How we’re unlocking more stock for you
In this week’s webinar, Marc Thornborough caught up with our CEO, Nathan Coe, to share our plans to help retailers maximise their online sales and explain a recent announcement to help unlock more stock for our customers.
Sharing his view on online selling, Nathan reveals that the pandemic has massively accelerated our thinking, and this is because that it has changed the way consumers think. Consumers were in essence forced into completing most of the car buying journey online through the pandemic and we have seen that this behaviour seems to be sticking as we seemingly emerge from the pandemic with 61% of consumers now comfortable in completing some or all of the car buying process online. With 37% happy to complete the entire process online
Anecdotally, Nathan has found that many retailers and manufacturers don’t want to go back to the way things were having seen the benefit of having the consumer do more of the process, with many finding it reduces the workload at the forecourt, leading to less errors and crucially a far better consumer experience.
In Nathan’s view, those retailers not engaging in online selling are at a disadvantage and that is why we are working to bring retailers the tools they need to become digital retailers and take advantage of online selling without having to build costly digital sales tools and platforms.
We’ve already started this process by launching tools designed to bring more of the car buying process online for consumers. We recently launched our Guaranteed Part-Exchange service designed to allow consumers to get a part-exchange value guaranteed online which retailers can then either accept the vehicle as stock or dispose of the vehicle through Manheim and get the full value back. This allows saves both the retailer and consumers time and creates more transparency throughout the process whilst also getting more stock to retailers.
Nathan believes the latter point is crucial right now with sourcing a massive challenge for retailers globally. Retailers looking to grow can no longer source stock the same way as their competitors and that is why we are seeing retail models designed to source cars direct from consumers with cash offers.
Nathan explained that the rationale for this is very logical with 3 million vehicles transacted between consumers each year, so it makes sense to bring these vehicles into retailers’ stock.
To help make this stock available to all retailers, we’ve been offering our own instant buying service to consumers with our Instant Offer tool. This service enables consumers to get a cash offer for their car which we would then make available to retailers through Dealer Auction. The offers made to consumers and suggested trade prices will all be calculated through our award winning, live market data to ensure consumers get a fair price and retailers get a great margin.
Whilst this service has been live for 12 months, we are now starting to actively promote this to consumers and have announced this to our retailer partners. We did receive a number of questions on the back of announcing Instant Offer more widely which Marc put to Nathan on the webinar.
Marc: Our first question is from Andrew who says that “on previous webinars, Auto Trader has confirmed that they have no plans on purchasing stock or facilitating a link between stakeholders to purchase stock. Albeit you haven't made your plans public yet, what's changed?”
Nathan: We still don’t plan to buy cars to compete with retailers. Our objective is to make more cars available to retailers by enabling retailers to access a previously unavailable pool of stock at reasonable prices. As we’ve said before we see ourselves as enabler for car retailers.
Marc: Question now from Vince who says that “sourcing stock more efficiently is only part of it. I spend an average £1500 preparing my cars for sale which puts them into your 'High' price bracket. Are you going to share insights on how to source cars more efficiently and, at better prices?”
Nathan: We’ll always be continuing to share our insights on how to source cars more efficiently and Instant Offer is a part of that. Our valuations are based entirely on data and are a reflection of the price’s retailers are placing on vehicles. So, if retailers are pricing to market then this will be reflected. He went on to say that if you are prepping vehicles to an exceptional standard then you can charge a premium and reflect this in your adverts.
Marc: One from Tim now. “This will make my life more difficult and my business less profitable. Why do you want to do that? I have built very effective working methods for sourcing stock and WBAC, MotorWay, etc are getting in the way, badly.”
Nathan: Of course, we’re not looking to make any retailer’s lives more difficult. We believe that through our online selling digital retailing products include Instant Offer, we should be increasing retailer’s profitability. Our focus is getting more vehicles to retailers through part-exchanges and to make this a consumer first thought when it comes to disposing of their car. We recognise that part-exchange is easiest for the consumer and the most profitable way for retailers, so we are making this process easier. Car buying services though aren’t going away and that’s why we’ve created our own service which benefits retailers with Instant Offer.
In terms of making it easier for retailers, the transaction fees for acquiring vehicles through Instant Offer are significantly lower for retailers compared to competitors and that the logistics are far simpler and faster, with free delivery within 50 miles.
Marc: A few questions from Joe who asks “will these instant price valuations Auto Trader are going to offer consumers directly going to become available at buy it now prices on Dealer Auction at the same price?
Or will they be auctioned on Dealer Auction? If so, you are basically profiteering and in essence buying and selling cars which you said you would never do. Also, will instant price use the same algorithm to value as GPX does?”
Nathan: Yes, we are using the auction function through Dealer Auction but no we are not looking to profiteer through retailers at all. The auction function is the function that works best for our customers and we will use our live market data to value vehicles. Our aim is to break even on sales which might sound strange but if we were making a profit on the metal, we simply wouldn’t be giving consumers the best price. Our main aim is to get more stock on Dealer Auction and, being completely transparent, we will make some money through transaction fees but none from the metal.
Our instant price offers do use the same algorithm as GPX yes.
Marc: And finally, Robert asks “what are the most exciting innovations currently in the pipeline at Autotrader?”
Nathan: It really is all about online selling and the products and services that we are creating to enable more retailers to become digital retailers, enabling our partners to be more profitable.
We’re looking to create a world where the car buying journey is far simpler, where consumers can get valuations for their vehicle, understand what finance offers they can get (through the retailer) on a vehicle and reserve the car they want all entirely online so that they only need to visit the retailer to finalise the purchase. If retailers get on the front foot, embrace these products and embed them in their buyer’s journey then I truly believe they will have a competitive advantage over their competitors.