Why Tesla's Direct approach to sales will fail

buzznwood

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If direct sales was a failure then amazon would have gone the way of the dodo long ago. Going to the store is an alien concept to a whole generation, a generation that will have little interest in the 'joys' of the dealership experience.

The whole point of the dealership is the supposed competition it brings so we the consumer gets the better deal, ADM proves otherwise. BEV's give manufactures the perfect opportunity to bypass what is a glorified cartel of middleman that serves no purpose in this day and age.

Consumers are expecting more and more as standard in a new car, which results in manufactures having to resort to all manor of bean counting to meet the expected consumers price point and profits. remove a % cut that heads to the dealer and manufactures would have a lot more breathing space.

No doubt there will be plenty of dealers out there still telling tall tails of how how the invoice is the real price they pay. I am all for people making a good living but the day the dealership sales model goes the way of the dodo to replaced by a few online button clicks is a good thing. Any dealer with any sense will have migrated to mainly catering to vehicle servicing years ago.
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Machemark

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Although like another poster said, there are pros and cons to traditional dealers, I don't think I've ever had a "great" relationship with a dealer.

My greatest short term concern with buying the Mach-E is the possibility of a markup (adm). This will never happen with a Tesla.

Granted, you could technically get a "deal" from buying from a dealer as well. However I have no doubt, most people have been screwed from a dealer than not.
 

ZSR

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Yes a drive through would be cool, wonder how much money the dealer can ask for that (none, we call it a service I already hear ?). But as more and more cases are software instead of hardware, It would be interesting to see if most dealers can find a software saffy employ these days?
 

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If direct sales was a failure then amazon would have gone the way of the dodo long ago. Going to the store is an alien concept to a whole generation, a generation that will have little interest in the 'joys' of the dealership experience.

The whole point of the dealership is the supposed competition it brings so we the consumer gets the better deal, ADM proves otherwise. BEV's give manufactures the perfect opportunity to bypass what is a glorified cartel of middleman that serves no purpose in this day and age.

Consumers are expecting more and more as standard in a new car, which results in manufactures having to resort to all manor of bean counting to meet the expected consumers price point and profits. remove a % cut that heads to the dealer and manufactures would have a lot more breathing space.

No doubt there will be plenty of dealers out there still telling tall tails of how how the invoice is the real price they pay. I am all for people making a good living but the day the dealership sales model goes the way of the dodo to replaced by a few online button clicks is a good thing. Any dealer with any sense will have migrated to mainly catering to vehicle servicing years ago.
When was the last time you purchased a 60k item on Amazon? For this "generation" that only deals with online .. they probably haven't ever spent 60k in their life.

There lies the problem with your analogy. Amazon is GREAT for cheap items or few hundred dollar items. Things that are easily bought, shipped and returned. The amazon model falls apart when people want to see their very expensive item first. That's why amazon really doesn't own the market on cars, houses, appliances ... stuff like that. High investment items with a need to see and experience it first hand before buying.

The point of the dealership is getting customers into cars while spreading costs out. THAT is where Tesla fails. You have to buy a car sight unseen for a large chunk of the US. Right now they have been targeting a market that has enough disposable income that they can deal with not seeing it and if they don't like it they get rid of it. The majority of car buyers have to get loans and get approved and do all of that stuff. People like to know they are going to like what they are getting before they do that.

So no ... dealers going away is NOT a good thing. Yes, they need to revamp some things, but going online only should NEVER be the only option to buy a car.
 

dbsb3233

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There's often trade-ins to be dealt with too. It's a pain to try and sell a used car on your own, and many people just don't want to mess with it (or don't know how, or don't have the time and resources to deal with prospective buyers).

Bottom line -- I think there's room for multiple methods of car buying. It doesn't have to be all one or all the other. In some instances the non-dealer direct order method works just fine and can offer savings for people that already know exactly what they want. Others want/need the full hand-holding (slash arm-twisting) experience of taking the old car in for trade and picking a new car from the lot.

There's room for both.
 


Whatstreet

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Amazon really wants to sell cars online.

This could happen while dealerships are in business. Then in time it would be just like the brick and mortar store fronts that are closing today due to internet merchandising.

