Automotive trade industry embraces E-commerce
While E-commerce has become the catch-all term in the retail sector, one industry has remained impervious to the changes brought about by the advent of technology. The automotive industry, especially the one involving the sale of both used and new cars, has remained sturdily in the grip of traditional physical showrooms run by dealers where buyers make their purchases.
This trend has largely been driven by the cost of purchasing an automobile which is much higher than other things in the retail sector. As Will Turner, partner at tech investor Draper Esprit told the Financial Times, “it is a big call to get people to spend £20,000 on an e-commerce purchase”. In addition to this, the tactile experience offered by showrooms ensured traditional car dealerships retained their novelty.
Meanwhile, the online model has been prohibitively expensive for car dealerships, considering the costs involved in storing and delivering automobiles and handling returns. A hybrid model of selling cars that combines shopping online and collecting cars at a physical store has existed for a while now, evidenced by the popularity of online car sales dealers such as Auto Trader.
However, in recent years consumers – most of them who have become disillusioned with sleazy salesmen – have shown a willingness to shop online. Where it previously took eight visits to a car dealership before a customer made a purchase, these days, it only takes a maximum of two visits. According to a recent Financial Times article, this is due to the fact that 60% of customers already know the model and the make they are looking for based on the research they have conducted online.
The Covid-19 pandemic has accelerated the disruption experienced by the automotive industry. The lockdowns imposed during the pandemic saw buyers migrate in droves to online car dealers. The new norms necessitated by the pandemic where social distancing is of paramount importance has also served as a catalyst for the growth of the sale of second-hand cars as people become wary of using congested public transportation networks.
The global used car business is worth US$1 trillion, but before the pandemic, only 1% of all used car sales took place online. In the first six months of 2021, online car retailers worldwide have raised US$6 billion in fundings. Singapore’s Carro announced in June it had raised SG$360 million in investments this year.
Meanwhile, the sale of brand new cars have been severely hampered by supply chain issues arising from chip shortages resulting in manufacturing slowdown. For the first time since 1985, inventories in the US dropped by half to 23-days supply. This has resulted in some soul searching within the automotive industry where car manufacturers – or original equipment manufacturers (OEM) as they are known – are growing weary of the dealership model and are looking to transition to an agency or a subscription model.
OEMs now view online presence as vital to building a digital-age business that would be leaner and responsive to consumer needs. By selling vehicles online, OEMs can obtain crucial data such as the journey of the buyer before they make a purchase.
A long-overdue digital revolution is taking place in the automotive industry. For present car dealerships, undertaking digital transformation efforts would go a long way towards ensuring their survival in the automotive industry which is increasingly embracing digitalisation.
The amount of investment pouring into the car dealership industry is a testament to the need for these businesses to invest heavily in technology to cater to growing market demand. Modern day solutions such as cloud ERP systems have helped automotive traders in the Asean region such as Carro optimise their business processes and achieve sustainable growth.
Below are some of the areas that will help the automotive industry if they undertake digital transformation and some of the benefits of cloud solutions:
Enhanced CRM Functionality
As OEMs and car dealerships embrace digitalisation and focus on personalised care for their customers, it is of utmost importance for their businesses to keep track of a customer’s journey before making a purchase. This would allow companies in the automotive sector to cater to the demands of their customers based on data.
Automation of Finance and Accounting Processes
Businesses in the automotive sector who move online will need to be lean and operate efficiently. Most digital-age solutions enable businesses to automate tedious accounting processes that are often riddled with human errors due to manual entry of data. Solutions such as cloud ERP systems are also equipped with features that enable businesses to comply with regulatory requirements that come with operating in different countries.
Most software solutions in the digital age, such as cloud ERP systems, help companies integrate disparate systems and provide organisations with a consolidated view of their business processes.
Real-Time View of Businesses Processes
By virtue of architecture, cloud systems are able to provide real-time views of customer data to businesses. In an environment where small details can make big differences, these data can help companies unlock new insights that will help them in their strategic decision-making
One of the biggest issues that plague the automotive industry is the long waiting times before customers get their cars. Using the best of latest technologies, solutions such as cloud ERP systems can provide car dealerships with accurate data and in return fulfil their promises to the customers. Most cloud systems are also equipped with data analysis that enable them to make accurate predictions of what is needed.
Easy Low-Code/No-Code Integrations With Third-Party Software
Throughout the course of the sale of vehicles, there is a laundry list of different paperwork that need to be fulfilled, from details of customers for the processing of loan application right through insuring and other contracts. It is only natural that car dealerships will encounter various different systems. By undertaking digital transformation, businesses have a suite of solutions that help them easily integrate with different third-party systems, either with very little or no coding at all required. This also ensures that businesses provide customers with a seamless service, free of unnecessary complications.
Oracle NetSuite is the world’s leading cloud enterprise resource planning (ERP) system, having been deployed in 40,000 companies and subsidiaries across 160 countries.