Many automotive companies have begun exploring digital retail, but technical complexities and potential conflicts with franchise regulations have hampered progress so far. As a result, only about 9 percent of all vehicles were bought online in 2018.
61% of surveyed consumers in the market for vehicles were open to buying online in 2020—up from 32% in 2019.
But COVID-19 has changed the market. The pandemic has compelled auto marketers to grow bolder and embrace digital commerce experiences for the automotive buying process. And they needed to. When the crisis hit, digital leaders such as Tesla were still able to sell vehicles online, while other OEMs had to shut down their dealership-dependent offline sales channels.
And COVID-19 is not the only factor. Rising customer expectations and changes in buying behavior are pushing the industry to create competitive online commerce experiences. This is reflected in a survey, conducted in April 2020, that found 61 percent of consumers in the market for vehicles were open to buying online. That compares with 32 percent in 2019.
Digital reinvention is a business necessity
Now more than ever, digital retail is a must have—not an optional or vanity project. In fact, in a 2019 IBM Institute for Business Value (IBV) report, 50 percent of automotive executives said that to succeed—or even survive—their organizations needed to digitally reinvent themselves. And 42 percent cited a high sense of urgency. This is especially relevant to the fastest-growing markets in Asia, which tend to have much higher expectations related to purchasing products and services digitally.
Automotive brands must create a new perception of customer value that transcends the vehicle they’re selling.
The future of automotive depends on creating seamless digital commerce experiences, built around the vehicle, that cater to direct customer interactions and transactions, including ownership, subscriptions, sharing, and additional e-commerce opportunities. To thrive, automotive brands must create a new perception of customer value that transcends the vehicle they’re selling. They must transact with drivers online and directly—in many cases creating a digital commerce experience for the first time.
Success with digital commerce requires an original perspective: a fresh take on procedures, organizational structures, and IT architecture combined with integrated, cross-disciplinary thinking. Working both within and outside the automotive industry, we’ve learned valuable lessons—sometimes the hard way. The result? Our approach focuses on the customer experience first. Our concept starts with envisioning the future sales experience from a consumer’s point of view, then using that vision to inform process and technology development. We call this an “experience-led” approach.
Read the full report to learn how to define, ideate, and create a broader digital experience, from both a consumer and business perspective.
Meet the authorsMarko Thorhauer, Executive Creative Director, IBM Design Principal, IBM
Russell Gowers, Associate Partner and Member, IBM Automotive Centre of Competency
Peter Schel, Executive Partner and Lead Client Partner, BMW Group, IBM
Philipp Beckmannshagen, Business Development Executive and Solution Leader, Transform Customer Experience, IBM
Ferdinand Rieger, Associate Consultant, IBM
Originally published 28 October 2020
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