Amazon takes control of the wheel.
You’ll have heard of Amazon - no doubt. The online giant founded by Jeff Bezos who’d started off life as a digital bookstore; is nowadays taking great, yet stealthy leaps into car territory for good.
Coincidence? Even after doing pretty whacky stuff from the likes of partnering the old-Top Gear trio of; Clarkson, Hammond and the other fella who looks like the spitting image of Theresa May, for their new car show? We feel it was all well and truly planned.*
Planned*: The whole getting into the car thing, not the demise of Top Gear should we add.
First foray into the automotive industry.
To flex its digital muscles, Amazon was reported to have opened up a new ‘car hub’ as coined by James Vincent of The Verge in 2016.
The new hub was designed to give its customers a trusted and honest platform for reviews and discussion on cars currently available for purchase at dealers and forecourts today.
From specifications to warranty packages, the ‘car hub’ today appeals to both general car-buying customers who’ve yet to purchase a car with with useful, informative reviews - or as Amazon puts it “support customers during one of the most important, research-intensive purchases in the lives”, and those with cars already - looking to voice their opinion on the web’s most comprehensive website full of product reviews for pretty much everything. It makes full sense now.
With images, videos, and customer reviews across thousands of new and classic car models; you could say Amazon is aiming to be the network you should trust more than the actual dealer's themselves.
Who wants to argue with the salesman, anyway? You just want to know how the Prius will cope driving on snow, not a 3-day lecture on available finance options, right?
View the Amazon car hub by clicking here.
Amazon closer to selling cars online.
After setting up a vibrant category around ‘cars’ and calling it by the tedious-named ‘Amazon Vehicles’ - the next road - and the ultimate road ahead was to begin selling cars online.
And, what a start it’s been for Amazon - having partnered with Fiat-Chrysler to sell very few select motors at discounted prices.
The small range of models on sale include; the Fiat Panda, the lush 500, and the extra lux 500L. And the discounts, you ask? Up to 33% can be bargained if you purchase any of the vehicles’ online than in person at the dealership.
Oh, and the car will be ready for you from click to pick-up in around 2 weeks turnaround time. That’s right, the catch is customers must collect the car at the dealership - which is fine anyway.
At the moment, only Fiat-Chrysler have set up this exclusive long-term partnership with Amazon.
However, the annoying news is that Amazon is only to provide this advanced purchasing model in Italy - for now.
The online retailer has worked with another manufacturer elsewhere; to be more specific in the U.S, although that was more of a publicity stunt than a long-term retail partnership.
Hyundai once approached Amazon to give its customers unique opportunities’ to bypass their dealer networks - and order up a test drive in Hyundai vehicles’ from the click of a button.
Customers were able to do this from virtually anywhere; Amazon smartphone app or on the desktop.
A Hyundai vehicles’ expert would then arrive at the customer's address; at home or at work with the car of choice - and a test-drive would take place.
Customers could then progress further to purchase the vehicle at the nearest dealership, should they have wished to do so.
So why did Amazon make a stop with Italy?
Amazon can’t do the same in the U.S - it’s home turf, due to archaic, tight regulations requiring new cars to be purchased from an actual dealership.
That means, a direct seller such as Amazon is unable to sell new cars themselves on their own website, but, can technically become a broker selling cars on behalf of dealerships in the U.S.
Ultimately, Amazon won’t be able to deal with Ford the manufacturer, but Ford franchisees and their network of dealerships spanning across the U.S. It’s for this reason the online giant is inking up deals with the rest of the world with more progressive laws.
After all, the auto sales market alone is worth $1.2 trillion - so you can bet Amazon will keep pursuing this idea of a 1-click car-buying future.
TWO huge obstacles Amazon must tackle first.
If Amazon’s ambitious 1-click car-purchasing scheme does take-off at some point in the future, then how will it affect financing and will the franchise laws need to be re-written?
#1 Financing
Head to Amazon today, purchase Meguiar’s Ultimate Wash & Wax kit and you’ll be billed around £16 with delivery included. Head to the Amazon Vehicles’ page and purchase a car, and you’ll be expected to pay quite a big sum - even if it’s a Corsa, as it’ll be new.
And, because most people don’t buy a car with a credit card, the vast majority won’t have liquid enough assets - nor the cash to pay the outright full payment for a car.
You’d have to get approved for finance or lease - and that would mean Amazon may need to become a broker - or require a finance arm to help you buy.
#2 Franchise Laws
These are laws to protect the manufacturers, and dealerships selling new cars without worrying about run-of-the-mill, one-week Phil opening up and eating up dealership profits. Essentially, it’s to protect the vehicle selling beneficiaries from going bankrupt.
In America, the state earns 20 percent of all state sales taxes from dealerships, and can easily account for 7-8 percent of retail employments.
So, if Amazon comes along and starts selling cars online - in effect - it’s aiming to do what it did to small bookstores in the early days.
That’s unless, it wishes to become a broker - much like how carwow.co.uk works here in the UK - and similar to its current deal with Fiat-Chrysler over in Italy. Or, have customers buy and sell cars on the Amazon Vehicles platform much like eBay and Autotrader.
We feel setting up to become a broker may be best for both Amazon and its customers. Who’d say no to incredible savings to be had on new cars with Amazon’s influencing power? We’d love the idea.
In fact, Toyota UK is already looking forward to this possibility - as the brands GB Marketing Director, Andrew Cullis suggesting “buying habits around cars are set to fundamentally change…”.
He expects Amazon to start selling soon, and that there’d still be a balance of online and offline, with customers still needing to take the all-important test drives in their purchasing journeys.
What do you think Amazon should do? We’d love to hear your thoughts, so why not drop us a comment on our Facebook page?