The eCommerce automotive industry is expected to continue to grow rapidly and evolve in 2023. As technology advances and more consumers turn to online shopping, the automotive industry is also adapting to meet these changing demands.
What steps is it taking to do so? In this article, we’ll go through some key automotive eCommerce trends and innovations that are likely to shape the eCommerce automotive industry in 2023.
Automotive eCommerce growth & evolution
The automotive industry landscape, captured in the Feed Marketing Report 2022, shows that the vehicle industry has undergone significant changes in recent years, and eCommerce has played a vital role in this transformation. The pandemic has caused a seachange in the buying habits of prospective car buyers whilst also causing difficulties and disruption to supply chains and the manufacturing process of the sector.
Let's take a closer look at the growth and evolution of automotive eCommerce.
Key market research
The global automotive e-commerce market is projected to grow from $75.28 billion in 2022 to $213.08 billion by 2029, according to fortune business insights. Key drivers of this growth include the increasing number of smartphone users, the rise of digital marketing, and the shift toward online shopping.
Automotive eCommerce has also gained significant traction due to the ease and convenience of purchasing vehicles and related products online. With the advent of eCommerce platforms and marketplaces, customers can now shop for vehicles, parts, and accessories from the comfort of their homes. Automotive trends display an ever-growing shift from the forecourt to eCommerce platforms, and the analysis of these trends looks to continue on this trajectory.
The COVID-19 pandemic has had a profound impact on the automotive industry, including eCommerce. With lockdowns and social distancing measures in place, consumers have increasingly turned to online shopping for their automotive needs.
Automotive eCommerce trends show the sector is one absolutely stacked with parts, choices, colors, and thus a huge amount of SKUs – managing these SKUs to make the choices appealing and logical for the customer is a particular challenge as the automotive sector has the largest number of SKU’s across eCommerce channels (data from the Feed Market Report):
The pandemic has also highlighted the importance of contactless delivery and online services, leading to an increase in the adoption of digital tools such as virtual test drives and online vehicle customization.
But it hasn’t been without its challenges for the automotive supply chain sector. The Vehicles & Parts eCommerce sector reporting 57.46% of products out-of-stock shouldn’t come as a surprise, considering the automotive industry has repeatedly been reported to have taken the hardest hit by Covid-led manufacturing disruptions. New-car delivery delays have reached waiting times of between 3 and 12 months due to shortages in the chips and semiconductors required to meet production schedules and the surging customer demand created by online channels.
The latest market trends in the automotive industry
With that in mind, what can we expect from the automotive eCommerce landscape in the future? Here are six trends likely to lead automotive eCommerce in 2023.
1. Increased focus on electric vehicles (EVs) and Autonomous Vehicles (AV’s)
As the demand for eco-friendly solutions continues to rise, more consumers will be interested in purchasing EVs through eCommerce platforms. We can expect to see more offerings for electric and hybrid vehicles, as well as innovative financing options and services such as home charging installations.
Image Source - EVAdoption.com
Major automakers and technology companies are also investing heavily in the development of autonomous vehicles (AVs), which have the potential to revolutionize transportation. AVs can increase safety and efficiency, reduce traffic congestion, and make transportation more accessible to people with disabilities. Greater adherence to regulations (such as speed limits) and stop signs is achievable when the human desire to get there quicker is replaced with a digital binary decision-making process.
Autonomous vehicles are a boon to the rising trend for shared mobility, such as ride-hailing services, car-sharing services, and bike-sharing services, which are growing in urban areas. This is driven by the need to reduce traffic congestion, decrease air pollution, and provide more efficient and cost-effective transportation options. Data analysis shows that automotive eCommerce trends towards autonomous vehicle growth, and manufacturers are developing strategies and investing heavily in R&D to meet these growing demands from the consumer.
2. Incorporating Artificial Intelligence into the automotive technology sector
With AI, eCommerce automotive retailers would be able to anticipate customer behavior, offer personalized recommendations for vehicles and accessories, and improve the overall customer experience with chatbots and virtual assistants with natural language processing capabilities.
The growing ability of chatbots to sound more human can only help the consumer feel a sense of relationship with the eCommerce brand previously lacking from these encounters in the past.
Image Source - BMW.com
Artificial intelligence has grown from not just predicting human behavior and buying patterns but has also become a helpful aid to our everyday lives. The integration of AI via mediums such as Alexa, Siri, and bespoke automotive AI packages like Hey BMW into our vehicles has brought the customer closer than ever to the seller.
