Will Amazon dominate as a major sales channel in the automotive sector?

Will Amazon dominate as a major sales channel in the automotive sector?

On the eve of Toyota’s most significant advertising campaign across Britain for its latest C-HR vehicle, the Japanese car manufacturer believes the time is nearing for motor vehicles to be sold using Amazon as an example of new credible sales channels.

It wasn’t long ago that to buy something you really needed you popped down to your local high street store, looked at, picked up, tried out the thing you were looking for and only then decided to buy, or not! Nowadays is there nothing that’s not available online?

Don’t get me wrong, I have an Amazon Prime account and did 90% of my Christmas shopping online, but there are still times I want to look and feel before I buy. It’s the sensory and emotional experience you get from smelling freshly baked bread, or indeed the squeak you get from the leather seat in a new Aston Martin (or was it a VW Golf!!) that make the experience richer and more personal.

Can convenience, price and rational decision making always trump those intangibles or false facts as some might say? I’m not so sure, however, Andrew Cullis, marketing director for Toyota GB admitted to Marketing Week earlier this month that he is anticipating a rush for car manufacturers to use Amazon as one of its distribution channels in the coming months and years.

“There’s no reason why Amazon won’t soon start selling cars,” said Cullis. “We do a lot of customer research and it’s clear a more simple e-commerce buying experience is what a lot of drivers crave.”

In the middle of 2016, Amazon confirmed its latest portal, Amazon Vehicles. It is regarded as a community where car enthusiasts and drivers can do their research on all types of vehicles on the road, with the ability to get hold of vehicle specifications, imagery and video content and driver reviews at the click of a button.

Even during its release then there were motoring experts who promptly predicted that Amazon would soon be used as a powerful marketing tool for the automotive sector, with brands thinking outside of the box in a bid to keep up with their competitors’ marketing and distribution efforts.

Amazon itself may well be planning its insertion into the car buying process, but that will bring with it knock-on implications for the automotive industry worldwide.

There is no doubt that leading automotive brands are viewing Amazon as a new distribution channel. Amazon users based in Italy will soon be able to acquire three of Italy’s most popular road cars at cheaper prices online following a deal with Fiat Chrysler. The Fiat Panda, Fiat 500 and Fiat 500L are all set to be made available to reserve online before being contacted by an Amazon representative to complete the purchase and pick up the car from a suitable dealership. All this just a fortnight from the initial click of a mouse on Amazon.

Around half of Italians surveyed about buying vehicles online would consider doing so, but the vast majority (97%) much prefer the option of making their purchase from a traditional dealership as they still value the personal touch.

Cullis believes there is much more planning required before Amazon takes the lead over roadside dealerships in the customer service stakes. He believes there’ll always be a place for dealers that provide face-to-face consultancy. In this instance, it’s highly unlikely that car showrooms will ever be rendered entirely obsolete.

“There’s still a lot of people that like to make that connection with a car dealer and to obviously test drive the product first, so you’ll always need to have a balance,” said Cullis. “That’s something Toyota will always consider.”

For some consumers, buying a new vehicle is a genuine sensory experience. This emotional aspect of the customer journey rings particularly true with those purchasing high-end vehicles that get great pleasure from the bells and whistles of luxury features and interiors.

On the flip-side, there will always be consumers that simply want to acquire a car at an acceptable price, with no haggling or test driving necessary. And that is where Amazon could get the edge over e-commerce car sales portals such as Auto Trader if they can perfect the balance between convenience and buyer security.

On the other side of the Atlantic, the launch of Amazon Vehicles instantly made waves against online services. TrueCar, a site which matches consumers with dealers that offer set ‘buy now’ prices for their vehicles, experienced a 14% decline in its share price, with investors seemingly convinced that Amazon’s scale and marketing power could hold sway in the medium term.

Nevertheless, the chances of an automotive manufacturer relying solely on an online marketplace to sell its entire product range seem hugely remote. The thought of purchasing a six-figure supercar online without having sampled its driving experience just doesn’t sit right.

Perhaps the halfway house between e-commerce and showroom sales for automotive brands is the Urban Store. DS Automobiles unveiled its first Urban Store in Westfield London before Christmas. The unique angle for Urban Stores is that they are situated within shopping centres and busy high streets, providing increased footfall for manufacturers – promoting their brand more closely to their customers – and improving the convenience of car shopping for consumers. Perhaps this is the way forward?

Stefan Kerridge is founder of The K Consultancy. Partnering with your business to bring expertise without the overhead. Working as part of your business to drive your marketing plan, execute key activities and help you realise your ambitions for more information visit www.thekconsultancy.co.uk follow on LinkedIn

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