Arthur D. Little recently completed a study of online car sales. In order to clarify the demand for online car purchases and identify Key successful factors and Key buying factors, more than 1,000 consumers from Germany, China and the United States were surveyed.
Online shopping has changed the shopping habits of consumers. Even in some industries, it has fundamentally changed the traditional sales model. In order to meet the online consumer demand of today's customers, especially young people, the auto industry should also expand sales channels and provide corresponding online services. However, at present, there are few channels and information for on-line sales of automobiles. If this problem can be solved, sales to certain customers can be greatly improved. In this article, Littex conducts research on the global automotive consumer market (including Germany, China, and the United States), and analyzes the prospects for online sales of automobiles by evaluating key market entry barriers and identifying key success factors from the perspective of consumers.
There is a large demand for online shopping
Industry experts believe that demand-driven online sales channels also apply to the automotive industry. Richard's “Future Urban Transport in 2020†research report shows that consumer spending habits and expectations are changing. Consumers' car buying behavior has shifted from impulsive consumption to more rational consumption. For more and more people, the car is just a means of transport, and it is no longer a symbol of social status. Our research shows that only a small proportion of cars are sold through the Internet. However, our experience with the world's leading car manufacturers shows that consumers have less shopping time and are more inclined to facilitate online shopping.
In the survey, we asked consumers about their willingness to purchase cars online and online shopping. The results show that many consumers are willing to purchase cars online, of which Chinese consumers are twice as likely to purchase cars online as Germans and US consumers (see Figure 1).
Price, convenience and channel exclusivity are key success factors for online shopping
By researching other industries that have already adopted online sales, we have found that price advantage, convenience, and channel exclusivity are the key success factors in establishing and developing online sales.
1. Price. The biggest advantage of online sales is price, especially in the FMCG industry. However, the luxury goods industry rarely uses online sales channels because it will reduce the social status symbol of luxury goods.
2. Convenience. Online retailers, such as Amazon, get a lot of revenue by providing reliable and convenient door-to-door service. Online retailing is usually more convenient than other traditional retail channels.
3. Channel exclusivity. For high-end products such as high-end electronic products and top fashion products, there is no need to adopt different pricing strategies on online channels and traditional channels. Consumers of such products prefer to purchase through exclusive channels. Some successful retailers bring value to consumers through pre-purchase through proprietary online channels or online, while increasing the visibility of online channels.
The same success factors can also promote car sales
Our customer survey results also confirmed this trend. For American and German sellers, the price advantage of online shopping cars is still the most important consideration. However, the survey results also show that convenience and channel exclusivity are also important (see Figure 2). We also find that for Chinese consumers, the price advantage is relatively insignificant, and Chinese consumers value the exclusivity of buying channels more.
Our research further shows that consumers who prefer online shopping cars are also more receptive to new retail concepts, especially young consumers. In addition to pure online shopping, these consumers hope to have more interaction in the online shopping process. They hope to experience car purchases through different channels during the car purchase process. For example, customers can obtain information through the Internet, rent a test drive, configure new cars online through the support of the customer service center, and eventually purchase cars online. Our research also shows that these consumers want to use the live chat feature, access to customer service center services, and external help during the purchase process. In addition to going to the local 4S shop to experience, they also hope to have other ways to experience new cars.
The biggest obstacle to buying online is the final transaction. We surveyed consumers about their preference for online trading services and found that consumers wanted different trading options. Online consumers need to be able to choose full payment, mortgage and other methods. Figure 3 shows the propensity of consumers in different ways in Germany and the United States.
Our research shows that online sales in the future can help automotive manufacturers achieve sales goals. In order to meet the young consumer groups, they need to better establish sales channels. However, because of the wide range of automotive parts and components, it does not make sense to only provide online sales services. As a result, inventory vehicles and some pre-configured vehicles can be sold online, avoiding complete price transparency and price conflicts (especially competing with traditional dealers). In other words, online channels are complementary to offline channels and also a fully integrated channel.
Difficulties faced by auto manufacturers when establishing online channels
Despite the obvious need for consumers to buy cars online, auto makers also need to consider the potential risks of expanding sales channels. In fact, when building an online sales channel, you need to analyze issues such as legal, sales network risks, and relationships with dealers.
According to the contract with the dealer, auto manufacturers can directly build online channels and can also establish dealer online channels together with distributors. However, regardless of the contract, building an online channel will have an impact on the dealer, which needs careful consideration.
Five online tips for car sales
Many auto companies have begun to build online channels to support their after-sales service network, private customers and commercial customers. Some companies have achieved good results in reducing costs and upgrading their brands. However, the increase in online sales does not increase significantly. In order to successfully develop online sales channels, the following five aspects need to be considered:
1. Adjust online and offline channels to maintain a consistent product mix
In order to expand online sales while avoiding conflicts between online and offline channels, auto manufacturers need to balance the balance between online and offline channels. Channels should not conflict with each other and should complement each other. For each type of company product, the company needs to decide which parts or sales processes can be sold online. In the decision-making process, there needs to be a clear sales strategy. At the same time, the sales department and the distributors need to participate in the decision-making.