Voice-activated controls for the more traditional car features, such as climate control and music selection or volume, are now just a word away. We have never been closer to our vehicles than we are now because our vehicles actually listen to our commands, execute our instructions and even advise us of what wear and tear items need to be changed.
3. Real-life automotive experience in digital showrooms
Virtual showrooms (VR) and augmented reality (AR) create new options for both customers and dealers. A customer may favor a car for a specific trim or feature, yet the traditional dealership cannot stock every car model in every different color, with every specification available. VR and AR make customization simple and are becoming increasingly popular in the industry.
This can help customers make informed decisions and reduce the likelihood of returns. The enhancements in VR technology offer a realistic insight into the layout and setup of a potential vehicle purchase previously only available in real-life showroom experiences.
Some automotive brands, like Mercedes Benz, are already testing digital showrooms to showcase their latest models and allow customers to configure and order their own cars online. This trend is expected to grow as more consumers prefer the convenience and flexibility of shopping online.
Image Source - Lexus
A UPS study showed that 52% of online automotive shoppers had purchased parts or accessories from their mobiles. Purchases made from tablets are on the rise too. So ensuring your virtual showroom is mobile and tablet friendly is something to bear in mind.
Augmented reality can support the operations of car dealerships to enhance the sales process too, and many well-known brands are taking advantage of this.
Jeep is enabling their customers to conduct virtual walkarounds of their newest models, allowing you to view different colors, change the interior and even place the vehicle in the customer’s everyday environment.
4. Strong focus on enhancing connectivity and 5G
Automotive industry analysis shows that the rise of 5G technology is enabling faster and more reliable connectivity in vehicles, making it possible for cars to communicate with each other and with digital infrastructure.
There is a multitude of apps that integrate seamlessly with modern cars to better enable the consumer to interact with their vehicle in ways that seemed alien only a few years ago. With My BMW App, for example, BMW drivers can use functions such as ‘Find my car’, and ‘Remote Start’ and can perform tasks such as remote control parking and checking the vehicle’s status (fuel, tire pressure, etc).
Other manufacturer-made apps (such as Mercedes Me) also have some amazingly helpful features like Activate Telediagnostics, where you will be informed in good time about the need to replace worn parts. With Maintenance Management, you always have your service appointments in view and ensure the best possible safety and value retention for your Mercedes. And with Accident Recovery and Breakdown Management, you have all the reassurance you need.
Image Source - MG Motors iSmart
5. Improving sales with data analytics
Data analytics is an increasingly important tool that eCommerce automotive retailers can use to gain insights into customer behavior, preferences, and overall shopping experience. Automotive eCommerce trends and automotive industry analysis demonstrate that by collecting and analyzing data, retailers can make data-backed decisions to enhance their product offerings and customer service, ultimately improving the customer experience and driving sales.
How can data analytics improve the automotive industry?
Customer behavior analysis
One significant benefit of data analytics for eCommerce automotive retailers is customer behavior analysis. By tracking customer behavior on their website, retailers can better understand what motivates potential clients and what drives them to make a purchase.
For instance, by analyzing data on:
- what customers are browsing,
- how long they spend on each page,
- and which products they add to their carts,
retailers can make data-based decisions about which products to feature and how to organize their website to maximize sales potential. For example, if a retailer sees a trend in customers searching for electric cars, they may decide to offer more electric models, or if they see customers tending to purchase mid-size cars, they may prioritize those in their product offerings. They can also use this data to identify drop-off points in the purchasing process and take steps to improve conversion rates.
Customer service enhancement
In addition to understanding customer behavior and preferences, data analytics can also be used to enhance customer service. By analyzing customer feedback, retailers can identify common concerns or complaints and take steps to improve their service levels. For instance, if customers often complain about long wait times for support, a retailer may decide to invest in additional support staff or improve their support systems to reduce wait times.
Improving inventory management
Automotive industry analysis coupled with data analytics also helps retailers improve inventory management by optimizing stock levels and reducing overstocking or understocking. With a better understanding of customer preferences, retailers can more accurately forecast demand and adjust their product offerings, prices, and marketing efforts accordingly. Additionally, data analytics can help retailers identify trends in customer demand for particular products, enabling them to adjust inventory levels accordingly.
