We may finally be seeing how business, when faced with a technological threat, adapts. Not by changing practices. But by waiting until it can develop antibodies to overwhelm the intruder.
Twelve years ago, I bought my first car online. Routine as it might sound now, it was a Big Deal back then. The web (still called the “World Wide Web”) was less than a decade old, the dot-com bust was painfully fresh and most companies were still trying to figure out how to address e-commerce. In June 2000, I thought I’d test the waters and get price quotes for a Subaru from three Seattle area dealerships, all by web form and email.
It was a refreshing experience, though it was a challenge finding dealers who would give actual price quotes by email. One accepted my web request, then refused to provide any detailed information in email. Instead, he badgered me by phone insisting everything had to be done in person. His petulant response to my you-are-dead-to-me email: “I didn’t LOSE A SALE by not selling you a car. I hope you pay to [sic] much!”
Ultimately, I wound up with three firm prices, chose a dealership based both on price and the ease of working with them, walked in, test drove the car, did the paperwork and walked out – all in slightly more than an hour. It was quick, it was painless and there were no surprises.
In the nearly dozen years since, two things have happened. First, the tools available to the car buyer have gotten much better. New and used car price estimators, based both on dealer invoice and actual cost, are widespread and as cheap as free (including tools on KBB.com, Edmunds.com and ConsumerReports.org). “Internet sales” reps are no longer rare. The single person I dealt with at the Subaru dealership, who was green and admitted she had the job because she loved the Internet, has evolved into a full-fledged department of three seasoned sales professionals at the store where I just bought my new Toyota.
And it is no longer equally rare to research, get price quotes or even complete most (or all) of a car purchase online. A study last year by AutoTrader.com and auto market information firm Polk found that nearly 60 percent of vehicle shopping time was online with the average buyer spending 18-19 hours doing web research. Overall, more than 70 percent of car buyers rely on the Internet while shopping for a car, new or used.
But during the same decade-plus, a second development has occurred. The car dealerships have watched. And learned.
Last month, my wife and I decided we wanted to buy a rolling computer with seats (some call it a “Prius”). Armed with price information from KBB.com and even more detailed dealer cost information in a New Car Price Report from ConsumerReports.org, we used the complimentary CR Build & Buy service to send a request for a Prius with specific features, down to color, to local Toyota dealers. We were guaranteed to pay at least $300 less than factory invoice by anyone who responded.
Almost immediately, three dealerships did. One, though, refused to discuss price any further by email, insisting in a hard-sell phone pitch we had to first show up in person. (It appears there’s one every decade.) Still, we quickly agreed on a price and options with one dealer and set up a time to see and buy the car. We even had the VIN.
And this is where the organism has adapted. Or, should I say, regressed.
My wife and I arrived at the Seattle area dealership at the appointed hour. No car. “I’m sure it’s on the lot somewhere,” claimed our dealer’s Internet sales rep. As time passed it became clear, while we were shown other vehicles and other options, that not only was our car not on the lot, it wasn’t even in the county: it was being driven up from another dealership in Olympia.
The next surprise came in the business manager’s office. We turned down, as planned, the offered extended warranty, maintenance plan and financing package to keep the price exactly as we’d been quoted. But all that increased transparency on pricing? Turns out it only works for factory prices.
Dealerships have figured this out. We were told how, for security reasons on the lot, the dealer had pre-installed an alarm system on all of its cars and we could have it for “only” what turned out to be full retail price, or they’d disable it (later web research turned up both the practice and the “lot security” claims were both common at dealerships throughout the West).
Not wanting brain-dead electronics mind-melded to our bright shiny Prius, I half-heartedly haggled on price and reluctantly gave in. At least the flashing blue light is pretty.
Nearly four hours after arriving, we were done. And this, mind you, was after arriving with a price set, a VIN in hand and a specific appointment to buy a specific car.
Why might a dealership do this in the Internet age? Simple: the only way to counter transparency in national pricing is to increase opacity with dealer-installed extras which are revealed only after the customer is in the store, and make them “optional.” And by making the in-store experience as long and drawn out as possible, customers are more likely to succumb just to get the hell finished so they can finally have lunch.
It is, after all, the desire of a dealer to extract as much money from a customer as possible. It’s no longer in the dealership’s best interests to view the final web purchase step as merely an in-person version of e-commerce checkout. Rather, by making it a waiting game during which the consumer is essentially blind to outside information, car dealers have created a workaround to the web, an effective Internet retailing counter-reformation. No wonder some people complete the sale online as well.
Yes, I bought the car. I got a fair price, because we stood our ground. But the experience, albeit better than when I bought my first car when there was no web, was not better than when the web was new.
You know all those classic science fiction movies where cunning, unpredictable humans beat the annoyingly methodical, intellectually superior machine? This time, the web is the machine. Many car dealers appear to be working hard to outwit it.