2. Establish a digital sales system for multi-channel sales
Future consumers are more inclined to choose a variety of sales forms - this means the need to develop an integrated sales system platform, integrated network services, mobile clients, social platforms and personal home pages in the form of online sales. However, it is difficult for online consumers to establish mutual trust. Therefore, a credible and reliable system is needed to effectively handle online issues such as placing orders and payments.
3. Get dealer support
Traditional sales rely heavily on dealer networks, so online sales require the support of dealers. Manufacturers must take into account the interests of distributors when deciding on distribution channels and pricing strategies. In short, dealers should participate in the online sales process and profit from online sales.
4. Provide clear preferential measures
Consumers must enjoy real benefits when using online sales channels. As mentioned earlier, there are many ways to motivate consumers to use online channels. We need to communicate the convenience of online channels to consumers. According to different products, we can launch exclusive custom services (such as online booking and special customization). Different from direct price cuts, preferential measures can include a series of supporting measures, such as more exquisite packaging, more flexible financing loans, faster product delivery, and more thoughtful after-sales service. The customization of such preferential measures needs to combine the specific preferences of consumers in different regions.
5. Guide customers
The effectiveness of each channel depends on the consumer's confidence in it. Consumers must understand the functionality, reliability, and benefits of new channels. Car manufacturers need to win the trust of consumers through a successful online shopping experience. This requires online sales to provide a complete set of automotive products (such as decorations, navigation equipment) and related services (such as driving instructions), but also need to establish a reliable process.
to sum up
With the increasing use of online sales in multiple industries, consumers are becoming more familiar with the online sales environment. Automobile manufacturers can provide a series of preferential measures through online channels to increase sales and tap new consumers. Auto companies can also obtain data on consumer shopping habits through online channels in order to analyze consumer purchasing habits and do customer relationship management (CRM). In addition, online sales channels can also significantly reduce the operating costs incurred in the offline sales process.
In addition to the aforementioned benefits, the trend of online sales in the automotive industry cannot be avoided in the era of digitization and internetization. Auto companies need to adopt active strategies to meet new customer needs. Consumers want to communicate with car manufacturers at any time and place via Internet terminals. In the not-too-distant future, auto manufacturers need to establish new online sales channels to find new potential customers and manage existing customers.
Online shopping has changed the shopping habits of consumers. Even in some industries, it has fundamentally changed the traditional sales model. In order to meet the online consumer demand of today's customers, especially young people, the auto industry should also expand sales channels and provide corresponding online services. However, at present, there are few channels and information for on-line sales of automobiles. If this problem can be solved, sales to certain customers can be greatly improved. In this article, Littex conducts research on the global automotive consumer market (including Germany, China, and the United States), and analyzes the prospects for online sales of automobiles by evaluating key market entry barriers and identifying key success factors from the perspective of consumers.
There is a large demand for online shopping
Industry experts believe that demand-driven online sales channels also apply to the automotive industry. Richard's “Future Urban Transport in 2020†research report shows that consumer spending habits and expectations are changing. Consumers' car buying behavior has shifted from impulsive consumption to more rational consumption. For more and more people, the car is just a means of transport, and it is no longer a symbol of social status. Our research shows that only a small proportion of cars are sold through the Internet. However, our experience with the world's leading car manufacturers shows that consumers have less shopping time and are more inclined to facilitate online shopping.
In the survey, we asked consumers about their willingness to purchase cars online and online shopping. The results show that many consumers are willing to purchase cars online, of which Chinese consumers are twice as likely to purchase cars online as Germans and US consumers (see Figure 1).
Price, convenience and channel exclusivity are key success factors for online shopping
By researching other industries that have already adopted online sales, we have found that price advantage, convenience, and channel exclusivity are the key success factors in establishing and developing online sales.
1. Price. The biggest advantage of online sales is price, especially in the FMCG industry. However, the luxury goods industry rarely uses online sales channels because it will reduce the social status symbol of luxury goods.
2. Convenience. Online retailers, such as Amazon, get a lot of revenue by providing reliable and convenient door-to-door service. Online retailing is usually more convenient than other traditional retail channels.
3. Channel exclusivity. For high-end products such as high-end electronic products and top fashion products, there is no need to adopt different pricing strategies on online channels and traditional channels. Consumers of such products prefer to purchase through exclusive channels. Some successful retailers bring value to consumers through pre-purchase through proprietary online channels or online, while increasing the visibility of online channels.
