Like most high-profile celebrity relationships, General Motors and eBay's love affair was a short one. The program that began on Aug. 11 will end today. How did it go? The Wall Street Journal reports:
"We thought the program was successful but that this was not the right time," GM sales chief Mark LaNeve said.
Given that a few weeks of the program overlapped with the infamous cash-for-clunkers program, artificially boosting auto demand, this raises the question: when would a better time have been? The little detail we have suggests the program probably wasn't all that successful after all. If it was why end it?
The Associated Press reports:
The eBay site received 1.5 million hits, or visits, producing 15,000 leads for dealers. About 227 California-based dealerships participated in the program. GM and eBay did not say how many cars were sold based on the program.
And from WSJ:
VJ Singh, executive manager of Singh Chevrolet in Riverside, Calif., said the program produced an overload of "browsers." His Chevrolet store typically gets 1,000 leads per month, and eBay created about 20% more -- but led to just one sale.
This implies that the number of vehicles actually sold through the program was very, very low. How low? Let's do an estimation based on that Chevy dealer's experience. If its experience was typical, then every 200 leads the eBay site provided resulted in one sale. If the program overall created 15,000 leads, that approximates to 75 sales. That's not exactly a slam-dunk.
So why were those leads so useless? The WSJ further notes:
Several dealers involved in the program said most attendees at a recent dealer conference in Las Vegas agreed it was ineffective. Richard Slade, general manager at FH Dailey Chevrolet in San Leandro, Calif., said too many people submitted ridiculously low offers, forcing staff to sift through bids that were highly unlikely to result in sales. He said one person submitted a $2,500 offer for a $40,000 vehicle.
Because that's what eBay is for! Nobody goes to eBay expecting anything other than a huge deal at a deep discount. But that's not really the game that GM was trying to play.
Back in August, my colleague Derek noted that this partnership could be good for GM, as it might allow them to utilize an online sales model and rely less on expensive dealerships. As the AP article notes, that didn't really work:
Very few people chose the "Buy Now" price option, said the owner of Dublin GMC Buick in Dublin, Calif., with consumers preferring to come into a dealership to make such a large purchase.
I'm all about online shopping, but I can totally relate. The most expensive thing I've ever bought online was a TV, and I was only comfortable doing that after a great deal of research on and experience with the manufacturer and online retailer. I think there's still a psychological barrier for most of us to spend a lot of money without physically seeing the tangible product in front of us.
I'm not sure if people will ever be comfortable buying something like a car online, but it could happen. After all, diamond website bluenile.com does a pretty good amount of business. Some of its diamonds are as expensive as cars, so online auto sales might not be impossible. With that hope likely in mind, the WSJ reports that GM says it may try the program again next year.
I'm probably one of the few people who's actually bought a car online - without ever visiting any dealerships to look at cars beforehand. My experience led to 2 others doing the same.
In April of 08 I had to replace a 12 year old car when its transmission crapped out on a Monday. By Wednesday I had a deposit a car without ever leaving the house and picked it up that Saturday. In this case Ford, had a superb website that made it easy to find a car, see what was in it, see all applicable rebates and discounts, and get the price on that particular car from the dealer.
If you're the type of person who does not particularly care about cars, other than a means to get from here to there, and hate going to car dealers, buying over the web can save you a bunch of money and headaches.
Following my experience - and the price I got - my wife's boss also bought a Focus online, just like me. Then another guy she works with did the same. So Ford sold 3 Focuses because I had come across their well designed, easy to use site. Nobody ever went near a dealer other than to pick up the car.
Thanks for your perspective. I think part of the problem was GM's platform -- eBay. Unless they were planning on auctioning off vehicles or offering deep discounts, I think they had the wrong target audience and infrastructure. They might have been better served going through an online retailer like Amazon or even their own website if developed like the Ford site you noted.
Yes. but only for a small subset of the market: People like me, and the others I mentioned, who don't care much about cars other than for transportation and who are not trading in.
Another important feature is allowing pre-approval for credit to a certain amount over the website. Without that, the buyer has to go to a dealer. I paid cash so it didn't matter. Ford and Toyota allow that on their site. I don't recall what other makers do.
Interestingly, Toyota and Honda seem to make it the hardest to buy online. You cannot search local inventory and find what you want and get the price on that car. They seem to do everything in their power to force you to the showroom.
Sounds like they didn't properly leverage the eBay technology. You can specify a lower limit for offers you will consider. Any lower offer will be automatically declined. There should have been no need whatsoever to spend manhours on lowball offers.