According to a 2016 report by the UK’s no1 auto marketplace Auto Trader just 7% of consumers said they trusted car dealers. making car salespeople regularly ranked among the least trusted professions.
Interestingly enough, despite the car dealer being quite an untrusted professional it was able to survive the massive shift from brick and mortar sales to e-commerce that affected almost every other retail sector.
However in the last years several innovative solutions with the aim of breaking this trend have appeared and have received considerably more funding that its peers in other sectors.
Source: https://blog.dealroom.co/the-future-of-online-marketplaces-2/
One of the trends that explains the significant rise in the amount of dollars that are being poured intro the mobility & auto sector is the raise of a new type of marketplace know as the iBuying marketplace. This marketplace is significantly more capital intensive than the rest and its growth was driven by companies in the auto & real estate sector as Auto1 (or InstaCarro in Brazil) or OpenDoor.
A report published by dealroom explains the evolution of marketplaces in 4 simple steps:
- The first wave of marketplaces were considerably asset-light and supply-driven (e.g: classifieds).
- Later, these marketplaces enabled the transactions and companies as Booking.com or Airbnb appeared.
- The third wave of marketplaces added logistical processes to form a full-stack marketplace. A Brazilian example of this evolution is the evolution from iFood (processing orders, but restaurants have to do delivery themselves) to Spoonrocket or UberEats (own riders do delivery).
- Finally the fourth wave of marketplaces are even taking inventory supply from the seller (so called iBuying).
The appearance of this more capital intensive marketplaces focused in increasing consumers’ trust has come together with a significant change in consumer’s behaviour.
A recent study summarised by Carvana shows that already 42% of consumers would feel comfortable buying a car online without visiting a dealership.
A recent study developed by the consulting firm Bain & Co estimated that by 2030 up to 65% of car sales could happen online.
This change in consumer’s behaviour -shifting to online from offline- has just started and with it we expect great changes to continue happening in the industry.
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