Is the Millennial car shopper Amazon’s next big audience?

Discussion
Source: Amazon
Aug 30, 2016
Matthew Stern

Amazon Prime Now members in Los Angeles and Orange County, California have been able to treat themselves to a test drive of a 2017 Hyundai Elantra over the past few weekends, according to TechCrunch. Prime Now customers in the test markets are able to schedule a two-hour window for the 45-to-60 minute test drive. “Trained experts” deliver the cars.

Shortly after the beginning of the Hyundai partnership, Amazon announced the launch of a site called Amazon Vehicles, a research destination and community meant to help people with the notoriously complicated process of purchasing a vehicle. Amazon Vehicles will integrate with the Amazon Automotive store, which enables users to shop for individual car parts. The site will present specifications, images, videos and extensive customer reviews.

“Our goal is to support customers during one of the most important, research-intensive purchases in their lives by helping them make informed decisions every step of the way,” said Adam Goetsch, director of automotive at Amazon.com, in a statement.

Cars might seem like a strange place for Amazon’s focus given that Millennials are said to drive and purchase them at a lower rate than previous generations. But more Millennials might relish the opportunity to test drive a Hyundai, and find it convenient to research a car online, than one might expect.

In January, an article in Bloomberg challenged the conventional wisdom that Millennials aren’t buying cars, citing a J.D. Power study indicating that in 2014, the portion of new vehicles purchased by Millennials had jumped 9 percent in four years.

The article also noted that the desire to have internet-connected, environmentally-sound automobiles may inspire Millennials to go for new, rather than used, vehicles

Discussions Questions: How big is the automotive opportunity for Amazon? How valuable will car test-drive experiences be to Amazon’s efforts to reinvent the car shopping experience?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"It just may revolutionize the automotive distribution model -- not unlike what Amazon did to traditional retail."
"Revolutionary! Amazon found yet another (new) way to present a product and make sales."
"Amazon can be the lead generation tool for the auto dealers, but in selling the cars they will have a peak and then run flat. "

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14 Comments on "Is the Millennial car shopper Amazon’s next big audience?"


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Max Goldberg
Guest

Once again, Amazon show us a path that we did not know existed. The personal test drive is changed in an instant. I’m not sure how many auto manufacturers or dealers will jump on the Prime bandwagon, but expect to see a few more opt in soon. If nothing else, this adds to the Prime experience and gives consumers another reason to visit Amazon first.

Tom Redd
Guest

OK, cars are my space – but used cars are the smarter investment and most Millennials know this, at least the ones related to me or influenced by me. But I am sure there are the Milennials out there linked to making payments for leasing new cars or buying them.

Amazon can be the lead generation tool for the auto dealers, but in selling the cars they will have a peak and then run flat. Strong dealers already do this and they do it well, but they can complete the full sale from online to at-door to post-sale service. Amazon cannot, especially with some brands.

Good marketing by Amazon that is more of a test and playtime effort than a play for serious margins. Real people buy cars from pros and negotiate. I ended up with my 2015 truck with perks that you would never get on an online deal. After a walk away from a deal they called back and added what I wanted — for free. Try that on Amazon, kids.

Ryan Mathews
BrainTrust

Cars are just one more way for Amazon to connect to its customer and, as I have written before, I believe that’s what this is all about. It isn’t that Amazon wants to sell cars, or be the trusted authority for researching automotive purchases. What Amazon wants is to have as many emotional and commercial touch-points to the customer as possible. Put a simpler way, in a perfect world from Amazon’s perspective, you’d never have to deal with anyone else but Amazon. Trust them to get you the best deal on books, clothing, furniture, tools, cars, whatever, and why would you go anywhere else? Amazon’s strategy appears to be to encircle the customer, wrapping a commercial cocoon around them that reinforces the shopper logic of buying from Amazon. So looking at test drives is missing the point. It isn’t the car, it’s the connectivity.

Adrian Weidmann
BrainTrust

This is brilliant marketing and will be successful! Millennials will require and buy environmentally-sound vehicles from brands that truly stand up and put a social conscience into practice. It is imperative that the entire automotive industry watch this experiment very closely because it just may revolutionize the automotive distribution model — not unlike what Amazon did to traditional retail. Integrating mobile proximity marketing and merchandising technologies into this scenario will amplify the transformation.

