Here’s a statistic from Mercedes-Benz Financial Services to consider when thinking about how times have changed in the wholesale market.

The fourth quarter of 2014 marked the first time that Mercedes-Benz Financial sales through its MBonDemand online wholesale portal have exceeded its sales in the auction lanes, said Sherry Keltner, the manager of online sales and marketing at Mercedes Benz Financial Services.

While MBonDemand had only been on the market for around two years at the time of the interview, this point hammers home the notion of how much the wholesale market has changed, even in recent months.

And further changes to online remarketing may be on the way.

“We absolutely expect that more of it (remarketing) will move online. In fact, we’re already seeing a substantial shift from traditional auction to online sales channels,” Keltner said in an early January interview with Auto Remarketing.

“It’s really just because that’s a far more efficient way for our dealers to shop for available pre-owned inventory, where they can see vehicles across multiple auction locations and sellers. Because of that, we see that shift continuing,” she added.

And here’s another shift: the business model for the dealerships, themselves. They’re responding to more widespread information available to the retail customer, who’s now researching online for many hours before arriving at the store.

“They’re very educated consumers, and to meet those expectations of these educated customers, dealers are having to become extremely competitive,” Keltner said. “As a result, many of them are shifting to a high-volume, quick-turn sales model, as opposed to the lower-volume, high-profit-per-unit model we’ve seen in the past.”

And with such quick turns on those pre-owned cars, having immediate access to inventory is a big plus for dealers.

‘Spreading Those Spokes Out Further’

In discussing how the evolution and marriage of both online/technological and physical wholesale environments is impacting inventory acquisition, Mike Williams used the term “hub-and-spoke” to describe the activity that might be found at the dealership level.

“It’s really a hub-and-spoke moment. You’ve got one guy making decisions — the principal or the used-car manager — and he could be contending with three different people that are spotting at three different auctions for him,” said Williams, who is vice president of mobile and direct sales at Black Book. “He’s got a buyer that’s running around his region trying to get cars — all of these different things, and he’s trying to juggle all of them.”

Williams, who was talking with Auto Remarketing during an interview at the NADA Convention & Expo this winter, said that in light of this, the use of “multi-screening” by dealerships will become more common when they set out to buy cars.

It’s also important to bear in mind the dealer, in terms of time-efficiency and maximizing profitability.

“So, now what you see is them reaching out, spreading those spokes out further. We used to say 300 miles maybe five years ago. That was the reach of most big ones that were embracing technology. At this point, it’s probably 500, 600 miles,” he said. “Regionality is really coming into play.”

Williams added that “you start to see micro-cells of dealer interaction and networking that become this kind of trade network or the sharing of inventory.

“None of these things are new,” he continued. “They’ve all been around for five years. But what’s happened is, it’s been embraced more and more because of the need constantly to improve that efficiency.

“When cars were really in demand, I think that really drove it much faster; but now that there’s a glut, they can be pickier; they can look for the better deal.”

Aiming to Provide Best Physical Venue, Online Auction & Technology

When it comes to the more widespread use of technology in the wholesale space, here’s some food for thought.

“We’re really a technology company that sells cars,” says KAR Auction Services chief executive officer Jim Hallett.

Speaking to Auto Remarketing in late February, Hallett said it’s key for his company to continue providing tech-based solutions for its customers, grow and support KAR’s existing technologies and hone in on acquiring new solutions that will continue to boost the buyer and seller experience.

He also touched on KAR’s approach when it comes to buyer and seller decision-making in terms of channel selection, be it physical, online and so forth.

“I don’t feel that, as a company, KAR should ever try to steer a car in one direction or another,” Hallett said. “I believe that we should provide the best physical venue. We should provide the best online venue. We should support it with the best technologies, and we should let the customer and the market decide how the car gets sold.”

Later in the interview, Hallett further emphasized the balance and importance for each of the various remarketing channels when he said this: “We don’t believe brick-and-mortar is dead, either. And we still believe that there is opportunity for brick-and-mortar auctions to be acquired.

“Brick-and-mortar gives you more than just physical sales and ancillary services,” he continued. “We think brick-and-mortar, furthermore, supports our online buying initiatives. So when you go into a new market, you not only get the physical presence, but you also get that buyer base that then supports your online offerings, as well.

“So, it’s a real focus on both online and physical,” Hallett added, “again, letting the customers decide how they want to sell those cars.”