http://www.4-traders.com/...-on-the-road-to-e-commerce-mode-21441673/
'Click and drive' shopping to come online in near future
Shoppers in China crazy about Singles Day, the largest online shopping day in the world that falls on Nov 11, helped China's automotive industry set new records for online orders.
According to data from two leading automotive websites, Autohome sold 54,085 cars, while BitAuto sold 77,882, which means the two sites generated more than 21 billion yuan ($3.29 billion) in a single day.
This success is reflective of Chinese consumers' passion for online shopping.
We believe that China's automotive e-commerce is ready for liftoff in the coming years - experts forecast annual growth rates between 30 to 40 percent for the next five years.
However, what does e-commerce in the Chinese automotive industry need to advance to the next stage and who will be the winners in that race?
Connect offline, online
When buying a car, most Chinese customers tend to get their information through research on the Internet.
According to interviews with 4S dealers, 80 to 90 percent of customers going to stores have already done research online nowadays.
Automotive information was essentially limited to several specialized online vertical platforms, with the biggest players, Autohome and Bitauto, attracting millions of visits a day.
Through their large user base, the sites offer advertisements to potential buyers and help dealers extend the reach of their physical showrooms by providing a centralized marketing platform.
Online sales, however, were handled separately from offline sales in the industry, because they were generally viewed by automotive manufacturers and dealers as playing only a supporting role.
During the past few years, however, with major e-commerce platforms realizing the importance of leveraging customer data from both virtual and physical stores, a complete automotive e-commerce ecosystem has gradually begun to take shape.
For the next phase, dealers are trying to integrate the two channels more closely into an online-to-offline, or O2O, model.
Alibaba's B2C online retail platform, Tmall, marked its first involvement in payment transactions.
The first step is that buyers can make an upfront payment online or use Alipay machines near the point of sale to purchase a car conveniently and without cash by simply swiping their bankcards.
In the long run, customers will not have to go to the showroom at all, but pay the full price online.
This would also be a win for the online dealer: Customers leave behind a valuable data footprint that provides information about the effectiveness of marketing activities.
Pioneers guide the way
Some automakers, such as Geely, Guangqi Honda and Chevrolet, have started to promote selected models via their own e-commerce platforms.
VW and BMW are also well aware of the opportunities and are teaming up with e-commerce platforms, such as Tmall or Bitauto, to promote selected models.
But activities are still far from being fully integrated. Fundamental issues such as the low transaction conversion rate and the challenge of incorporating online sales into daily operations have not yet been resolved.
Managing such large inventories and offering aftermarket services are also virgin territory for e-commerce platforms.
Part of the difficulty stems from the fact that an automobiles today seem too complex to be priced and sold online in the same way as consumer goods like books or DVDs.
In the coming stages of development, automotive manufacturers will need to know how to address consumers directly, try to leverage online and mobile platforms and establish direct B2C channels to reach the customer directly.
These activities enhance the customer experience, enable community-building and improve the exchange of information over the complete product lifecycle.
Zhang Junyi is a partner of Roland Berger Strategy Consultants and Raymond Wang is a principal of Roland Berger Strategy Consultants. |
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