Amazon $AMZN ( ▲ 1.75% ) Autos has recently expanded its auto financing options with major lending partners like Wells Fargo, Chase, and Santander.
The problem is, finance and insurance (F&I) penetration for the franchise dealers leveraging Amazon’s digital storefront, is typically much lower to what live F&I managers achieve.
Driving the news: The difference, according to Wade Higgins, Regional Sales Director at GSFS Group, comes down to connection.
"I think there's a lot of questions when it comes to F&I, when it comes to F&I products," he said. "If it's just an app that they're looking down at and they have a lot of questions, they don't get to have that interaction," he told Daily Dealer Live hosts Sam D’Arc and Uli de’ Martino.
And customers staring at a screen with eight or nine products see overwhelming choices with no context. Meaning, the easiest answer becomes "no."
Dennis Gingrich, Sales and Finance Director at The Niello Company, added that F&I products sell based on customers’ concerns about the future.
Understanding those concerns requires picking up on tone, hesitation, and what customers emphasize.
An app can't detect when someone lingers on a warranty description or when their spouse interjects with worry about repair costs.
Zooming in: Higgins trains his F&I managers with an investigation mindset over a presentation one, and it starts by asking customers: What do you use the vehicle for? How long do you plan to keep it? What happened with your last car? Have you ever had a major repair?
"That process takes time and it takes communication," he said.
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Between the lines: Digital retailers have tried moving F&I product selection around in the online flow.
But penetration rates are still staying relatively flat regardless of placement.
Gingrich noted that even big box players trying to compete with dealers face the same problem. The transaction works online. The F&I conversation doesn't.
But getting sales advisors involved in the F&I process earlier helps. Customers hear about products from someone they already trust before reaching the office.
Why it matters: Amazon Autos’ struggle with F&I reveals some potential limitations of digital retailing as we know it today.
Apps can handle transactions efficiently, but F&I requires reading customers, answering questions in real time, and adjusting products to fit specific situations.
Those capabilities remain uniquely human.
Looking ahead: Amazon will keep iterating on F&I. The company has resources and patience. But the gap between digital and in-person F&I performance is largely based on a fundamental difference in how customers make decisions about intangible products.
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