As the world grows more connected, businesses are learning more than ever about consumers’ buying habits. Online car dealers have enjoyed a nice bump in profits by taking advantage of one simple fact: people like buying cars after dinner. According to an industry analysis by our company Drive Motors, 45 percent of prospective owners went shopping online for a vehicle between the hours of 4 p.m. and midnight. What could this mean? Let’s look at the facts.
First of all, anyone working a day job is going to get home after 5 p.m. (unless they’re really lucky). Working people have got the most time for quick errands right after dinner, so it’s the perfect slot for a little browsing. It’s not over in just a couple clicks, though – a study commissioned by AutoTrader.com found that the average user spent about 15 hours searching for new cars (and about 14 hours for used cars) in 2015. That figure was down from 18 hours in 2011, and at a decay of 18 precent per two years, we’re looking at around 12.5 hours in 2017. Numbers like that don’t decide to drop on their own; something deeper has got to be going on in the industry, a broader shift in the market indicating a fundamental change. So what’s up?
There are a few factors driving that number down. Number one: auto dealers are putting their product in front of buyers better and faster than ever, thanks to new e-commerce solutions streamlining the business process, evolving best practices, and better searchable information industry-wide.
Number two: consumers are just getting better at searching for what they want, and finding it. That’s why the turnaround for an online buy is also going down fast. Our study mentioned above notes that these enthusiastic online buyers will often show up at the dealership within a period of 24 hours after making a purchase, perhaps motivated by the same initiative that brought them searching online in the first place. And not only will they show up right away, but customers will close themselves, which creates an excellent opportunity for dealers to let their websites do a little work for them – after all, a site is online around the clock, and doesn’t charge overtime.
Finally, since retailers have learned their peak hours for web sales, they’ve gotten smart about the deals they offer. Just like airplane tickets, consumers can wrangle a great bargain by selecting the right time to shop around – usually the heart of the evening, when the most customers are online, and when businesses want to make sure they’re closing as many deals as they can. After all, with no staff on call to answer questions or talk to potential buyers, a dealership has to rely on the quality of its site to bring in a purchase. As the data show once again, after dinner is when it counts.
That’s not the only change that’s made its way into the industry. AutoTrader has determined that the average number of dealership visits per purchase dropped to a record low of 1.1 last year. That’s as low as that statistic has ever been. We can readily see the effect that the move to the web has had on the sales process. Some dealers have already begun to downsize their sales staff to cut costs, since the fewer sales happen on the lot the fewer people you need on payroll.
But wait a second – that doesn’t quite follow. The raw number “1.1” isn’t the whole story. What about the duration of that visit? What about the effect of more information being present online? Better not to draw too many conclusions and think this out, as Professor Jim Saker writes in “AM Online”.
The prolific amount of info online has freed up a lot of time for the buyer to do the prior footwork on their own, and come in only when they’re ready and they know what they want. As a result, these 1.1 visits may be fewer in quantity, but their average quality (I suspect) has actually increased – buyers walk onto the lot much closer to the end of the sales process, ready to cut to the chase. The fit and feel of a car is obviously the final factor, and it’s only available in real life.
Frank Pierce, owner of a new SUV in Palo Alto, Calif., related his experience over the phone: “After seeing what it was like to do all the looking on my own and only come in when I’ve got my card ready, I don’t think I’ll ever go back,” he said. “Way too much hassle.”
Frank said he didn’t buy on the lot, though – he researched on his own, visited once and digested the info (and his food) after dinner, and finally made the purchase later that evening. He described the process as follows: “I used to go to the dealership and meet the sales rep, we would talk about the car for a bit and get down to haggling.” He lets out a sigh. “I really hated that part. I might talk to another two or three people before the price would move. I wasn’t even sure I was getting a good price. I didn’t know if I could leave and come back later for a better one, or what to say. It was all very stressful,” he added.
“On their site, they don’t push anything on you. They don’t have time limits for thinking about your buy. You look at all the prices and deals they have, and compare it with others in the area,” he said, referring to deals with different dealerships. “I felt confident going in, I had done my homework and it was really simple to have it all written out on paper.”
When asked how long he’d spent online, Frank said “about 10 hours, give or take. It was a good few days in a row, all after work. I talked it over with buddies, too. The guys who had bought online before said they found a great deal by looking online before. That got me interested.” He paused for a moment before saying thoughtfully, “All I really had to do once I got to the lot was sit in the car.”
These data should give you a clear idea of what to expect from the buying process. The rules of the game have changed since the last time most consumers bought a car. People are placing direct orders for vehicles at all hours of the day: midnight on a weekday, 6pm Friday night – really, the boundaries no longer exist. Your search is only limited by the time you’re willing to invest.
Another overlooked aspect of the new, freer car search is the “democratization” offered by the online platform: if you’ve got friends who are willing to help you look, you could have your buddies scanning cars alongside you, injecting their opinions on specs, style, feel, and personal stories about that guy you know who drives the same model. Three heads are better than one, and when there’s not much of a deadline for a decision – remember, you’re shopping right after dinner in the comfort of your home – you’re far more likely to make a choice you’ll be happy with the evening after.