Source: CCN

How Blockchain can spark the future of automotive online sales.

By now most industries have felt some sort of disruption through digital. Some more, like media or retail, some less like FMCG or insurances. 
Most of those industries are aware of the fact that they need to take action in order to transform their business and keep relevance.

Digital transformation in the automotive industry

The automotive industry is a very complex one. It’s combining and dependant on a lot of other industries and big networks — from production to maintenance, retail to marketing or financial services. 
Digital is starting to shape certain parts of the automotive industry, just think of engineering or marketing / communications.

Do start-ups have a different perspective on the bigger picture?

Most start-ups and new companies are focused on transforming mobility as a whole – just think autonomy, electricity and sharing.

Yet brands are often copycats and their dealerships are hardly adopting digital technology to support and strengthen their business. Let alone online retail / online sales. 
Which is understandable:

  • Not a lot of people are willing to pay tens of thousands of dollars for a car online.
  • It‘s a complex and expensive technical process.

Right now we need third-party retailers.

Still companies and brands are trying to move the retail process into the online world. Amazon has been at the forefront of cooperating with brands trying to sell cars online. A few examples:

  • Fiat Chrysler: In Italy Amazon has been the middle man of a test by Fiat Chrysler. Customers were able to buy cars up to 33% cheaper. Still everything but the order had to be done via local dealerships.
  • MINI: In India Amazon has been selling a MINI Cooper special edition exclusively (no more information on the transaction process is available)
  • SEAT: In France Seat has cooperated with Amazon. Customers needed to make a $500 deposit and were contacted afterwards by a SEAT rep to finish the sale via a dealership.

Other companies are tying to go “D2C” — direct, skipping the middle man and provide customers with more options to buy cars online. An example for that is Polestar (a Volvo brand), which is offering every possible service online. Another one is Tesla with the online preorder of the Roadster 2.

The problem? Each of these examples is using some form of middle man. Whether it is Amazon, Express Storefront or a bank.

Source: Amazon Vehicles

Change to create trust.

For corporations it’s not really an easy task to sell cars online. It’s a very complex process, which requires a lot of work and especially change of old structures and silos. It requires change in many ways. I’ll focus on three key things brands need to focus on:

  • New processes that integrate digital landscapes across dealerships, banks etc. Without this an end-to-end transaction will not be possible.
  • New financial services and products need to be developed to convince customers to move beyond online research.
  • Last mile delivery to the customer / pick-up at a dealership.

A good example to highlight here is BMW UK. They’ve created a unique online sales platform back in 2015 which strongly cooperates with dealerships for the last mile pick-up. puts it this way:

While there’s minimal risk buying a £40 Gran Turismo video game on Amazon, it takes a leap of faith to buy a £40,000 3-series Gran Turismo online. Thanks to BMW, now you can in just 10 minutes.

Blockchain — a synonyme for trust

D2C, Direct 2 Consumer, as we know it today is not really Direct 2 Consumer. We’re always dependent on some form of intermediary. It always requires dependency on a third-party as well as trusting said platform or provider. That’s where Blockchain comes in.

Blockchain is essentially a chain of data blocks which are linked and secured via cryptography. It is not controlled by one entity but a via a decentralised peer-to-peer network.x

In the future brands will be able to sell directly to the end consumer without the need to a an online platform or a dealership, therefore reducing cost and providing trust to said end consumer.

I’ll break down a very simplified online process for this example, which is always based on encrypted technology:

  • Brand X offers and end-to-end shopping and payment process online.
  • Brand X offers different payment methods (downpayment, leasing from its own Financial Services branch, …).
  • User Y can safely choose between different options and verify any step basically just by clicking.
  • User Y can now do any identification (approve documents, sign documents, confirm payments, …) via the Blockchain.

Especially the last point, security and identification, can be the differentiating factor between current solutions and future Blockchain solutions.

I’m very excited to see how the Blockchain will be adopted by automotive brands in the future and what other cases they will come up with.

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