Everybody loves to get a new car, but nobody loves car shopping. Edmunds.com is trying to reduce the pain by eliminating a major point of suffering: finding out the price of a new car.
In a recent survey, some 54 percent of car shoppers said the biggest unmet need in car-shopping online is finding the price of the car they want to buy, said Seth Berkowitz, president and COO of Edmunds.com, in a phone interview.
Potential buyers can find reference points: the Edmunds.com True Market Value reports, Blue Book, Manufacturer's Suggested Retail Price (MSRP). But buyers can't find the actual price they'll pay for the car they want from the dealer they've contacted. "The average consumer is bordering on mystified why they can't go online and purchase their car like any other consumer could, and know what the actual car they're buying is and the actual cost," Berkowitz said.
The car-shopping site is looking to reduce that pain. It started with a partnership to get new car prices from a Portland dealership, and simply post them online. That proved unsuccessful. "Lo and behold, what we found is that consumer engagement was up materially with respect to that dealership, but sales that the dealer accomplished through the website actually dropped," Berkowitz said. Consumers were comparison-shopping; they'd get a quote from the Portland dealership and use that as leverage to get a better deal locally.
"The next thing we tried was to create some reciprocal process where the actual price was given to the consumer when the consumer provided information that allowed the dealer to follow up and try to close the deal," Berkowitz said. Shoppers could get the actual price of a car if they provided their names and email address, and in some cases phone number. In return, the shopper got a price for a specific car, designated by a VIN number.
"There was an explosion of interest," Berkowitz said. The arrangement proved successful for both customers and dealers. Engagement increased five to ten-fold, and the number of consumers submitting requests for contacts increased 50 percent to 60 percent.
Consumers did less shopping. Consumers who submitted anonymous pricing requests did so at an average three and a half dealerships, but consumers who submitted requests for pricing under their own name only asked at an average of one and a half dealerships. "They are less price sensitive. They want to get this thing done at a good price," he said.
Some four fifths of consumers who gave their information in exchange for price information said they were very satisfied, and 73 percent thought the price they received was competitive. Also:
- 81 percent of consumers said the purchase was easy.
- 86 percent said the staff treated them well.
- And 75 percent said the staff was knowledgable.
"Edmunds' view is that we would like to be the Amazon.com of the automative space, and get as close as possible to allowing people to buy a car online like any consumer good," Berkowitz said. Regulatory requirements and the dealer structure will make it impossible to make it as convenient to buy a car online as it is to buy, say, a TV on Amazon.com. "But we believe more and more of the car-buying experience will go online," Berkowitz said.
In the future, Edmunds hopes to offer the price quotes and the broad contours of an agreement for leasing, as well as pricing for used cars and trade-in. Edmunds is also looking to reduce the time it takes to buy a car. "People want this experience to be streamlined. Their point of comparison is Amazon, or even a brick-and-mortar shopping experience. They're not accustomed to three to five hours to complete a transaction," which is the average amount of time it takes to buy a new car. "We believe consumers feel that's way too long," Berkowitz said. Buying a new car will never be quick -- in California alone, consumers are required to sign 27 to 31 pieces of paperwork, and someone has to show those to the consumer and explain them all.
"There are good reasons why that's an extended transaction. But more things can be brought online," Berkowitz said.
Edmunds is just one company in one industry. But it's setting an example for Internet business. By figuring out what the customer hates most, and using online tools to make the process more convenient, businesses can succeed in a competitive online world.
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— Mitch Wagner , Editor in Chief, Internet Evolution