Dealerships will try to prevent this from happening, but ultimately, it will happen.
 

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Amazon really wants to sell cars online.

This could happen while dealerships are in business. Then in time it would be just like the brick and mortar store fronts that are closing today due to internet merchandising.

Dealerships will try to prevent this from happening, but ultimately, it will happen.
Eh .. going to disagree here. Drastically different than normal internet merchandising. They might get some sales, and SOME dealers might close that were already underperforming but this is not the same as selling electronics and toilet paper online.
 

dbsb3233

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Eh .. going to disagree here. Drastically different than normal internet merchandising. They might get some sales, and SOME dealers might close that were already underperforming but this is not the same as selling electronics and toilet paper online.
Agree that most people won't buy a car that way. But we are seeing more and more "research in person but buy online" shopping for more expensive items. Not usually $60k cars, of course, but it's becoming more commonplace to go to Best Buy or somewhere to look and try, but then go online to buy it for a cheaper price after you know what you want.
 

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Agree that most people won't buy a car that way. But we are seeing more and more "research in person but buy online" shopping for more expensive items. Not usually $60k cars, of course, but it's becoming more commonplace to go to Best Buy or somewhere to look and try, but then go online to buy it for a cheaper price after you know what you want.
Exactly, and this will include cars for the same reason, PRICE!

People use BestBuy as a showroom to investigate their electronic devices, then buy them online for less money.
 

dbsb3233

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Exactly, and this will include cars for the same reason, PRICE!

People use BestBuy as a showroom to investigate their electronic devices, then buy them online for less money.
Which will eventually drive Best Buy out of business, of course. Kind of a Catch-22. It could become harder and harder to find showrooms if they can't generate the revenue from sales to keep themselves open.

That's where we flip back to the dealership model, or at least a showroom-only model. Which is what Tesla is doing. They have showrooms in a few of the major malls around here. Enough for people to see the (similar) vehicle in person and sit in it, and schedule a test drive. I'd be fine with that for the Mach-e, if I could just go to a mall showroom that simply showed demos. Then if I decide to buy one, order one from home. In fact I'd prefer that over dealing with car salesmen.
 

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Agree that most people won't buy a car that way. But we are seeing more and more "research in person but buy online" shopping for more expensive items. Not usually $60k cars, of course, but it's becoming more commonplace to go to Best Buy or somewhere to look and try, but then go online to buy it for a cheaper price after you know what you want.
Maybe .. yet again .. nothing Best Buy sells really gets in the same ball park as a car except maybe appliances. Those don't get ordered through Amazon either. Biggest sellers of those are Best Buy, Lowes, Home Depot etc.

Even then the argument is whether dealers will go away ... I don't think we will EVER get to the point that there is no way at all to see a car before buying it. There will have to be showrooms. The purchases are just too large and the "experience" of the product matters more than most any other product.
 

dbsb3233

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Maybe .. yet again .. nothing Best Buy sells really gets in the same ball park as a car except maybe appliances. Those don't get ordered through Amazon either. Biggest sellers of those are Best Buy, Lowes, Home Depot etc.

Even then the argument is whether dealers will go away ... I don't think we will EVER get to the point that there is no way at all to see a car before buying it. There will have to be showrooms. The purchases are just too large and the "experience" of the product matters more than most any other product.
Electronics do though. Which is most of what Best Buy sells. TVs, sound systems, computer equipment, etc can run into the 4-digits. (Although that's getting off in the weeds a bit.)

Totally agree about dealerships not going totally away though (and replaced by online-only). I only expect incremental shift, not wholesale shift.
 

Stickboy46

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Electronics do though. Which is most of what Best Buy sells. TVs, sound systems, computer equipment, etc can run into the 4-digits. (Although that's getting off in the weeds a bit.)

Totally agree about dealerships not going totally away though (and replaced by online-only). I only expect incremental shift, not wholesale shift.
BIG difference in easily bought, delivered and returned items in the 4 digits, and an item in the 5 digits that takes special delivery and not easily returned.

People put 4 digit purchases on debit/credit cards all the time. Very few people are doing 5 digits out of a bank account/credit card. They require a loan that needs collateral and special processing.
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