Auto dealers face a predicament.
The coronavirus pandemic has slowed consumer spending and threatens to push new-vehicle sales below the previously anticipated 16.6 million mark.
To successfully maneuver in this volatile and uncertain environment, dealers will need to change up the playbook, embracing a never-idle mindset and incorporating investment-value management practices into daily operations.
What does this mean exactly? At the crux of it, investment-value management is the difference between guessing and knowing.
With the right data in hand, dealers can know the profit potential of every new and used vehicle right from day one – and how to effectively merchandise them online. From there, they can manage and market inventory proactively. Those dealers who make wiser decisions early can decrease aged inventory and soften how much it costs.
One key, yet likely unexpected, area where this approach will be crucial is in digital merchandising.
Today, nearly all vehicle shopping begins online. However, HomeNet research shows while 83% of dealers believe they can increase vehicle turn if they improve digital merchandising, only 12% think their online presence is highly differentiated.
Introducing an online experience that is distinct and tailored is mission-critical. With a strategic approach, dealers can build an online presence that attracts and engages the right shoppers at the right time in the car buying process.
This enables consumers to make fast and informed buying decisions, helping drive sales and optimizing profit potential for the long haul.
Yes, digital merchandising may focus less on data compared with day-to-day inventory management. But make no mistake, a technology- and insights-backed merchandising strategy gives dealers another lever to pull in creating inventory demand.
When they can enhance online listing quality and evolve their strategy based on what they know consumers value most, dealers can set themselves up to find and win over buyers who are willing to pay top dollar.
Here are three ways dealers can turn consumer car-buying habits and trends into digital-merchandising success.
With new technology, each car can be treated differently based on its profit potential.
Vehicles with little profit potential will be priced to move, and therefore will show up at the top of listings sites. However, vehicles with more profit potential need help to be found online through better merchandising and targeted promotions, including Facebook Marketplace.
Leveraging 360-Degree Displays
According to a HomeNet study, 73% of consumers who browsed and then bought or leased a vehicle rated 360-degree visual displays as extremely or very helpful. Yet, 42% of dealers don’t use this feature in merchandising.
By incorporating it into listings, dealers can raise visibility and help consumers make more confident purchase decisions.
Gone are the days when dealers would have to spend hundreds of thousands of dollars to build a rotating photo booth. The 360-degree display technology is a fraction of the cost.
Tailoring Vehicle Photos
Backgrounded images that are clear and keep the focus on the car receive up to 5% more click conversions from search-results page to a dealership website vehicle details page. It can boost buyer appeal and dealership perception.
Utilizing photo overlays can also provide an easy way to serve up relevant shopping information.
With new tools, dealers can automatically insert custom content within a vehicle photo or within a photo set, content that is specific to a particular advertising site. This tailored approach enables deeper connections with car buyers at every stage in the shopping journey.
Today’s consumers are online and coming to the car-buying process with a treasure trove of information.
To even the playing field with those customers, dealers will need to become more proactive and build vehicle-advertising momentum by understanding when and where to reach target audiences, and with what content.
With the right digital merchandising tools and an investment-minded approach, dealers can succeed in this demanding and ever-changing auto retail marketplace. (Wards Industry Voices contributor Randy Kobat, left)
Randy Kobat is Cox Automotive’s vice president-operations, inventory management solutions.