Measuring marketing effectiveness
Finally, data analytics allows retailers to measure the effectiveness of their marketing and advertising campaigns. By analyzing the impact of marketing campaigns on customer behavior, retailers can adjust their marketing strategy to focus on the most effective tactics. This includes analyzing metrics such as click-through rates, conversion rates, and social media engagement to determine which campaigns are driving the most sales and what factors are contributing to success.
6. Sustainability of the manufacturing process
There is growing consumer demand for sustainable and eco-friendly cars, and automakers are responding with more sustainable manufacturing processes and materials, as well as more eco-friendly design features like solar panels and regenerative braking.
The automotive industry is undergoing rapid transformation driven by changing consumer demands, technological advancements, and of course, government regulations. Automotive industry analysis of automotive eCommerce trends points towards sustainability in the manufacturing process, shaping the future of the industry, and automakers who are able to adapt and innovate will be best positioned for success.
Benefits of automotive eCommerce
Some of the benefits of automotive eCommerce channels concern online shopping convenience, pricing competitiveness, and choice. It is vital that automotive businesses exploit the desire of their customer base to maximize the opportunities presented.
Automotive eCommerce allows consumers to shop for products and services online without the need to physically visit a store. This can save them time and effort, as they can shop anytime, from anywhere, and have their products delivered directly to their doorstep. Specialist online companies such as Cinch and even traditional dealers like Evans Halshaw now offer these services.
Of course, you can’t always beat a visit to a forecourt for a test drive and a cup of coffee before making the final purchase. Online showrooms can provide a great way to gain a customer's interest and explain the options, features, and suitability of the vehicle for that particular person. The customer can then always order or visit the showroom to make the final decision and has already had access to lots of pertinent information and useful images.
eCommerce allows automotive retailers to offer a wider selection of products than would be possible in a physical store. This means consumers can find exactly what they are looking for and have a greater chance of finding unique or hard-to-find products.
If the consumer wants a non-standard interior finish, a specific infotainment system, upgraded wheel trims or alloys, whatever it may be, the customer has all the options and possibilities at their fingertips. Choice and individualization are more apparent than ever before, without the need for the dealer to stock every possible add-on, upgrade, or color scheme on their premises.
This benefits consumers as they can compare prices easily and find the best deals. It is also far easier for the consumer to search for credit options, hire purchases, and business-use plans at the click of a button. Comparing deals on pricing and credit options reduces the leg work the consumer must undertake to find the best deal and prompts faster purchasing decisions.
For example, in the automotive sector, online buying channels such asGoogle Vehicle Ads or Microsoft Automotive Ads can be used to filter out the huge selection of new and used vehicles, to narrow the search down to the year, make, model, mileage, proximity to the buyer and best pricing on offer.
Image Source - Blog.Google
As the world's most used search engine, listing your vehicles using Google Vehicle Ads makes lots of commercial sense. Your stock is far more likely to be seen, and you can tailor your ads and target your inventory at the consumer profile best suited to completing a purchase.
Reviews and feedback
eCommerce platforms often have reviews and feedback mechanisms that allow consumers to read about the experiences of others who have purchased the same products. Partnering with automotive comparison platforms can help you highlight your vehicles or accessories, and the consumers make informed decisions.
Some car manufacturers have a great reputation for safety and durability, others do for reliability or performance. The consumer can choose to find out more about certain brands as other customers' reviews will touch on the concerns and similar buying habits of the reader. Cars.com and Zigwheels.us are examples driven very heavily by both expert reviews and customer experiences.
Flexibility and Availability
Online retailers, including automotive dealers, never close, which means consumers can shop whenever they want without being limited by forecourt or showroom hours. 24/7 real-time choice and ease of use are driving huge sales benefits and customer engagement in the automotive industry.
Retailers can adjust their inventory and available stocks based on trends or demand, making it easier to provide consumers with the latest and greatest products that suit their driving needs to a tee. However, when optimizing the automotive inventory feed, it's important to be aware of products that should be excluded from the feed. This will most often refer to those items that are out of stock/ discontinued or are not bringing you any profit.
When considering your automotive feed, always remember to exclude out-of-stock items. This will help your conversion rate tremendously by preventing potential customers from selecting out-of-stock items in their basket, thus causing errors and frustration. This step helps with improving the user experience overall.
An agency working for clients in the automotive industry, Norte Digital, achieved excellent results by using DataFeedWatch. By implementing the out-of-stock products exclusion strategy, they saw a 620% increase in conversions for their clients.
