Automotive Digital Retailing Technology – Build vs. Buy?

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Since March 2020, the use of online vehicle shopping, purchasing and delivery technology has exploded bringing droves of consumers through the web for their shopping, pricing, payments, deal structuring, credit approval submission/decisioning and transaction activities.   Using technology tools like electronic vehicle deposits, e-signing, e-contracting and home delivery is the new norm and expectation that consumers expect.  Who can argue that having a safe, customer driven process for a major purchase like a vehicle is a value-added service for the consumer, dealer, lender, and manufacturer? These methods for online purchasing have grown in ways not planned, however, dealers and tech companies reacted and acclimated to the new norm driven by consumer preference and safe practice compliance with local and state restrictions.

The silver lining for the automotive retail industry and consumers through COVID-19 is that technology has met the challenge and delivered experiences and results that exceed what many expected.  As various tools have been introduced to support the shopping and buying process, questions arise for dealer software providers whether product and development teams should build these applications or choose off-the-shelf software for supporting new and evolving consumer tools.

The answer may be yes, no, and everything between.  The dependency on buy versus build technology will align with the business goals and consumer online activities.  Factors to consider are where and how the consumer begins engaging in the shopping process and how many of the purchase steps they complete online.  Also, these digital retailing tools must support consumer purchase steps which change rapidly and require ongoing adjustments to buyer feedback and adoption.  These modifications arise based on where the consumer begins their journey; for example, on a shopping portal, or if they are converting on a search, digital or display ad.  We see constant change in how consumers follow the path to purchase and what application support is needed to facilitate a near seamless experience for transacting online.

The way consumers shop and how they choose to engage with the purchase workflow will drive needs for different user’s experiences (UX).   This can begin with a shop-by-payment process providing the consumer with options for budget qualification, or selecting by vehicle segment/brand/feature choices with the ability for a soft credit pull so they understand the incentives and borrowing rate they qualify for to receive an accurate, fundable price and payment.  

If the end goal is to generate a more qualified lead for the dealer, a turnkey solution may be the best, most economical approach.  Consumers being led down a credit pre-qualification process will need a more educational experience that builds on trust.  For each piece of information, they are giving up (vehicle trade, credit application, home address, etc.) there needs to be a fair exchange of information returned to the consumer like vehicle trade value, credit score and an accurate price and payment offer. 

F&I and aftermarket offerings are becoming more visible as the transaction builds dynamically within the consumer UX.   This allows the consumer and dealer more opportunity to expand an online experience through improved educational and learning tools.  The UX is reflective of products and services tailored to the vehicle (VIN) and the preferred consumer transaction (cash, finance, or lease).  Technological advancements through machine learning and artificial intelligence (ML/AI) provide accurate recommendation of products and pricing for consumers based on household, driving miles, vehicle, region of the country, type of transaction and many other considerations which make the buying process more personalized for consumers.

As the experience becomes more individualized, the need for acquiring raw information via data providers and API services becomes more critical for building, controlling, testing, and applying modifications to the workflow and UX.  This allows for application development to support a custom buying experience for the consumer.  For those retail partners who support multiple use cases like digital advertising, listings, digital/in-store retailing, equity mining and vehicle delivery the need for customization and access to raw data becomes a necessity for the speed and agility to customize the consumer experience.  

During the short term go-to-market product launch, the technology “buy” may be quick and allow market entry faster.  Consideration for how developers plan to maintain and enhance features and functionality will weigh heavier with feedback from consumer workflow and UX performance analytics.  Whatever the direction is that your software architects or developers choose, having the flexibility to access raw data elements will be needed when additional enhancements are made to an organic application.  Building the application may take more upfront time, however, will provide a flexibility for a sustained and consumer driven product development roadmap for a complex industry with rapidly changing consumer and dealer needs.

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