Are Virtual Dealerships the Real Future for Franchised Dealers?
Salespeople have been making sales outside of an “office” for decades. Travelling salesmen started making the rounds in Europe in the 1920s, proving you can make a sale anywhere. It doesn’t have to happen in your showroom. This could be true for car dealers,too. We are already seeing virtual dealerships that provide everything in the customer’s driveway. Buyers look through the online “showroom,” which includes all the specs and details for each vehicle. Then they simply select it, wait to be contacted by the dealership to start the buying process.
While it is uncommon to go without a physical location when selling cars, it can and has been profitable for many years, even pre-Covid; however, the pandemic has pushed dealers further. During the pandemic shutdowns, dealers had to deliver vehicles to people’s homes - for both sales and service. Consumers now demand a higher level of service because they’re now aware of the types of services dealers are willing to offer to accommodate them.
Most have heard about online-only retailers like Vroom and Carvana. They have become a useful option for many who prefer a more contactless experience. To stay competitive, traditional dealers are trying to offer similar services. Virtual dealerships have staff members working as valet drivers to bring the car to the buyer for test drives. These days, paperwork can be done anywhere, even completely online. And now buyers have the ease of clicking on a car on the dealer’s website that they want, and before they know it, it is right outside their door. The buyer spends no time waiting in a dealership, and there is less pressure in the sales process.
As the industry moves toward fully virtual showrooms at warp speed, OEMs are still requiring large, expensive facilities with expensive furniture, TV displays, and audio equipment. Plus, every so often, dealers are required to “update” their store to the brand’s newest look, which includes expensive renovations. While they're required to comply with all of this, they continue to make the shift online to stay relevant in the current market.As such, dealers are much further ahead on moving to a virtual showroom than the OEMs are.
A Genesis dealer in New Jersey has been running his business completely online for years, with no showroom to walk into.The staff operates out of a Hyundai store. Not only do they make sales, but they also service the vehicles. By utilizing the valet service in which cars are brought to the buyer or picked up for a service appointment, they are building that relationship with a firm foundation. The dealer wanted to stand out from the crowd and keep the focus on the customers who do not have to pay for the valet service. This dealership has exceeded expectations for customer satisfaction, making them very successful. So much so, that they are building what could be the first Genesis standalone dealership.
We cannot forget one of the largest virtual only car brands out there… Tesla. From the very beginning, their process involved selecting a model online with whatever specs and trim level consumers wanted. The buyer must arrange financing with either Tesla or another bank, choose a delivery method, and secure the payment upon waiting for their new car to arrive. Every single step is done online, and the brand has gained a lot of popularity since it launched. Just recently, other manufacturers, like Ford, are announcing the option to order online through the OEM website with a completely virtual process.
On a smaller scale, online purchases have gone through the roof since Covid-19 struck. From Amazon, to grocery store delivery services, to ordering takeout. Just about anything can be bought online, shipped/couriered, and arrive on your doorstep. There is little to no-contact with new standards in place. Even stores and restaurants who never used to offer such services have now found platforms and processes for full-service delivery. From small purchases to big ones, they all have a similar process and have made it easy for consumers. Dealerships are no different, and they are implementing new methods on a daily basis to stay competitive in this ever-growing virtual market. While traditional dealerships are still the majority, virtual dealerships have a lot to offer and have proven to be a successful avenue. There’s also a hybrid model, which we discussed in a recent article.
What a virtual dealer lacks in a physical building, they make up for in customer service, direct communication, honesty, integrity, and more. The main focus is the customers and their happiness. Buyers will care more about a good experience and an honest relationship more than a big fancy showroom.
Plus it could save some overhead, right?