Automotive eCommerce vs. Traditional Car Sales
Considering the convenience and other benefits of automotive eCommerce, why are some consumers still choosing traditional dealership visits? And which sales channel is more likely to increase commerce popularity?
Let’s compare the two and see.
Buying a car online
Buying a car in-person
Simultaneously view cars, comparing brands, models, features, and specifications
Typically one brand per showroom
The final price and payment plans in one click, with easy comparisons across different suppliers and vendors
Discuss offers and possible payment options with a sales representative
Electronic trade appraisal
In dealership trade appraisal
Going through the contract onsite
VR/AR car viewing
In-person test driving
Drive your car off the forecourt on the same day
High-pressure purchase tactics
There are clear advantages and disadvantages for both, but it really depends on personal preference. Some people prefer the one-to-one service of a sales representative, while others prefer a more relaxed environment with less pressure.
One thing that is clear is that eCommerce as a whole is growing rapidly, so it only makes sense that automotive eCommerce would follow suit. We just weren’t expecting it to happen so abruptly.
With COVID causing car companies to rethink their approach and focus their efforts online, consumers have been given a more convenient, hassle-free option when it comes to buying their new car. Automotive eCommerce trends show that, by the looks of it – they aren’t going back to the forecourt anytime soon.
This doesn't come as a surprise given that the recent Autotrader ‘Ultimate Guide To Success 2022’ report for car dealers highlights the shift in research and buying patterns from car buyers:
Automotive industry challenges and solutions
1. Economic Factors
Fluctuations in the economy can impact demand for cars and the industry’s overall profitability. The recent decline in the supply of computer chips and semiconductors due to both economic and political factors have proved difficult for manufacturers to negotiate. Supply chain resilience is becoming increasingly important in securing the future of the automotive industry.
DataFeedWatch's feed marketing report demonstrates the vulnerability of the automotive sector compared to global supply chains in the graph below.
Source: Feed Marketing Report 2022 | DataFeedWatch by Cart,com
Collaborating with other companies, such as component suppliers, technology partners, and other entities, can help manufacturers produce vehicles faster and more efficiently while leveraging one another's strengths. Often designs, parts, and expertise are shared amongst manufacturers owned by the same group (Renault and Dacia swapping parts, for example).
2. Environmental Concerns
Increasing concerns about climate change have led to a demand for eco-friendly cars and regulations that limit emissions. Legislative hurdles around emissions are only set to grow ever more constrictive and demanding as the climate crisis continues to lead lawmakers and governments to tighten restrictions and demand more environmentally friendly solutions from automotive manufacturers. Many major cities have already introduced bans or restrictions on emission-causing vehicles worldwide (see London’s congestion zone charge, for example), and there is a growing trend to limit lanes and, in some cases, whole roads to only green vehicles. In the US, a trial in the city of Santa Monica is currently underway to establish the country’s first voluntary zero-emissions delivery zone.
Manufacturers need to focus on research and development to create eco-friendly and safe cars that incorporate new technologies. Take Tesla, for example, who built an entire strategy on the EV market and who have treated this as a key factor in their eCommerce strategy, becoming synonymous with the green vehicle movement.
3. Technological Disruption
A shift towards electric and autonomous vehicles requires hefty R&D investment and proper infrastructure.
Diversifying product portfolios to include electric vehicles or innovative mobility solutions can indeed be a smart move for carmakers looking to stay competitive and meet consumer demand. However, this can require significant investments in research and development (R&D) and equipment, which can be a challenge for many companies. Here are a few strategies that companies can use to address this problem:Secure funding: Companies can look for funding from various sources, such as venture capitalists, government grants, and loans. They can also consider issuing bonds or selling equity to raise capital. It's essential to have a clear business plan and a solid understanding of the costs and potential returns to attract investors.
Partner with suppliers: Car manufacturers can partner with suppliers of components and technology to reduce R&D costs. By leveraging the supplier's expertise, carmakers can develop new products and services more efficiently and at a lower cost.
Collaborate with other companies: Collaborating with other companies in the same industry or related industries can also help reduce R&D costs. Companies can share the costs of developing new technologies, which can be too expensive for one company to bear alone. For example, car manufacturers can partner with technology companies to develop autonomous driving systems.
Acquire companies: Acquiring companies with expertise in new technologies can help car manufacturers quickly expand their product portfolios. For example, an automaker can acquire an electric vehicle startup to gain access to its technology and expertise.
