How Dealers Can Meet The Delivery Demands Of Their Digital Retailing Strategy

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On today’s show, we’re pleased to welcome Mike Malakhov, Executive Vice President at Acertus, a one-stop-shop for automotive logistics and services including transport and delivery, storage, compliance, and much more.

deliveryVIDEO TRANSCRIPT: 

Jim Fitzpatrick: Hi everyone, I’m Jim Fitzpatrick. Thanks so much for joining me on another edition of CBT News. Digital retailing, it’s right around the corner, but how are we going to get the cars delivered from your showroom to the customer’s front door? Well, we’ve got just the guy that’s going to tell us how that’s done and they’re doing it currently for thousands of dealers all over the country. Mr Mike Malakhov, who is Executive Vice President of ACERTUS. So welcome into the show, Mike.

Mike Malakhov: Thank you. Thanks for having me.

Jim Fitzpatrick: So how are we going to get these cars delivered right to their… You guys do it, right?

Mike Malakhov: It’s an interesting dilemma, right?

Jim Fitzpatrick: That’s right.

Mike Malakhov: So, one of the pieces is having the right infrastructure to accomplish that. It’s having the final mile, kind of the last mile delivery points established, and then having the infrastructure of transportation providers to provide those deliveries to the final destination, as well as kind of longer haul. So, it’s really combining multiple different modes of transportation to have that delivery completed.

Jim Fitzpatrick: Yeah, for sure. Yeah. So you’re a full solutions company for these dealers in all areas including titling, right? And registration. Talk to us a little bit about that.

Mike Malakhov: Yeah, so we’ve built out several different services. So we service multiple different industry players within the automotive space. We work with OEMs, dealership groups, rental car companies, financial institutions, fleet management companies. And through our relationship with these different verticals, we built out multiple different services for those specific verticals that now are becoming more and more relevant for different verticals and ability to provide those services to our broader portfolio, that’s kind of where we’ve been focused on. So to touch upon the title registration, so we’ve been doing this title registration for numerous years.

Mike Malakhov: A lot of that has been focused in the fleet management space and dealerships. And as more dealerships are selling vehicles out of state online, it’s becoming more and more prevalent. Because generally, dealerships would have a title clerk in their specific state and that title clerk would be very proficient in how to handle those titles in that specific state. But as soon as you step out of that state-

Jim Fitzpatrick: You’re in trouble.

Mike Malakhov: In trouble.

Jim Fitzpatrick: That’s right. That could hold up a contract that you’re waiting to getting paid on. It could hold up cash if you’re waiting on a check or a cashier’s check from another state to come in. They want to see that the title work is done right and that the lien is there. So, you got a title clerk that isn’t familiar with it. Which is most cases. Most title clerks are not familiar with the other 49 states, right?

Mike Malakhov: That’s right. And the other challenge you deal with is the churn in that position in a lot of dealerships is quite high. And generally, when that person walks out, knowledge walks out with it.

Jim Fitzpatrick: That’s a good point.

Mike Malakhov: So those titles stack up.

Jim Fitzpatrick: That’s right.

Mike Malakhov: So we’ve kind of built out our system to support that mechanism and help dealerships to speed to market.

Jim Fitzpatrick: Sure, that’s huge. And today with the internet, people think nothing about going to another state and looking for the right used car that they want, sometimes the right new car. If it’s a hard to get new car, maybe it’s a Porsche or it’s a Lexus or Mercedes or something like that, and they say, “Yeah, we got one, but it’s three states over,” you’re the solution for that. To not only transport that car over safely and professionally, but also to handle the title work on it.

Mike Malakhov: That’s right. So one of the exciting parts that we’re really excited about is we’ve established infrastructure for about 55 storage units that we have, that are manned and we have our own employees on-site, where these units… We would do kind of a hub and spoke model. So we would ship a car from further away on a larger truck hauler, transporter, a nine-car transporter, and we’ll ship it there and then we would stage that vehicle at that storage location. Get it washed, cleaned, make sure that it looks presentable to the client.

Jim Fitzpatrick: Oh, that’s great.

Mike Malakhov: And then from that storage location, do a final mile delivery to the consumer, so it’s feels more of a-

Jim Fitzpatrick: Yeah, very cool.

Mike Malakhov: It’s all about the experience, right?

Jim Fitzpatrick: That’s right. That’s right.

Mike Malakhov: The digital retailing is disrupting the space, and the customer experience is going to drive the speed of that.

Jim Fitzpatrick: What if I want the driver to actually have the logo of the dealership on there. Is that possible?

Mike Malakhov: Absolutely.

Jim Fitzpatrick: Really?

Mike Malakhov: We can do a couple different options. Today what we’ll offer is either we can have it delivered on a flatbed, a three-car hauler, or have it driven with one our employees as well with the logo and the entire kind of white-glove type of experience. So we’ll have all three options available.

Jim Fitzpatrick: Wow, that’s pretty cool. Yeah. So the dealers that are on this program, it’s got to be life-changing for them to be able to have one call or one click and you guys handle all of that, rather than trying to find the hauler and then the person that’s going to do the title work, and somebody else to clean it before it gets to the dealership and such. It’s pretty cool.

