The web has long been a digital marketing platform for dealers, says Mike Burgiss, the vice president of digital retailing at Cox Automotive.

For instance, a dealership listing its inventory on its own website and classifieds sites like Autotrader, Cars.com, etc.

And lately, talk has ramped up about the internet being a dealer’s digital transaction platform.

“But there’s a missing piece in the middle in this evolution, (in) that the internet needs to become a digital deal-making platform for dealers before it can become a digital transaction platform,” Burgiss said.

Digital deal-making needs to include price negotiation, a consensus on the trade-in value and a “penny-perfect deal structure,” Burgiss said.

The latter two, in particular, can be tricky without face-to-face interaction.

“A shopping-cart model requires that you agree on a fixed amount for the trade-in vehicle sight unseen. And that’s not something dealers do, and I don’t think they will do,” Burgiss said. “So, the model is some hybrid … it’s not a pure shopping-cart model; it’s a model where you structure a deal online contingent upon inspection of the vehicle.

“I know my monthly payment based on the trade valuation that the online tool helped us arrive at, but then all of that is contingent on me bringing the car to you or you picking it up or you sending out a person to see it. And then once we true-up based on the dealer’s inspection of the vehicle, then we can move into the transaction,” he said.

Regarding the deal structure, Burgiss said that when a customer signs the sales contract, which is legally binding, it must be “right to the penny” because it goes in the dealership’s general ledger (i.e. accounting records) and is distributed to various accounts in that ledger. Not to mention, it’s also used for tax purposes, he said.

“Well, a penny-perfect deal structure doesn’t exist on the internet today,” he said. “Another way to say that is, the DMS is not connected to the website. That just isn’t how things are integrated today. Well, that will happen, eventually; it will get there.

“In the meantime, what problem we’re trying to solve is to get the customer to understand what a realistic estimate of that monthly payment is, so that in their minds they can say, ‘Yes, I want to buy this car, and I just need to go to the dealership and see it, touch it, feel it, drive it. And then if it all checks out and the numbers match what I saw online, then I’ll sign the papers.’”

That, Burgiss said, is the current mindset. Previously, he said, consumers would see a car’s price online without knowing exactly what the payment will end up being.

Once the shopper went to a store, they may have to start the price part from scratch and have to wait up to two-and-half hours to figure out what the payment is.

“And the cost to the dealership in getting through those two-and-a-half hours is $750 on average in the cost of the sale,” Burgiss said.

“And so that source of cost for the dealership is also a new source of profitability in terms of sales efficiency, sales productivity,” he said.

The human element

The price negotiation, trade valuation and nailing down a precise deal structure is “really the meat of getting the car sold,” Burgiss said.

“The transaction itself becomes a very mechanical process after those things are done,” he said.  

Still, there’s the human element of the car-buying process, he said, which can be even tougher than the “shopping-cart part” (which in and of itself, has its own complexities).  

For instance, what if the shopper has questions about whether he or she should finance the vehicle or lease it? How does the dealer work with the shopper to get to the monthly payment he or she had in mind?

 “The human element, the art of selling the car, is the very unique thing about the automotive retail transaction and that’s the place where we’ve got to help dealers and consumers come together in a very efficient way that’s very convenient for the customer and very efficient for the dealer,” he said.

Burgiss further illustrated the human element. For shopping-cart e-commerce to happen — an “Amazon-style checkout process” — you must have “customers that have zero questions,” he said.

“So ask any dealer, have you ever had a customer that had zero questions, that walked in the door or called you on the phone and said, ‘Here’s my cash, this is the one I want?’” Burgiss said.

“It never, ever, ever, ever happens. And the reason is … the car purchase process is so complex, it costs so much money, the product is super complicated,” he said. “And it’s a very emotional buying decision because of that. The truth of automotive retail: It is a human process. It’s a relationship-based process. It’s a relationship-based selling environment … there must be trust there.”

Thererfore, he said, creating trust and establishing a relationship online — going beyond simply showing the vehicles online — is the biggest opportunity for dealers.

How is that accomplished? Stay tuned for the next installment of this feature.