Is Amazon moving into car sales?

Beginning with the relatively humble book, Amazon has come to be a byword for online shopping. The company’s seemingly unstoppable trajectory has also been revolutionising grocery sales first with Amazon Prime – offering groceries with free delivery to Amazon Go – the supermarket without checkouts.

Until now, Amazon doesn’t have a specific local version, but confirmed in April its plans to open a local fulfilment centre and rumours suggest the online giant will launch in Australia as soon as September this year.

Understandably, this news has put Australian retailers on high alert. But it’s not just FMCG retailers that are preparing for fundamental market disruption.

One market segment Amazon hasn’t yet explored is cars, but that could soon change. The Globe and Mail has reported that Amazon has been putting together a team of car specialists with a view to begin online sales in Britain.

The growth of online shopping has seen most consumers become comfortable with making relatively low-value purchases online, but spending tens of thousands of dollars on a car is a big leap of faith for most consumers.

The big question is if that will be part of the launch strategy in Australia.

The automotive industry has been relatively untouched by the kind of digital disruption which has affected almost every other facet of commerce. Most manufacturers have websites which are little more than a collection of images with a facility to order a brochure, but offer no transaction.

In our experience setting up HelloCars, there is clearly an appetite for the convenience an online sales model brings to commerce, even for big-ticket items like cars. We’ve also found that because of the competition online commerce brings, customers realise they have greater power and are no longer willing to accept a poor sales experience. Our experience is very much backed by research into consumer trends.

According to the “Future of Mobility” report from global consultancy Deloitte: “Retailers are now seeing customers compare their buying experiences across industries, and the old adage ‘That’s how it’s always been done’ is increasingly inadequate… When it comes to making car purchase decisions, Generation Y drivers value customer experience three times as much as vehicle design. Today’s customers increasingly insist that their retail interactions be tailored experiences, and they are more willing than ever to abandon retailers that fall short.”

The big dealer groups risk being left flat footed by changing consumer behaviour and those companies like Amazon and HelloCars will be positioned to meet the new level of consumer expectation for value as well as purchase experience.

Paul Higgins is Director of HelloCars.