Mike Malakhov: So we’ve spent a lot of time, because each one of these services that we provide, we kind of had in its own silos where we offered these services. Now we have an internal coordinated effort to connect the dots between the longer haul transport, to the storage, the services that are done at the storage, whatever the service that need to be done to that unit. You have the title registration and put a plate on the car and then final mile delivery. So it takes certainly a lot of coordinated effort on the back end, but we’re just trying to strive for the optimal customer experience.

Jim Fitzpatrick: That’s what it’s all about too. Have you found a number of… Or I should say, your business increasing and more dealers wanting to learn about your business and what you’re offering is as digital retailing becomes more popular?

Mike Malakhov: Absolutely. So it’s not a lot of providers that have the-

Jim Fitzpatrick: That scope of work, yeah.

Mike Malakhov: The landscape and the scope of work that touches multiple different offerings within the whole transaction. Because if you think about it, it’s one transaction, but there’s multiple transactions that go into it to accomplish that. So that coordinated effort and the ability to provide those services and having that network built out to do that, that’s the hard work that comes into play.

Jim Fitzpatrick: That’s huge. And I don’t think anybody that’s watching us right now or in the country that hasn’t seen a Carvana commercial or a Vroom commercial, where they really emphasize that home delivery. The notion that somebody can sit on their couch, pick up their iPhone, order a car with a liberal return policy and the car pulls up, right to the front door of that home. Right? And that’s what you guys are delivering on.

Mike Malakhov: Amazon sets a pretty high bar in general, because consumers are pretty used to that two-hour delivery or same-day delivery. So how do we reach the same type of experience in automotive space because we’re not dropping off a box.

Jim Fitzpatrick: That’s right.

Mike Malakhov: We’re dropping off a vehicle. And for most individuals, it’s a significant investment. How do we provide that same level experience?

Jim Fitzpatrick: Yeah, that’s pretty cool.

Mike Malakhov: There’s a lot of work to be done to make it as optimal as eCommerce has made it, but we’re certainly trying to-

Jim Fitzpatrick: Are you guys yet to the point where you will also do the signing of agreements? Or are you not there yet? Where if a dealer says, “Hey, I’m going to FedEx you the contract and can you have your driver have the contract signed” in certain areas-

Mike Malakhov: We’re not to that extent at this point.

Jim Fitzpatrick: No, not yet, right?

Mike Malakhov: Yes, absolutely. Because there’s some additional complexities that come with that of course.

Jim Fitzpatrick: Oh yeah, no question about it. All of that now is done online anyway.

Mike Malakhov: That’s right.

Jim Fitzpatrick: I guess there’s still some states that need a wet signature, so to speak.

Mike Malakhov: Right. So our title registration service will do a lot of the back end to support the F&I manager to complete the transaction, but we’re not the F&I manager.

Jim Fitzpatrick: Okay. Right, right, right. And what’s the turnaround time? If I’m a dealer and I give you a call and I say I’ve just sold a car and I’m in Atlanta and the car has got to go to Alabama, how long a wait is it on average that it’s going to take me to get that car there?

Mike Malakhov: So from Atlanta to Alabama, obviously the distance is… depending on where in Alabama. Let’s say Birmingham.

Jim Fitzpatrick: Yeah, a couple hours away.

Mike Malakhov: Usually for us the turnaround time is 24 hours.

Jim Fitzpatrick: Oh okay, that’s quick.

Mike Malakhov: We’ll get the system, the infrastructure in place to have that shipment handled. But also it depends on what kind of services you need to have done. So, is the vehicle ready to be delivered? Then we may take it to our storage unit to have it washed once it’s closer to Birmingham. So I would say two to three days generally.

Jim Fitzpatrick: To give it ample time.

Mike Malakhov: Depending on what services.

Jim Fitzpatrick: Right. Right.

Mike Malakhov: If you need title registration done as well, that takes time as well.

Jim Fitzpatrick: Right. Which it does in a normal setting anyway, right?

Mike Malakhov: That’s right.

Jim Fitzpatrick: And then of course you’ve got to be competitively priced with the other haulers that are out there, right?

Mike Malakhov: No doubt.

Jim Fitzpatrick: It’s not that they’re paying so much more because it’s ACERTUS, right? You’re in the hunt there.

Mike Malakhov: That’s right. I mean, for us, ultimately we look at the customer experience is number one, and then we look at speed to market delivery. Because as you know, we all expect things immediately.

Jim Fitzpatrick: I know. It’s unbelievable.

Mike Malakhov: So we optimize our pricing, we optimize the whole infrastructure based on speed. So how do we deliver that speed to market so our customers experience that and our dealers’ customers experience that.

Jim Fitzpatrick: Sure. And you work with subcontractors that you contract out the jobs to, or are all these people ACERTUS employees?

Mike Malakhov: So the actual transporters we have subcontractors. We’ve built out 6,000 subcontractors to service our network, and that’s between-

Jim Fitzpatrick: Wow, you’re all over.

