In its second-largest acquisition, Amazon buys the company for $970 million.
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Like CarsDirect, eBay Motors has a sophisticated support system and education program it calls the eBay Dealer Outreach center, which includes both online and offline courses dealers can take to learn best practices that help them close e-commerce sales on eBay. In conjunction with its outreach center, eBay offers a network of sales support specialists who will work with dealers and their Internet sales representatives to begin–and close-auctions using the eBay platform. “We’re teaching dealers how to engage in complete e-commerce,” Chesney says. “We’re helping them adapt to using the Internet as a complete transactional business model and a new way to sell cars.”
Mark Brohan is principal of Milwaukee-based The Brohan Group, providing professional editorial and publishing services.
At eBay, the cars are real and so are the sales
The first cars sold at eBay were toy cars. And you can still buy toy cars there, but you can buy the real thing as well. “We started by selling miniature collectible cars on the site and found out that people wanted to use eBay to buy and sell actual cars just like they do with other items,” says Simon Rothman, eBay Motors global vice president and the architect of eBay’s direct e-commerce automotive business. “We saw the automotive channel as an opportunity early on.”
In a very traditional automotive retailing environment where most dealers and manufacturers see the Internet strictly as a sales support tool, eBay Motors continues to prove that there is a market for customers who want to buy and sell cars entirely over the web. It launched eBay Motors in 1998 and so far this year is on track to generate almost $10 billion worth of sales of used vehicles, parts and accessories.
The system works, Rothman says, because eBay Motors has spent six years building features and tools into the site such as an online finance center, certified vehicle inspections and a free buyer protection program that builds customer confidence in an Internet-only sales model. “The site and business model work because people have placed their trust in eBay,” Rothman says. “80% of all the vehicles purchased on eBay Motors are from buyers and sellers who live in different states.”
The traditional automotive retailing market is local and uses the Internet mainly as an advertising medium. But eBay Motors is committed to building a national automotive sales base and direct e-commerce model, Rothman says. “We clearly have a distinctive view,” he says. “We are a believer in the e-commerce transaction model.”
Buying online means financing online, too
Companies and dealerships that provide online financing options are a key indicator of the fledgling market of customers who want to shop for a new or used vehicle entirely over the Internet. In fact, says Jupiter Research, the volume of Internet-generated vehicle financing, defined as customers who research, apply and are approved for an auto loan package completely over the web, is forecast to grow from $8.3 billion in 2004 to $20.3 billion in 2008.
While 100% online auto finance deals represent only about 1% of all annual new and used vehicle financing, the numbers are growing because some consumers prefer using the Internet as opposed to visiting or calling multiple lenders or finance companies to see who has the most competitive loan rate. “Consumers completing the financing process online perceive the Internet to be a venue where they can get faster application approvals and save the time that would be spent visiting lenders in person,” says Julie Ask, automotive market analyst with Jupiter Research.
Arranging online finance deals for cars could become even more popular if lenders, dealers, auctioneers and other third-party automotive sites take the time to simplify their electronic forms and expedite processing. “Some online applicants still think the process is poorly automated and doesn’t provide enough information,” Ask says. “These conditions create barriers to adoption.”