace giant.
Want another couple of reasons? Amazon doesn’t need to have large compounds of stock lying around, and while dealers might be a bit sceptical at first, if they’re guaranteed a sale without having to actively sell to that customer through costly marketing, then they’ll get on board.
The US car market is very different to the UK’s. We’ve seen Brits have a cautious approach to buying their next motor with a click of their mouse, and online car sales are going to be small fry for a long time.
But if anyone can give customers confidence in transacting online, it’s Amazon.
This column appears in the current edition of Car Dealer – issue 189 – along with news, reviews, features and more! Read and download it for FREE here!