Mike Malakhov: All over over the US.

Jim Fitzpatrick: Right.

Mike Malakhov: That amounts to about 18,000 actual units across the US.

Jim Fitzpatrick: Oh my gosh, wow.

Mike Malakhov: And we pride ourselves in vetting those contractors and building those relationships, and actually giving them the right tools to help them run their business as well. App solutions, so to give them, and the transportation management systems for fleets.

Jim Fitzpatrick: Oh, that’s great.

Mike Malakhov: For us it’s a dual relationship with the client, but also with our suppliers since we’re kind of a middle entity. But building out that infrastructure has been kind of our focus.

Jim Fitzpatrick: Very good. So as you know, a lot of car dealers also owned rent-a-car franchises, either on their lot or down the road or what have you. It seems to be one of the natural businesses that you can pick up because you’re in the auto industry anyway. Some dealers use it as a means to get pre-owned vehicles or late model cars that will first rent them and then acquire them through their used car operation. But for those dealers that want to take those cars to auction, maybe 10, 20, 50 at a time, you guys can do that as well.

Mike Malakhov: Absolutely. So that kind of goes into, so you have the subscription models that are coming into play. So what we’ll do is not just the last-mile delivery, but we can do the extraction as well of those vehicles. So once that individual is done with the vehicle, we can pick it up at their house, bring it back to the dealer if it has further use or take it to an auction and get it sold there.

Jim Fitzpatrick: Oh, that’s great. You brought up a good point. If I’m a dealer and I send a vehicle to a client in Alabama, but I’ve got to pick up their trade-in and bring it back, you guys can clearly do that as well.

Mike Malakhov: That’s right. So, we’ll do the pickup as well. We bring it back to our storage yard. We can help optimize the transportation of it with other units. Because one of the things that the value we also deliver is we will move about 400,000 units this year. So as we’re doing that, opportunities to bundle these units as you’re shipping them and realize cost savings is significant. And drive speed, because ultimately when you have one vehicle to move, you don’t want to be paying for a full truck.

Jim Fitzpatrick: Yeah, sure, sure.

Mike Malakhov: And we help optimize that.

Jim Fitzpatrick: So in the event, let’s take that same scenario, I’m a dealer. I send a new Camry over to this customer in Birmingham and they have a used Camry to trade in, but I don’t want to keep that used Camry, I’m going to send it to the auction. You can handle that as well. It never has to come back to my location?

Mike Malakhov: That’s right.

Jim Fitzpatrick: You can say, “I want that to go to Manheim,” for instance. You can take it right to Manheim.

Mike Malakhov: That’s right. That’s right.

Jim Fitzpatrick: So I don’t lose any time.

Mike Malakhov: Absolutely. Yeah. I mean, we can pick it up. We will generally pick it up with the same hauler that’s delivering it and we’ll take it either directly to an auction or we’ll bring it back to our yard and then we’ll take it from there. The closest yard.

Jim Fitzpatrick: Right. Store it from there.

Mike Malakhov: That’s right.

Jim Fitzpatrick: Yeah. Very good. Very good. So this has got to be helping dealers in a big way, especially, as I mentioned, with digital retailing that’s coming up fast with dealers. We’re all trying to compete with Amazon and with the Vroom and Carvana out there, and dealers are really trying to get their hands around how to do this. But they all know for sure that it’s here to stay. Consumers want to buy a car, not all consumers yet, but a great number of consumers want to buy a car this way. Right?

Mike Malakhov: I’ve spent a lot of time in my career in the eCommerce space and the last mile delivery from a retail perspective, and a lot of the things that you see in automotive space, if you pay attention to what happened in eCommerce, all of those steps are happening, but a little bit slower. Because again, it’s not a box.

Jim Fitzpatrick: Right, right, right. It’s an automobile.

Mike Malakhov: But the trend is very similar.

Jim Fitzpatrick: Yeah, that’s pretty cool.

Mike Malakhov: So having that infrastructure, if you think about a lot of those distribution centers that Amazon has built out all over the US closer to the consumer, similar infrastructure’s going to be required.

Jim Fitzpatrick: Yeah, 55 locations. That’s incredible.

Mike Malakhov: So we’re in all major cities for those specific reasons.

Jim Fitzpatrick: Fantastic. Well, Mike Malakhov, the Executive Vice President of ACERTUS, I want to thank you so much for coming into CBT News.

Mike Malakhov: Thank you for having me.

Jim Fitzpatrick: It’s been very enlightening. I know that for dealers that are watching right now, you may not have heard the name ACERTUS, maybe a number of you have because you’re using them right now, but I think you’re going to hear a lot more about this company, especially as the industry moves more towards delivering vehicles right to your customer’s front door. So check them out online. It’s ACERTUS.

Mike Malakhov: Thank you. Thanks for having me.

Jim Fitzpatrick: Yeah, thanks again for coming in.

CBT Automotive Network, the number one most-watched network in retail automotive. This has been a JBF Business Media production.

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