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- Industry Spotlight: How Sonic Automotive joined forces with the world's biggest e-retailer to sell cars
Industry Spotlight: How Sonic Automotive joined forces with the world's biggest e-retailer to sell cars
Featuring Jeff Dyke, Sonic Automotive and Matt Nuffort, Amazon Autos
Welcome to another edition of the Car Dealership Guy Industry Spotlight Podcast Recap newsletter.
Recently, host Sam D’Arc, COO of the Zeigler Automotive Group spoke with Jeff Dyke, President of Sonic Automotive and Matt Nuffort Amazon Autos, about the partnership between the auto retailer and the popular E-retailer, delving into key facets of the partnership, from sales transactions to how vehicle trade-ins are managed on the platform.
1. Amazon Autos was created to meet car buyers where they are.
Amazon Autos was built to cater to the growing number of car shoppers now starting the process online (95%). And Amazon consumers want more transparent, integrated online shopping experiences when it comes to purchasing a vehicle.
“We've had vehicle detail pages and digital showrooms on Amazon for a number of years, and customers kept asking us where's the buy box and so well, we decided, you know, let's add a buy box.” — Matt
Jeff, president of one the first dealer groups with Hyundai stores to join Amazon Autos, said the company’s initial buy-in boiled down to the value proposition and a chance to get ahead of the curve.
“I personally believed…we could work with Amazon and the manufacturers to build digital retail solutions that would allow the consumer, in an omnichannel environment, to buy a car from A-Z.” — Jeff
2. Delivering and executing a car buying experience like Amazon Autos is no easy feat.
There are countless companies in the business that claim to have a digital tool that enables car shoppers to complete the entire buying process online. But very few of those companies deliver on the promise, which is what made Amazon Auto’s value proposition compelling, according to Jeff.
“I've spent the last… a couple of years actually studying this and went out and bought cars from everybody who said they could, document it and…switch to a human being…and this system didn't work.” — Jeff
Amazon’s customer-obsessed culture sets the tone as to how the company works with retailers like Sonic Automotive, which is a key component of Amazon’s business model, and how the e-commerce site services all its customers.
“If this is not a great place for dealers to connect with customers…then it’s not going to be a great place for customers in general.” — Matt
3. Amazon Autos has no intention of ever replacing dealerships.
The program is exactly the opposite of direct-to-consumer, explains Matt. The focus is on providing dealers with a marketing platform to more seamlessly connect with car buyers.
“It's creating a bridge for dealers to reach Amazon customers…millions of Amazon customers in an environment that customers find very familiar.” — Matt
Jeff adds that there’s a lot of knowledge that the dealer body brings to a partnership like Amazon Autos that is hugely valuable to the success of the program.
“Matt and the (Amazon) team recognized that from the very get-go, whether it's how you finance a car, the paperwork that goes along with the financing, the vehicles themselves, the relationship with the manufacturers…It is a very complex transaction.” — Jeff
4. One of the biggest challenges for online auto sales is protecting warranties and F&I.
The true success of the partnership will lie in the penetration of F&I products, which the stakeholders are working to solve, explains Matt. Jeff says that their multi-penetration rate for in-store sales is in the 60 to 65% range, but when the transaction is online, that penetration rate is in the 35% rate because there is no sales associate to explain the benefits of the offerings.
“A big part of our success is going to be whether or not the consumer is going to buy warranties, is going to buy F& I products at the same level at the same penetration levels that they do when they talk to a human being live.” — Jeff
1. Amazon Autos - Learn more about the Amazon Autos Beta here.
5. Amazon Autos is working to protect dealer profits.
The program is designed to emulate the profit structure for each participating dealer, which highlights how the e-commerce site is focused on keeping the dealer profit center intact, says Jeff.
“What really impressed me about Amazon was they…talked about…,‘how do you make money…? Show me on the front end, by product line, by manufacturer…because we can't interrupt your profit stream. We get that.’” — Jeff
The commitment that Jeff speaks about will guide the ongoing development of Amazon Autos for dealers and customers, as they continue to build the tool out and work through all the issues.
6. Keeping all retailing reputations intact.
Trade-ins are one of the topics that often come up when discussing the program. Amazon Autos has a trade-in partner that gives a value on the trade. The dealer can then take the car at that value or choose not to, with almost 100% of the dealers choosing to take the car at that value, said Matt.
That helps to keep Amazon Auto’s credibility and reputation intact with its customer base.
“The goal is to get as close to a…precise transaction at the time the customer is making the decision…You don't want to add friction into the process.” — Matt
7. Building and maintaining strong relationships with customers
Sonic Automotive and Amazon Autos' consumer-first approach to doing business is pivotal to the program, a shared interest that was discussed at the onset of the partnership.
“So far, every ounce of energy that's gone into this from our team, Amazon’s team, and all the dealer partners that are there on this dealer board and a part of this has been focused on improving the customer experience.” — Jeff
8. Thinking differently about the sales process isn’t new for Sonic Automotive.
Certain Sonic Automotive team members (known as “experience” associates) are paid a salary. This is more fitting for the Amazon Autos business model, and allows associates to deliver on the experience without having to deal with the pressure often associated with traditional compensation plans.
“Our goal here is, let's make an investment in our teammates so that we can create this amazing experience when the consumer comes in the store and our guests are there.” — Jeff
That said, the Sonic Automotive team understands that the car buyer who purchases a vehicle through Amazon Autos does not want to spend a lot of time at a dealership.
9. Incorporating the dealership service department.
The introduction to the service department is a top priority for the “experience” associates, even if the delivery/pickup happens after hours.
That on-site service introduction is an important part of the customer experience, which is another reason why Amazon Autos leans so heavily on the experience of its dealer partners.
“That's part of the objective partnering with dealers…We recognize this product has to be supported and we want to create a great customer experience end to end.” — Matt
10. The long-term viability of Amazon Autos.
The future success of Amazon Autos won’t be a quick, massive expansion. It’ll be a strategic, exploratory approach, taking into account many of the things learned from working with Jeff and the Sonic Automotive team and expanding the program with dealers who share the same kind of business values.
“The dealers we want are dealers who are willing to innovate and experiment. And we’re not going to get everything right. We’re gonna try, and we’re gonna make some mistakes. But if we can make mistakes and then correct them, we’ll do that.” — Matt
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