The future of the automotive industry is in eCommerce.
June 21st, 2023: Austin, TX’s BigCommerce shed some light in regards to the future of the automotive industry in their 2023 Global eCommerce Report: Automotive. Online purchasing trends for automotive merchants are examined in this report, as well as how buyers and sellers influence them.
Modern eCommerce has come a long way from just selling books and used second-hand goods over the Internet. Nowadays, most general purchases can be done by the click of a button; even real estate deals can be brokered online. Yet, the biggest breakthrough in eCommerce over the last few years has been the automotive industry’s success in selling online. Automotive retail websites aren’t exactly a new industry trend and a large segment of traditional customers still prefer to shop in-person, but the COVID pandemic and the influx of third-party vehicle marketplaces springing up online has shown that the auto industry is receiving a much-needed overhaul over the Internet.
A report by eMarketer projects that U.S. auto and parts retail ecommerce sales will reach $182.48 billion by 2026 while Fortune Business Insights predicts $213.08 billion in global automotive ecommerce sales by 2029. The US automotive market only accounts for just under 7% of all domestic retail sales but eMarketer anticipates that this segment will experience the third largest compound annual growth rate within the next 4 years. This includes other general merchandise categories such as clothing and apparel, food and drink, and health and beauty/personal hygiene products.
Key findings from BigCommerce’s 2023 Global eCommerce Report
Online vehicle marketplaces, flexible payment options, and digital advertising are driving the auto industry’s shift towards eCommerce while omnichannel selling, data analytics and subscription services have the potential to become the next major developments in automotive eCommerce.
Points of Interest:
- The gross merchandise volume (GMV) of automotive merchants increased by 4.3% in Q1 2023 over Q1 2022. Similarly, average order value (AOV) grew by 5% between Q1 2022 and Q1 2023.
- GMV increased 9.1% in the automotive category between Q1 2022 and Q1 2023, AOV increased 4.1%, and orders via iPhone grew 4.8%. On the other hand, the automotive industry experienced a 3.5% increase in AOV, a zero change in GMV and a 4% decrease in Android orders.
- The auto industry is showing considerable year-over-year (YOY) improvement in regards to pure B2B selling. Automotive GMVs grew 9.1% from Q1 2022, AOVs also grew 8.7%, though orders saw no major change.
BigCommerce’s data also suggests that if the trends from Q1 either remain consistent or improve, the automotive category will experience even more growth in 2023.
- Slight increase in mobile sales: A comparison between Q1 2022 and Q1 2023 showed an increase in GMV of 5%, no change in orders, and an increase in AOV of 4.1%. When comparing order sources, sales from iPhone users narrowly outperformed sales from Android users.
- Success due to B2B: Pure B2B sales in the auto industry are showing substantial improvement year-over-year. Despite no major changes in orders, automotive GMVs increased 9.1% with AOV up 8.7% from Q1 2022. There was also some improvement in hybrid B2B (merchants selling through both B2C and B2B); GMV was up 3.3% and AOV was up 7%. Orders, however, saw a decrease of 3.4%.
- Automotive growth in North America as well as in Europe, the Middle East, and Africa: Automotive still lags behind other segments in eCommerce, but it still managed to grow ever so slightly in North America, up 4.8% YOY GMV and up 5.2% in AOV. Merchants in Europe, the Middle East, and in Africa experienced a 1.7% improvement in GMV and a 5.1% increase in AOV between Q1 2022 and Q1 2023. Alternatively, there was no significant action in GMV, AOV, and orders throughout Asia and the Pacific.
New and Future Trends for Automotive eCommerce
Retailers in the auto industry are dialing in their setups for eCommerce performance but as a relatively new entry in the field, not all of the same tried-n-true strategies that other unrelated categories employ may be suitable for use in this competitive segment. Still, these businesses have managed to become industry trendsetters by deviating somewhat off course and these trends carry the potential to dictate the entire automotive category in the future.
New developments in technology allow automotive brands to deliver immersive eCommerce experiences that mimic physical showrooms and dealerships. Users will be able to customize features, trims, and models of their cars in digital showrooms, as well as do virtual test drives and demos.
The use of social media to engage with customers and showcase new products is not new, but it is becoming more prevalent as auto retailers turn to social platforms like Facebook, Google, and Instagram to showcase new products. Auto retailers can use these outlets to increase brand awareness as well as gather first-party user data to more efficiently target their advertising campaigns.
Multiple Payment Options
A survey by PwC found that 66% of dealerships agreed that customers expect information about financing in electronic form. Both online and traditional dealers have been forced to think outside the box when it comes to payment options due to the problems with purchasing, which has long been one of the most unpleasant parts of the car-shopping experience. Today, mobile wallets, payment scheduling, and contactless transactions are among the payment solutions that are revolutionizing the auto retail industry.
Automotive merchants can tap into larger customer pools outside of their own by integrating with third-party marketplaces such as Amazon, O’Reilly Auto Parts, Walmart, and even eBay. BigCommerce has noticed that the demand for new cars online is increasing and forecasts that third-party vehicle marketplaces will fill the gap left by traditional dealers.
The Road to Future Success in Automotive eCommerce
The automotive industry has undergone an almost complete refresh in the present but the future holds even more potential for continuing evolution.
Connected User Experiences Through Omnichannel Selling
Automobile customers are increasingly shopping online, but in-dealership experiences will likely continue to exist for some time to come. As a result, automotive retailers will need to implement an integrated omnichannel strategy that connects all channels–both online and offline–to create an engaging customer experience that blurs the line from website to physical dealership.
Meet the Customer VIA Data Collection and Analytics
The use of data analytics in inventory management can be especially useful for dealers who sell both online and offline. Big data and predictive analytics can also provide insight into the behavior of customers, such as how long they spend on a page, what products they browse, and how often they return.
Car Subscription Services > Traditional Ownership
New cars, just like everything else, are getting more and more expensive and less and less attainable by the average person. Part due to technological innovations, part due to inflation and current economic woes. Most eCommerce industries nowadays offer some sort of subscription service and in this survey from PwC, 40% of surveyed consumers stated that they’d consider using a car subscription service for their next vehicle. The survey also asked dealers their take and 71% of them view car subscription services are viable business models for their franchisees. Dealers can generate new revenue streams from subscription business models in addition to providing a flexible alternative to customers.
“BigCommerce is trusted by more than 2,600 automotive sites across the world, and our merchant data shows the power ecommerce has to fuel an industry leaning into digital transformation to better engage and sell to their customers. The opportunity for growth and innovation is remarkable.”
Chief Marketing Officer at BigCommerce
June 21, 2023
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