Fog Machine: Digital Retailing

by Jim Flint

San Francisco is famous for fog. The city’s given a nickname to its fog – Karl. Karl the fog even has an Instagram account with 243k followers.

As I traveled back from the NADA Show 2019 held in San Francisco, I’m reminded that our industry resides in a fog of Digital Retailing.

I met with many capable and reputable vendors while at the event–often per their request, –and while we move closer to Digital Retailing, it doesn’t appear that we’re approaching the finish line (as much as some would like us to otherwise believe).

The typical Digital Retailing demo that dealers see involves a sequence of quick clicks, a price point and the vendor hitting the “Easy” button.   As Lee Corso, of College Game-Day fame, might say, “Not So Fast My Friend.”

Most demos for digital retailing products, at present, only take a quick request for an accessory addition or an extended warranty product to make the whole process collapse. Add finance rates, lease residuals and APR calculations to the mix and the possibilities explode as consumers look for a penny perfect solution.

When consumers accustomed to a check out price, don’t get that penny-perfect experience, the resulting friction will make the idea of shaving with sandpaper seem like a soothing experience.

We know that the digital retailing technology is ready and that consumers are comfortable with it. I’d even argue that dealers are prepared for it (albeit hesitant). The issue to me is the fog of Big Data and the corresponding intricate integrations. Big dollars are at stake—for customers, dealers, vendors, and data exchanges alike.

There will be winners and losers. The service levels for customers and to dealers on this will be tactical, technical and not unlike what we’ve seen in the internet decade that’s transpired since the Great Recession of 2008.

Since 2008 the business model for most Internet service providers has been to grow to critical mass and then merge or be acquired by their larger brethren. Then, many ISP’s, albeit not all, watch as the need for quarterly earnings overtake Research and Development costs. Service levels dip as savings are identified and adjustments are made. The cycle after acquisition usually takes 18 months to play out before a true metric of customer service for a given company shows its face.

And therein may lie the opportunity for the entrepreneurs or even the Amazons amongst us. There’s seemingly little value in establishing an enterprise as an add-on to an internet site, but there’s little doubt that that is where it will reasonably reside–at least initially.

As such, I’m happy to sit through any presentation that a vendor would like to deliver or with any retailer that’s purportedly figured this out. In fact, I’m eagerly awaiting the invitation.

Because, while the industry and I may have left San Francisco, Karl and the associated fog remain in place.