Is COVID19 going to affect how you buy a car?
A car will be the second biggest purchase of your entire life. Let's have a look at how manufacturers are normalising the process.
MINI Australia last week announced a special edition JCW model lineup called the Nightfall Editions. The cars are basically aesthetically black MINI JCWs and they look superb, but in another long line of feelers in the automotive online market, MINI decided to offer the car to order online only. That means that you shop for the car much alike to how you'd shop for a new Polo shirt on Mr Porter. You add the car to a cart, pay the deposit with a credit card and checkout.
It's not the first time MINI Australia have delved into selling cars purely online and they aren't the first manufacturer to do it. Oh no, the first one to the party were our old friends at Tesla. And to be frank? I think this is one of the things Tesla do superbly.
What I want to take a closer look at today though is why it's such a big deal for car manufacturers to be selling their cars online and why all manufacturers don't do it already? I mean surely it's a way to severely cut the overhead costs of maintaining a dealership network with individual agreements for resellers of the car.
But that's not how the consumer's mind works and especially not in Australia. We're indoctrinated into thinking that a car purchase is somehow different from other purchases that we make. Where the buying journey for tomato ketchup, for example, might be a maximum of 6 hours, the buying journey of a car averages at about 6-9 months. That means you spend 6-9 months considering what your next car purchase is. In some cases worldwide the automotive buying journey is actually longer than that of buying property and normally this is attributed to the fact that the finances for those two purchases work very differently.
But Elon Musk didn't accept that explanation for the automotive purchase journey. He didn't accept that people honestly wanted to spend up to 9 months considering what sort of car they wanted. His vision for the Tesla marketing strategy prior to purchase was extremely different from those before him.
Tesla's awareness almost purely comes from public relations. Flashy big launches (using the same principal Apple had started doing so almost a decade earlier) and silly commentary to draw attention to themselves. In the real world though, Tesla spends almost no money on marketing when compared to the other big automotive manufacturers. Their budget for SEM is almost non-existent, they do little to no display advertising, they do no VOD advertising, they do no out of home and they certainly do zero radio, TV and print. So what about Tesla's marketing strategy pre-purchase makes the purchase process so successful?
Well, it's very much a pull and not a push strategy. To put it as a metaphor. Tesla is the most exclusive nightclub in town and it holds the best parties, but in order to actually party, you need to be inside the nightclub. You need to pay the entry fee and pay for the exorbitant drink prices. But because you know it's the best party in town? You go to the club and you pay for the party.
Tesla is much the same, to put it simply people already want the product prior to the research stage of the buyer journey and it means that setting up an e-commerce platform to convince people to buy the car first time researching and online is an easy task. You create a buying process that is intuitive but simple, and Tesla has done that.
MINI have gone down much the same path with these editions, selling cars like the JCW GP online only and the process has worked much the same for them. The head of marketing at MINI Australia, Alex McLean, is probably one of the smartest marketers I've ever had the pleasure of meeting or working with and he recognised early on that this Tesla-style pull strategy is the only way that automotive e-commerce can work.
And so MINI only currently sell cars with limited stock numbers through their e-commerce platform and it creates this sense of urgency with interested customers. There's an element of sneaker culture in that strategy as well, a public relations based hype build-up prior to release followed by a mad anxiety-driven rush to purchase once the product actually hits the shelves (or website).
So where does automotive e-commerce go from here? Well COVID19 made what was a very big world pre-2020 a very small world moving forward. The average consumer is taking up services that were struggling prior to the pandemic such as delivery and click and collect for groceries. It's also normalising the idea of buying a house via an online auction and selling your house in much the same way. Think of the pandemic is a catalyst for all of this tech that was hanging around for almost a decade but was value ads instead of being core offerings in product lineups.
Automotive e-commerce is much the same. It's an opportunity which is being catalysed by the pandemic. Stimulus means the average consumer has extra money in the bank account and travel bans mean the 1%ers can't take their average worldwide holidays. This means that everyone has a little more cash burning a hole in their pocket and the only way they can spend it in most cases (thanks to lockdowns) is online.
Do I see it catching on? I hope so. Car purchases are another anxiety-inducing activity in life today which really don't have to be and purchasing online takes the anxiety out of car purchases. Manufacturers will still need dealerships to deliver vehicles and many consumers out there still prefer bricks and motor to making a purchase online.
So where are we ten years from today? Are we all going to be buying cars online? I doubt it. But alike to ordering a pizza, buying your clothes and bidding on a house auction online? It'll certainly be an option.
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