Breaking Down
Digital Retail

The way we research, shop for, and purchase goods and services has been completely transformed. According to a survey by PwC, billions of people affected by the COVID-19 pandemic have driven a “historic and dramatic shift in consumer behavior” towards online shopping — and this shift will not reverse course. 

The shift in how goods are sold and purchased has made waves across virtually all industries, including those that historically have not offered robust online or digital customer experiences. For these businesses in particular, one thing is for certain: the retail landscape is changing in seismic ways. Here are four of the top trends affecting retail digitization today:

• Touchless experiences: One of the biggest trends at the height of the pandemic was offering customers a way to shop in-store while avoiding or minimizing contact with surfaces and other people. However, touchless experiences have been on the retail scene since the early 1990s. An example of this type of shopping experience is a grocery store self-checkout line, providing consumers with the ability to scan their purchases and pay for them via their mobile device or contactless credit or debit cards.
  
  
• Ordering ahead: This is when customers place and pay for orders online or via mobile device, and then head to the store to claim their ordered items. Many retailers are still offering curbside pickup, allowing consumers to simply park and wait for their purchases to be brought out to their vehicles.
  
  
• Starting the buying process online, finishing in-store: An omnichannel customer experience is one of the newest concepts affecting certain industries more than others. Specifically, it’s been a game-changer in the automotive industry. (We’ll dig into the how and why later on in this article.)
  
  
• Tech partnerships: The recent rush to digitize has revealed weaknesses in traditional business models. Forward-thinking companies have partnered with technology providers to meet the increasing demand for digital solutions.

What Is Digital Retailing?

Digital retailing refers to technology that enables shoppers to complete most of a transaction online and finalize it in person. It is typically used for big-ticket items such as cars and boats, but digital retailing is also used whenever in-person verification is required.

With so many consumers preferring to shop from home, digital retailing helps bridge the gap when those same people need to make larger purchases. Think of it as a compromise in which everyone wins: the consumer completes paperwork and details at their convenience from the comfort of home, while the store or dealership saves time and resources usually needed to initiate a sale.

Digital Retail vs. eCommerce

The main difference between digital retail and eCommerce is where the purchase is finalized:

• Digital retail allows buyers to initiate the process online, but the transaction is completed in-store.
• eCommerce enables a buyer to initiate and complete purchases entirely online.

Items that necessitate digital retailing typically have longer sales cycles and/or regulatory hoops through which to jump (such as vehicle registration and title requirements), while eCommerce purchases can be impulse buys with little-to-no red tape.

Digital Retail Examples

Certain industries and purchases still require some level of in-person interaction. Of those, many have moved much of their processes online. Today, individuals who don’t mind buying a home site unseen can complete the purchase entirely online.

While the home buyer can finalize their purchase online, they may still need to hire professionals to complete certain tasks in person. Conventionally financed home sales require an inspection and appraisal. So, while the homebuyer could complete the sale virtually, other players involved in the deal would have to physically participate in the process.

Luxury car dealerships have offered concierge services for years, but the delivery of vehicles to homes or offices for test drives or final purchases became mainstream during the pandemic.

In both instances (buying a home and buying a car), physical interaction with another person is inevitable. Whether it’s handing over the keys to the new purchase or obtaining a signature to finalize the sale — digital retailing requires some form of in-person dealings.

Largely due to the complexity of the sale, there is simply no automotive or mortgage industry equivalent right now to Amazon.com. One of the first attempts was by Fiat Chrysler Automobiles and Amazon, who teamed up to “start selling cars online” in Italy. At face value, it appeared Italian car buyers could purchase the vehicles of their choosing entirely online via Amazon.com. In reality, each “buyer” was only agreeing to be contacted by Amazon to decide on a dealer where they could finalize their purchase and pick up their vehicle.

Thus, even companies like Carvana and Vroom use a lead-generation model, meaning once the buyer chooses a vehicle, they must finish the deal with a notary public-authorized delivery person.

Digital Retailer Meaning

A digital retailer is defined as a retail business that allows customers to engage digitally at different stages of their buying journeys. Due to the pandemic-fueled surge in online shopping, almost every successful retail business today is a digital retailer to some extent — and most automotive dealerships offer car buyers a digital experience of some kind. However, the automotive retail industry is often characterized by inefficient customer experiences across channels.

Therefore, automotive dealerships especially should take note: 92% of car buyers do online research before making a purchase to ensure they are making the best possible choice. Ensuring your dealership’s website specials and digital ads are competitive and up to date based on your current and incoming inventory is the first step towards improving the cross-channel customer experience. The second step happens in-store (more on that later).

Digital Retailing in Automotive

There is no real eCommerce option for auto retailing today. Shoppers can add a car to a shopping cart and apply for financing online — but they’re eventually going to have to take possession of their new car and sign at least some documents in person. Automotive digital retail takes lead generation to the next level. It helps initiate — but not finalize — transactions. 

Unlike in 2000, when people visited an average of five dealerships before making a purchase, car shoppers in 2022 only visited two. Additionally, today’s car buyers have already done their research online before walking through a showroom door. Chances are, they know what they want and what it should cost. Dealerships committed to investing in virtual showrooms and transparent online pricing will be more successful in reaching these consumers. 

“Responsible leaders must begin preparing their people to survive and thrive both today and in an uncertain future.”