The same success factors can also promote car sales
Our customer survey results also confirmed this trend. For American and German sellers, the price advantage of online shopping cars is still the most important consideration. However, the survey results also show that convenience and channel exclusivity are also important (see Figure 2). We also find that for Chinese consumers, the price advantage is relatively insignificant, and Chinese consumers value the exclusivity of buying channels more.
Our research further shows that consumers who prefer online shopping cars are also more receptive to new retail concepts, especially young consumers. In addition to pure online shopping, these consumers hope to have more interaction in the online shopping process. They hope to experience car purchases through different channels during the car purchase process. For example, customers can obtain information through the Internet, rent a test drive, configure new cars online through the support of the customer service center, and eventually purchase cars online. Our research also shows that these consumers want to use the live chat feature, access to customer service center services, and external help during the purchase process. In addition to going to the local 4S shop to experience, they also hope to have other ways to experience new cars.
The biggest obstacle to buying online is the final transaction. We surveyed consumers about their preference for online trading services and found that consumers wanted different trading options. Online consumers need to be able to choose full payment, mortgage and other methods. Figure 3 shows the propensity of consumers in different ways in Germany and the United States.
Our research shows that online sales in the future can help automotive manufacturers achieve sales goals. In order to meet the young consumer groups, they need to better establish sales channels. However, because of the wide range of automotive parts and components, it does not make sense to only provide online sales services. As a result, inventory vehicles and some pre-configured vehicles can be sold online, avoiding complete price transparency and price conflicts (especially competing with traditional dealers). In other words, online channels are complementary to offline channels and also a fully integrated channel.
Difficulties faced by auto manufacturers when establishing online channels
Despite the obvious need for consumers to buy cars online, auto makers also need to consider the potential risks of expanding sales channels. In fact, when building an online sales channel, you need to analyze issues such as legal, sales network risks, and relationships with dealers.
According to the contract with the dealer, auto manufacturers can directly build online channels and can also establish dealer online channels together with distributors. However, regardless of the contract, building an online channel will have an impact on the dealer, which needs careful consideration.
Five online tips for car sales
Many auto companies have begun to build online channels to support their after-sales service network, private customers and commercial customers. Some companies have achieved good results in reducing costs and upgrading their brands. However, the increase in online sales does not increase significantly. In order to successfully develop online sales channels, the following five aspects need to be considered:
1. Adjust online and offline channels to maintain a consistent product mix
In order to expand online sales while avoiding conflicts between online and offline channels, auto manufacturers need to balance the balance between online and offline channels. Channels should not conflict with each other and should complement each other. For each type of company product, the company needs to decide which parts or sales processes can be sold online. In the decision-making process, there needs to be a clear sales strategy. At the same time, the sales department and the distributors need to participate in the decision-making.
2. Establish a digital sales system for multi-channel sales
Future consumers are more inclined to choose a variety of sales forms - this means the need to develop an integrated sales system platform, integrated network services, mobile clients, social platforms and personal home pages in the form of online sales. However, it is difficult for online consumers to establish mutual trust. Therefore, a credible and reliable system is needed to effectively handle online issues such as placing orders and payments.
3. Get dealer support
Traditional sales rely heavily on dealer networks, so online sales require the support of dealers. Manufacturers must take into account the interests of distributors when deciding on distribution channels and pricing strategies. In short, dealers should participate in the online sales process and profit from online sales.
4. Provide clear preferential measures
Consumers must enjoy real benefits when using online sales channels. As mentioned earlier, there are many ways to motivate consumers to use online channels. We need to communicate the convenience of online channels to consumers. According to different products, we can launch exclusive custom services (such as online booking and special customization). Different from direct price cuts, preferential measures can include a series of supporting measures, such as more exquisite packaging, more flexible financing loans, faster product delivery, and more thoughtful after-sales service. The customization of such preferential measures needs to combine the specific preferences of consumers in different regions.
5. Guide customers
The effectiveness of each channel depends on the consumer's confidence in it. Consumers must understand the functionality, reliability, and benefits of new channels. Car manufacturers need to win the trust of consumers through a successful online shopping experience. This requires online sales to provide a complete set of automotive products (such as decorations, navigation equipment) and related services (such as driving instructions), but also need to establish a reliable process.
to sum up
With the increasing use of online sales in multiple industries, consumers are becoming more familiar with the online sales environment. Automobile manufacturers can provide a series of preferential measures through online channels to increase sales and tap new consumers. Auto companies can also obtain data on consumer shopping habits through online channels in order to analyze consumer purchasing habits and do customer relationship management (CRM). In addition, online sales channels can also significantly reduce the operating costs incurred in the offline sales process.
In addition to the aforementioned benefits, the trend of online sales in the automotive industry cannot be avoided in the era of digitization and internetization. Auto companies need to adopt active strategies to meet new customer needs. Consumers want to communicate with car manufacturers at any time and place via Internet terminals. In the not-too-distant future, auto manufacturers need to establish new online sales channels to find new potential customers and manage existing customers.
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