Physical auctions have long been the life-blood of a wholesale used vehicle marketplace that now accounts for vehicle sales valued at more than $100 billion annually, according to National Auto Auction Association estimates.
However, a transformative shift to the digital world is clearly taking hold in the wholesale vehicle marketplace. So far in 2018, 45 percent of all vehicle sales via Manheim, North America’s leading provider of used vehicle services, were sold to a buyer not standing in a physical auction lane, but rather bidding via a computer or mobile device.
The rise of digital promises to bring down barriers and make the market more efficient, helping dealers large and small find the vehicles their customers want. These advances are even more important in an industry facing narrowing profit margins and increased pressure to quickly turn inventory.
In an industry where seeing is believing, though, the full potential of digital will only be realized when the marketplace builds three foundational elements for dealers – convenience, trust and seamless marketplace integration.
Championing Convenience
A key to delivering on the first element – convenience – already is in the palm of our hands. Dealers were among the first to embrace mobile phones when they took off in the 1990s. Mobile phones freed salespeople from their desks, allowing them to more easily connect with customers. Fast forward to today and the smartphone is playing a critical role in advancing the industry again.
Mobile platforms can offer a level of convenience for buyers and sellers like never before. Dealers are no longer bound by a desktop or laptop computer to connect to the digital wholesale marketplace. They can snap a photo, scan a VIN number, access a value assessment, vehicle history and manufacturer’s data and post a vehicle listing – all while walking the vehicle lot.
The shift of the industry to digital will only accelerate as more features and capabilities are moved to mobile platforms, driving more efficiencies and ease-of-use for dealer operations already stretched thin.
Creating Confidence
The shift also will be accelerated by the development of new digital tools that provide dealers with a high level of trust and assurance. Vehicle condition grade scoring systems already have become an industry standard, giving a buyer confidence in purchasing a vehicle without having to physically see it.
Advanced imaging technology also will be critical to provide intelligent 3D and 360-degree images, giving the dealer the confidence to evaluate a vehicle from their cell phone or desktop, and the ability to tag any damage which may affect the price.
Beyond the increasingly advanced tools available to dealers, assurance solutions that provide no-hassle returns, bring dealers even greater peace of mind for their wholesale purchases.
Seamless Integration Within Marketplaces
Seamless integration is another essential element to success. Dealers need easy access to financing, logistics, buying and selling solutions, and reconditioning all in one place. I like to think of the next era of the wholesale vehicle marketplace as building a digital mall, where dealers can enter the marketplace and find everything they need in one virtual location.
By creating seamless connectivity for the dealer between the physical and the virtual auction, the same vehicle could be listed in multiple places at once, ultimately speeding up the sales process. And rather than wait for the next physical auction, dealers will be able participate in anytime and anywhere auctions that occur every day.
Looking to the Future
As the industry instills these three foundational elements, the digital marketplace will deliver greater value to dealers, which will drive even faster growth and investments in entirely new technologies. In the near future, for example, intelligent search tools driven by machine learning will make it easier for dealers to find the right car at the right time and create a more personalized shopping experience.
As these core elements of trust, convenience and integration are realized, the digital marketplace will allow dealers to move inventory faster, reduce depreciation risk and boost profit margins. We’re already seeing some dealers shift 80 percent of their wholesale used vehicle purchases to digital platforms.
This doesn’t mean the physical auction will go away. In the short-term, dealers will continue to use both. In the long-run, physical auction sites will evolve to become logistics and reconditioning hubs.
By taking advantage of emerging technologies that provide trust, convenience and seamless integration, dealers will be equipped with the data and insights they need to make smarter decisions. They will be able to navigate the digital and physical marketplaces– simultaneously buying and selling inventory– whether standing in the lane of a physical auction or walking their lot with a smartphone in hand.
Now that’s what I call exciting!