The automotive retail industry has seen a significant shift in the last few years, with the rise of global online retail giants such as Carvana, Kavak, and Vroom. These companies are disrupting the traditional way of buying and selling cars, and industry experts predict that between 20 to 35 percent of all cars will be sold online by 2030. In this article, we will discuss the changing landscape in the automotive retail industry and its impact on traditional and independent auto dealers.
The Rise of Global Online Retail Giants
Carvana, Kavak, and Vroom are global online retail giants that have disrupted the automotive industry by offering consumers an alternative to traditional car buying methods. These companies allow consumers to purchase vehicles online, with options for home delivery and contactless pickup. Additionally, they offer a seamless buying experience, transparent pricing, and a wide selection of vehicles.
In recent years, these online retailers have grown significantly, with Carvana’s revenue reaching $5.6 billion in 2020, and Kavak raising $700 million in funding. These companies are expanding their operations globally, and traditional auto dealers are taking notice.
The Shift to Online Sales
BCG and other prestigious institutions expect between 20 to 35 percent of all cars will be sold online by 2030. This shift to online sales is due to several factors, including consumer preferences, advancements in technology, and the COVID-19 pandemic. Consumers today expect a convenient and hassle-free car buying experience, which online retailers provide. Additionally, advancements in technology, such as virtual reality and augmented reality, allow consumers to experience a car before making a purchase.
The COVID-19 pandemic has also accelerated the shift to online sales. Many consumers are now more comfortable buying items online, and the pandemic has forced traditional dealers to adapt to digital sales. As a result, traditional dealers are now offering online sales options to remain competitive.
Impact on Traditional and Independent Auto Dealers
The rise of online retailers has had a significant impact on traditional and independent auto dealers. Traditional dealers are facing increased competition, and they must adapt to the changing landscape to remain relevant. Many dealers are now offering online sales options, and they are investing in digital marketing to attract customers.
Independent auto dealers are also feeling the impact of online retailers. These dealers often operate on small profit margins and cannot compete with the scale and resources of online retailers. As a result, many independent dealers are closing their doors, unable to compete in an increasingly digital world.
Technology Infrastructure Providers to the Rescue
As traditional and independent auto dealers face increased competition from online retail giants, technology infrastructure providers such as Frumatic can help these businesses compete by providing digital solutions. Frumatic’s dealer management system (DMS) is designed to help auto dealers run their businesses with minimal effort and operating expenses through automation and digitalization.
Frumatic’s dealer management system (DMS) is an all-in-one digital solution designed to help auto dealers run their businesses with ease and efficiency. With the ability to automate processes, monitor employee performance, and leverage data to improve profitability, Frumatic’s DMS allows auto dealers to operate their business with low operating expenses, sell cars 100% online, and be less dependent on physical locations, and sales representatives.