After the recent Automotive Retail & Distribution Conference, we wrote about how car manufacturers and retailers are looking to seamlessly integrate their customers’ online and offline journeys. While online operations will continue to be important for successful car retail, the conference anticipated that, as Covid-19 restrictions ease, to a certain extent customers will revert to their previous behaviour. The conference therefore predicted that customers will expect to switch easily between the online and offline worlds. We thought we’d take a look to see whether or not the recent activities of online car retailers support this theory.
Cazoo moves offline
Online car retailer Cazoo is investing in new real-world customer centres. July saw the opening of a facility in Carlisle, with seven more planned for the rest of 2021 to add to the company’s existing 18 physical stores. These customer centres focus on car handovers, servicing and MOTs. Cazoo has also purchased the capacity to recondition vehicles, following its acquisition of Smart Fleet Solutions in February 2021.
In addition to locking in customers after their initial purchase, the customer centres offer an alternative to the company’s original home delivery option. Research by SEAT indicates that 47% of car buyers prefer to collect their vehicles from a dealer, compared with 25% who prefer home delivery, suggesting that Cazoo’s move meets many customers’ post-lockdown requirements.
The company has also expanded into vehicle subscription with the acquisition of Drover in December 2020. Like many operators in the automotive industry, Cazoo is anticipating increased demand for flexible, web-first car ownership models.
Tesla’s turnaround
Tesla is similarly expanding its physical retail locations in the UK. The company has opened ten new stores in the last 12 months, including four in the first half of 2021. This marks a significant change from plans in 2019 to close many of its 300+ global stores as part of a strategy to move the company’s sales entirely online. After a series of strategic shifts, Tesla in the US has started to switch its focus from expensive retail sites in shopping malls to cheaper industrial sites where the company can manage deliveries and test drives. But, according to Tesla, “All car buying is done online, regardless of whether you are at home or choose to place an order in store”.
In the UK, however, the increase in store openings suggests that Tesla is focusing on the partially offline market, following a rapid rise in sales of the Model 3.
BCA boosts its online presence
In contrast, used car conglomerate BCA has launched Cinch, an online car retailer. The aim is to supplement BCA’s existing offline sales to dealers. Cinch offers car buyers a choice of more than 4,000 vehicles, along with a 14-day money back guarantee and free home delivery. The model mirrors that of Cazoo, who use BCA’s vehicle preparation service.
However, the move has met with a furious backlash from dealers, who claim that Cinch is too close a competitor to their own online offerings, and who object to terms which suggest that participating retailers will be investing heavily in stock to be sold exclusively via Cinch.
Our conclusion
It’s clear from this recent activity that the blending of online and offline car retail is here to stay. To see how automotive manufacturers are addressing this shift, check out our detailed article here.