Focus on core competencies: Car manufacturers should focus on their core competencies and invest in areas where they have a competitive advantage. For example, a company with a strong design and engineering team may focus on developing innovative car designs and technologies.
4. Increasing competition
The rise of ride-sharing services, electric car manufacturers, and innovative mobility solutions providers poses additional competitive pressures on traditional car manufacturers.
Investing in paid and organic customer engagement models can help manufacturers broaden brand awareness and become part of their customers' daily digital lives. What are the best practices in that regard?
Organic Social Media activity: Creating a page on social mediafor the dealership and posting frequently can help in increasing awareness. The more engagement received on posts, the more the page will show up on other potential customers' feeds.
Paid Social Media activity: As for driving faster sales growth, leverage the Facebook Ads efforts and run Automotive Inventory Ads campaigns. They’re known to be a great remarketing source of purchase.
Google & Bing Ads:Google introduced a new form of ads for automotive in March 2022. When someone searches for something related to a vehicle or brand, the ad appears in front of the potential customer as a related search. Not only can this lead to instant sales, but it also strengthens the brand as a whole and ensures a strong showing in the automotive eCommerce trends currently shaping the market.
Expert reviews: Reviews from experts have been used for years online as many consumers look for a trusted third-party opinion before making a purchase. A dealership can reach out to experts for a review of their automotive in hopes that their review will help influence potential buyers. However, be attentive – many pride themselves on honesty, and it could result in a negative view of the company.
Article Marketing: Article marketing is where your advert is posted on established and related blogs or websites. This may not only generate a lead, but if consumers click on the advertisement, it can boost the search engine rankings of the dealership’s website. If the article itself is getting good traction and ranking well, this can drive sales organically through search result traffic, too.
How to optimize your website to increase online sales for cars?
Improve website usability and design
Automotive industry analysis hints that ensuring your website is user-friendly, visually appealing, and easy to navigate is critical to engaging potential customers and staying at the front of the pack in relation to automotive eCommerce trends. High-quality product images and videos can help customers visualize and get excited about the car they’re interested in.
Image Source - Audi
Implement an online financing and leasing system
By allowing customers to apply for financing and leases online, you make it easier for them to complete the purchase process.
Offer various Payment options
Offering customers easy and flexible payment options, such as paying a deposit immediately and completing the remainder of the payment later, can encourage them to make a purchase. Existing payment tools such as Klarna and manufacturer-lead payment plans also help make the purchase a reality. Payment options to consider might include:
- Split payment facilities (ie, Klarna)
- Monthly payment plans (often with attractive APRs)
- Buy now, pay later
- Attractive part ex packages
- Personal and business-focused leasing plans
The key to increasing online sales for cars requires a combination of factors, including a user-friendly website, comprehensive vehicle information, easy payment options, a strong digital marketing strategy, and excellent customer service. By implementing these strategies, automotive businesses can enhance their online presence, attract new customers, and sell more cars online.
What might the future of automotive eCommerce look like?
With manufacturers now dedicating lots of time, energy, and resources to automotive industry analysis, automotive eCommerce trends, and their online presence, consumers can expect a much easier, smoother, and more technology-led experience when it comes to buying their new wheels online.
Brands like Audi and Mercedes are just some of the companies to provide a virtual and augmented reality viewing experience to help car shopping online feel more real. In 2025, the global automotive AR and VR market is forecast to reach about 673 billion U.S. dollars, showing a huge upward trend in virtual viewings.
In a 2019 auto shopper study pre-covid, 43% of auto shoppers said they wanted to complete the entire transaction online without ever visiting a dealership, and by 2022, it was predicted that over 60% of retail sales would be eCommerce. The number (according to Autotrader) actually rose to 75% for 2022,with continued growth in online automotive industry shopping habits set to continue to rise.
It seems we can expect big things from the automotive eCommerce industry in the coming years. Whether that’s launching new technologies, more user-friendly and efficient buying processes, or simply better customer service – industry giants have had a serious wake-up call in 2020 due to the pandemic and shifting consumer behavior from the forecourt to online and have adapted quickly. The industry is going increasingly digital, from AI and AV technology to digital showrooms, online reviews, and social media items, all dictating that the future of the automotive industry is here, it is digital, and it is necessary for the long-term durability and success of the sector.
With the current rate of innovation in the automotive eCommerce space, there’s no doubt it will continue to take huge leaps over the coming months and years and become a norm for car buyers everywhere.