Lin Lei - Chairman, TNS Sinotrust
This time last year I wrote an article exploring online e-commerce. After viewing the sales performance of mainstream e-commerce players, I expressed my opinion that despite a surge in online shopping more generally, online sales of cars was still relatively low in China, and that many automakers and dealers viewed online platforms as a method of sales lead collection, rather than for sales.
The “Double 11" sale period, China’s version on Cyber Monday* last year brought with it the accustomed spike in auto sales. I reflected on the figures to see whether any of my observations had changed:
- The online/offline trend continued.
During the “Double 11”,50,700 units of cars were ordered through Tmall, about five times that in 2013; through BitAuto, 532,331 units were ordered, more than 5 times of the 90,466 units in 2013; and buyers on Autohome generated a sales of 37,117 units, with a total amount of RMB 6.054 billion Yuan, an increase of some 140 percent from 2013 (RMB 2.643 billion Yuan). Car booking launched by these network platforms are still served to boost customer traffic or collect sales leads offline.
- Full-payment car purchase made a substantive step forward.
During the “Double 11” this year, Autohome bound its payment system with over 6,000 dealers nationwide for the first time enabling full-payment car purchase online. As a result, 2,488 units were sold at full payment, totalling RMB 223 million Yuan.
- Auto finance “tested the water”.
Tmall, BitAuto and other platforms rolled out auto finance services this year to make online car purchase easier for consumers. Meanwhile, the combination of e-commerce and internet finance also improved the efficiency of car loan handling.
Although the trend of low online sales continued during the “Double 11” this year, there were definite developments and breakthroughs in areas such as full-payment car purchase and auto finance. With this in mind, I have some new perspectives on the prospect of the auto e-commerce for 2015:
- Auto e-commerce represents an irresistible trend.
According to our latest survey, Millennials (those born in the 80s and 90s) have emerged as the mainstream online shoppers, with 63 percent of those who make online purchase aged between 18 and 30. In addition, they are becoming the mainstream consumers of cars, with the proportion of Millennials buying cars rising from 38 percent in 2010 to 52 percent in 2013. Our survey revealed that 66 percent of those willing to buy cars online are from these younger generations. As a result, online car purchase is without doubt set to become an important channel for car sales.
Meanwhile, huge investment was poured into auto e-commerce in 2014: Ping An Insurance Group threw millions of RMBs into Scar.com to provide the O2O model to consumers; SAIC Motor put in hundreds of millions of RMBs into chexaing.com to activate the “Connect” model; and lookcar.com secured millions of dollars’ worth of investment. All these capital inflows will certainly drive the boom in auto e-commerce.
- Auto e-commerce will not overturn the existing dealer system, but will drive competition.
Although online car sales are becoming more and more ordinary, there will always be a need for certain after-sales services to be performed offline. As e-commerce grows, efforts are needed to optimize the current offline service to deliver the best service possible, seamlessly joined up with the online experience of purchase. Coordination on the dealers’ side will remain indispensable.
From the perspective of dealers, whether to embrace e-commerce or not will be a crucial factor at play in terms of dealer competitiveness. Auto e-commerce directly links the customer with the dealer, and so can greatly facilitate precision marketing and user experience improvement through big data analysis of customer behaviours. Ultimately, this enhances dealers’ operating capability. This will drive a “survival of the fittest” mentality among dealers.
- Only cooperation can secure success.
To become an important sales channel, the automotive industry needs to work with third party platforms, dealers and related businesses to ensure success. Firstly, it should roll out diverse product offerings for consumers; secondly, it must remove consumers’ concerns about on-line payment by working together with payment providers; and thirdly, it should continue to deliver offline services nationwide.
*Cyber Monday is a marketing term for the Monday after the Thanksgiving holiday in the United States. The term "Cyber Monday" was created by marketing companies to persuade people to shop online.
Source of information: Wikipedia