In August, Amazon made two big footprints in the auto space that stirred talk and turned heads.
First was teaming up with Hyundai Motor America for a program that let car shoppers in certain Southern California areas set up test drives of the 2017 Hyundai Elantra through its Amazon Prime Now service.
Later in the month was the launch of Amazon Vehicles, designed to let shoppers research and discuss all things automotive.
“Our goal is to support customers during one of the most important, research-intensive purchases in their lives by helping them make informed decisions every step of the way,” said Adam Goetsch, director of automotive at Amazon.com, said in a news release on the launch.
“Amazon Vehicles is a great resource for customers who are interested in car information or looking for a broad selection of parts and accessories — all enhanced by the ability to tap into the knowledge, opinions and experiences of other car owners within the Amazon customer community.”
Of course, the company already had Amazon Automotive for parts and accessories.
But what does the launch of Amazon Vehicle and the pilot program with Hyundai mean for retail? Will the online giant get into automotive ecommerce?
‘Massive validator’ of new retail era
“The move by Amazon to say, ‘Hey, we think we can market in much the same way that Shift does,’ I think is just a massive validator of a broader trend in consumer retail, particularly in the United States but globally to some degree,” said Toby Russell, the president of Shift Finance and the head of business and product at Shift, an online peer-to-peer car marketplace.
Consider the overall retail model of the 1950s, 60s and even early 70s, Russell said in a late August interview.
It was a “highly fragmented” industry largely built on your corner-store mom-and-pop businesses, he said.
From the late 1970s through the 90s was the “big box store” movement. The pitch there was that large stores like Wal-Mart or Best Buy could consolidate various and vast amounts of goods you needed to buy into one large place; and with large inventory and volume, they could offer lower prices, Russell explained.
Not only that, these big box stores would build “an established brand” that fostered peace-of-mind about product quality.
And the auto industry was impacted, too: CarMax is one example, he said.
The “next generation,” Russell said, were players like Amazon, whose approach was to step away from the idea of housing inventory at several different stores where people shopped in person.
The idea, being that, “with the advent of the Internet, people can basically shop for goods online. And that’s the way that customers can shop through and decide what they want,” he said.
“And then we can have one, maybe two distribution centers that will service any given city and then we can ship products direct to consumers.”
‘Door is open’ for auto ecommerce
We asked Nancy Lim, marketing director at automotive digital advertising platform PureCars, how Amazon Vehicles might change digital marketing for dealers.
“I think for the short term, it won’t necessarily make a huge impact,” Lim said in a late August interview. “I think it just supports our philosophy that dealers need to always make sure that they are just as educated as consumers.
“Consumers have so much access to information, they’ve become experts in every facet of every business,” she said. “So with Amazon Vehicles, I think that as more information is available on different makes and models, it’s important for the dealers to use that to their advantage in their advertising and making sure that the message is relevant and also sharing the most accurate information.”
Given how consumers may turn to Amazon Vehicles and other sites to discuss vehicles, dealers would be wise to pay attention to the features that resonate with those shoppers, Lim said. It might be safety for, a tech package for another.
“Finding out what those different triggers are for the consumers and what they’re shopping for is something that dealers can take advantage of, and I don’t think a lot do right now,” Lim said.
For example, you see that certain safety features on a make or model seem to strike a chord in online discussions. If a dealer has that car, they can highlight those particular features in copy, she said.
Sites like Shift, Carvana, Beepi, Vroom and others are offering automotive ecommerce, albeit in different forms and to varying degrees. Will Amazon expand its Vehicles platform further and make it transactional?
“I think that with the leaps and bounds that Amazon has made just over the last two years, the last five years, the last 10 years, I think it’d be really silly to think that they wouldn’t,” Lim said. “Those guys have been doing ecommerce … and this is one of their first steps into automotive. I would definitely say the door is open for them to move into more transactional offerings outside of just the reviews.”
‘Massive opportunity’ for auto industry
On the other hand, Rudi Thun, chief operating officer of Roadster, doesn’t anticipate Amazon Vehicles to be competing with existing online car marketplaces in the near future.
For those who are not familiar with Roadster, it is an e-commerce platform that allows 100-percent online car-buying through Roadster.com and partner dealer websites.
We asked Thun in an emailed Q&A last month if he expects Amazon to enter the direct-to-consumer vehicle sales space and potentially become a competitor to a service such as Roadster or similar platforms.
“We don’t expect Amazon to enter the direct-to-consumer space any time soon. In fact, most of the expertise Amazon has developed in its parts business (as well as other categories) does not directly apply to the new- and used-car retail space,” Thun said.
“In order for Amazon to be a true competitor, they would need to make significant investments in infrastructure to effectively work with dealerships around the country; address pricing strategies; deepen their domain expertise; and focus on product development and data acquisition; none of which we’ve seen them do to date.”
However, he still found the launch of Amazon Vehicles to be a “massive opportunity” for the car business.
“Dealers and OEMs alike are looking to provide consumers with a holistic online to offline approach to buying a car. By offering a robust ecommerce solution, you can create significant efficiencies throughout the entire ecosystem,” Thun said. “We welcome Amazon into the space and believe their expansion only further validates the opportunities we’ve seen and experienced to date.”