Automotive Blog

Omni-channel retailing in automotive is still in the early stages of development

Picture Source: Digitial Dealer
These days, ‘omni-channel retailing’ or ‘omni-channel commerce’ is one of the most frequently heard buzzwords in the industry, relating to the seamless integration of different channels and formats, operated by different types of player.  Recent ICDP consumer research has shown that customers are now looking to be able to fulfil different steps in their car or aftersales purchase journey at different physical and online touchpoints, and often in a different order.  All players at the retail end of the industry need to adapt to meet these changing customer requirements.

In other sectors, this move towards more seamless integration of ‘clicks and bricks’ is more developed, and is currently ahead of the automotive sector.  Looking at electronic consumer goods, we see that for instance Media Markt (part of the Ceconomy Group, the largest electronics chain in Europe) has been one of the first movers.  The chain operates around 800 physical stores, opened its first online store in 2000, and then revamped and relaunched it in 2012 across many European markets.  The product offer is transparent, including lead-time visibility and all prices identical to those in-store.  Media Markt have also established new formats such as the city-store in the centre of Barcelona – a combination of online store and physical presence, where customers can choose from different online offers displayed on large screens, buy fast-moving items which are stocked locally, collect items previously ordered online (after 24 hours), or experience product training, gaming, or virtual reality.

In the automotive sector, our recent research into Online Channels and Micro-Outlet Economics showed how approaches are still fragmented, and channels and formats are not yet seamlessly connected.  We identified 6 different OEM online channel types for new cars (so web sites offering some form of online ‘sales’), but only 2 had anything approaching omni-channel capability.  Those within the category we called ‘limited omni-channel capability’ (Peugeot UK’s online store would be an example) usually feature a ‘one-way’ purchase journey flow from the OEM’s online resource to the offline dealership.  Meanwhile, others, which we called ‘integrated omni-channel capability’ allow a flexible two-way connection between the online channel and the store and vice versa.  This is the case for the example of Rockar in the UK (representing JLR and, at the time, Hyundai), although the wider dealer network of the brands is not involved, and so a customer using the Rockar online site but wanting to proceed at a non-Rockar outlet has to start the process again.  Rockar was not only the most advanced omni-channel approach we identified, but it also provided the largest variety of online features to customers, including trade-in valuation and a range of finance options.  A further example of omni-channel integration is Tesla, even more advanced than Rockar, as they offer online sales with full transaction capability, supported by a limited network of wholly-owned outlets.  All other OEMs with online ‘sales’ channels currently sit some way behind these examples, with Mercedes-Benz Germany being the closest in terms of functionality.

Overall, the key challenges of omni-channel retail are similar across different sectors; supporting and encouraging the online customer, linking logistics efficiently, whilst still retaining a physical retail and personal customer experience that is seamless and consistent.

The automotive industry needs to face up to these challenges now, guided by a framework provided by the OEMs, where the dealer role and remuneration in an omni-channel world is more clearly defined.  Achieving this is possible, but will take some time, as it involves quite a reworking of the traditional franchise business model.

During this year’s research programme, we will investigate the role of the major dealer groups in omni-channel retailing, look again at the key ingredients of a successful omni-channel approach, and also at how the mix of sales across different types of channel might evolve in the future.

Post a comment

Blog view options