Tom Peters, Author and Management Expert

Automotive Digital Retailing Defined

A successful automotive digital retailing experience requires all touchpoints in the car-buying journey to be connected. This means that a dealership’s website, advertising, customer relationship management (CRM) system, and in-store experience work together in lockstep. When the car-buying process runs smoothly, customer satisfaction and sales increase.

Elements of Dealership Digital Retailing

Dealership digital retailing injects technology into the car-buying process — like fuel into an engine — to enable customers to start their buying journeys online and complete them in person.

Therefore, a sound dealership digital retail strategy includes the following elements:

• An informative and highly detailed website that allows car buyers to filter and shop for specific makes, models, features, and price ranges based on the dealership’s current and incoming inventory
• Competitive, up-to-date monthly payment and financing options dynamically published on that website and accurately reflected across the digital realm in the dealership’s advertising
• A digital way (e.g., via online chat or form submission) for potential customers to request more information and/or schedule a vehicle test drive with the dealership
• An online credit application, with quick decisions made by a variety of lenders
• A seamless customer experience from online to in-store on through to sign-and-drive

How Digital Retailing Works in Automotive

Digital retailing sounds good in theory, but how does it work in reality? A leading dealership ranked #1 for passenger car sales in the Midwest Region for 2022 has seen outstanding results after automating its sales process and transitioning to a single-point-of-contact model.

By eliminating the back-and-forth process with multiple people and price negotiations, the store realized an immediate positive impact for its employees and customers. 

The key, as stated earlier, is making sure systems work together. When automotive digital retailing is successful, it can lead to:

• More informed customers who are ready to buy
• Better qualified in-store leads 
• An increase in add-on features and services 

To reap these and other digital retail rewards, dealerships must partner with a reputable technology partner. Any breakdown in the car-buying process could cost customers and the dealership. Choosing the right solution and investing in dealer consulting services for ongoing training are critical for digital retail success.

Choosing Among Automotive Digital Retailing Solutions

Choosing an automotive digital retailing solution is not to be taken lightly. Digital retail partners should give dealers the ability to provide buyers with everything they need to make a purchasing decision at the moment of interest. Working with a trusted and industry-recognized solution is the first place to start. 

Features to look for in a top digital auto retail solution include:

• Upfront payment transparency: Customers should know exactly what their monthly payments will be based on money down, terms, dealership inventory, and other variables before they set foot in-store. At the same time, customers should be able to see localized pricing that includes all applicable incentives, taxes, and fees.
• Real-time auto F&I upsells: Stores shouldn’t miss out on upsells like warranties, service contracts, GAP insurance, and other after-market add-ons by waiting until the end of the car-buying process to present the F&I menu.
• Seamless transition to in-store: Customers should be empowered to begin a transaction at home and complete it in-store in less than an hour without any transitional speed bumps.
• Training and support: Team members should be trained to handle deals from beginning to close, and ongoing training and support should be provided to keep skills fresh and processes running smoothly.

Implementing Digital Retail for Your Dealership

Putting a plan in place to implement digital retailing at your dealership may need to happen in stages, starting with providing training for everyone within the organization. Here are some things to keep in mind:

• Automating steps of the car-buying process will require a shift in mindset.
• Employees who have built their careers around the in-person sale may need additional support. 
• Employees need to understand why and how this technology will improve their results and relationships with customers.

After choosing an automotive retail software partner and implementing the technology, dealerships will need to follow a plan, which should include:

• Executing data-driven automotive marketing to target in-market shoppers using first-party data.
• Delivering dynamic pricing with VIN-specific vehicle offers on dealership websites and across the internet.
• Adopting a modern business model featuring one-price selling and a single point of contact.
• Investing in ongoing training to ensure skills stay sharp and customer experience remains a top priority for everyone working at the dealership.

Why You Should Care About Digital Retail

Digital retailing helps everyone involved in the vehicle purchasing process, from car buyers to dealers to dealership employees. With the right automotive digital retail solution, the buying process can be initiated at home and completed in-store in less than an hour, so purchasing a car is no longer an all-day affair. This helps drive dealer profitability in many ways.

“Experience it forward. What employees experience, customers will. The best marketing is happy, engaged employees. Your customers will never be any happier than your employees.”

John DiJulius, Author of The Customer Service Revolution: Overthrow Conventional Business, Inspire Employees, and Change the World

Benefits of Digital Retail for Auto Dealers

In fact, car dealers that have made a move to digital retailing are already reaping the rewards. Here are some of the benefits of automating the car buying process for dealerships:

• Improved customer trust
• Streamlined processes
• Improved employee morale
• Increased sales
• Increased sales margins
• Expanded customer reach
• Control of the purchase process

Automating the car-buying process is not just a benefit for dealership owners but for the entire organization. Employees embrace the move to automation because it removes many arduous, time-consuming tasks that they and their buyers would have to complete to close a deal. 

As the saying goes, time is money. Eliminating administrative tasks and shortening the sales cycle gives salespeople more time to close even more deals.  

The Bottom Line: Digital Retail Is Evolving

Digital retailing isn’t just evolving — it’s the future of automotive sales.

With most of the car-buying process online, we’ve come a long way in the history of automotive retailing. Rapid changes in technology will continue. At some point a full eCommerce solution will be available; however, that is still years away from readiness. Dealerships that adopt the right digital retail, point-of-sale, and dealership marketing and pricing technologies and process now will benefit the most.