Ben Ball
BrainTrust

This just may be the Armageddon of show rooming. The pitched battle that will ensue when Amazon starts offering to fulfill the order for a vehicle the customer “specs out” at the dealer showroom will be epic. On top of the deep dealer contract obligations there are state-by-state legal restrictions in place to protect those dealerships as well. Just ask Tesla. But this will happen. And eventually those dealers will be fulfilling orders for Amazon — just like they do for Costco shoppers.

Ed Rosenbaum
BrainTrust

I wish this existed in my area a few months ago. We recently went through the search stage after not having to do it for many years (we keep cars for a long time). There have been no positive changes in the way the customer is handled in a typical non-executive car dealership. You think the salesperson is your friend until you are turned over to “the closer.” That is when things and relationships go downhill. If this step can be avoided at least during the search stage, this is going to be a good venture for Amazon.

Shep Hyken
BrainTrust

Wow! Another innovation and possible disruption from Amazon. It will be interesting to see how this plays out. I’m not sure of the details and how this is going to work. It seems that Amazon will have to affiliate with the manufacturer and perhaps even the local dealers. Manufacturers have realized that some of their customers are loyal to the brand, but not necessarily to a dealership that may not have serviced them as well as they could have. This could raise the stakes for the local dealers to turn on their customer service and relationship-building skills.

Camille P. Schuster, PhD.
BrainTrust

Millennials want to test drive before purchase and do not like the hassle and pressure of car dealerships, which is no different from other purchasers. What is different is that Millennials do not feel the same compulsion to purchase automobiles. If Amazon can allow Millennials the opportunity to review, compare, test drive and purchase in a no-hassle atmosphere, they may have found another successful category.

Naomi K. Shapiro
Guest

Revolutionary! Amazon found yet another (new) way to present a product and make sales. Who hasn’t walked into a deli and been given a sample of Old Amsterdam cheese, and then headed straight for the counter to buy some (as I did today). Ditto for automobiles. Once they’ve tasted the goods (automobile), they’re psychologically primed to make a purchase. And the offering of advice for navigating the auto-purchase labyrinth? Priceless!

Larry Negrich
BrainTrust
The auto dealership business is tightly controlled by the manufacturers, so I don’t see the established brands going this route in the near term for anything beyond marketing lead generation, unless it’s driven by regional auto retailers. This does present an avenue for new brands like Tesla, which needs someplace to market its wares and others as they expand to new geos. However this isn’t exactly a void in the market as there are many doing similar things today, but it does let Amazon steer its traffic to influence some sales. To the point of Millennials not valuing auto ownership, I don’t see that characteristic as generationally linked, but as a result of population shifts. According to a UN study, today, over 54 per cent of the world’s population lives in urban areas, and that is expected to increase to 66 per cent by 2050. Where cars become an ingrained part of daily life such as in suburbs and rural settings, breaking away from the readily available mode of transportation parked in the driveway is… Read more »
Doug Garnett
BrainTrust
Doug Garnett
President, Protonik
4 years 4 months ago

The beauty of having what seems to be infinite investment cash is that Amazon can try anything. The beauty of having an outstanding PR machine is that Amazon PR can make anything sound important.

But I’m a skeptic here. Amazon is attempting to stretch their brand where it won’t go. And let’s look at the starting point here. The pitch is “Call Amazon to invite a Hyundai car salesman into your home.” That suggests all Amazon is doing is playing lead generation site for Hyundai. Interesting, but not very significant.

Mel Kleiman
BrainTrust

This could be a great service if it can get around all of the rules/laws and restrictions that car dealers have been able to get placed on the books to stop competition from creating a new model of selling cars. Just look at some of the challenges Telsa has faced in trying to sell cars directly to the public.

Shawn Harris
BrainTrust
Shawn Harris
Director of NA Sales, SmartSight | EMA
4 years 4 months ago

If it can be consumed, Amazon is in it, or will be. Amazon is looking to get larger sellers to say “uncle,” and will then gladly sell you their services (FBA, AWS, etc) and access to their “eye balls.”

Patricia Vekich Waldron
Staff
Patricia Vekich Waldron
Contributing Editor, RetailWire; Founder and CEO, Vision First
4 years 4 months ago

Leave it to Amazon to find a way to improve (and disrupt) an unpleasant task while giving its members another reason to go to Amazon first.

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Braintrust
"It just may revolutionize the automotive distribution model -- not unlike what Amazon did to traditional retail."
"Revolutionary! Amazon found yet another (new) way to present a product and make sales."
"Amazon can be the lead generation tool for the auto dealers, but in selling the cars they will have a peak and then run flat. "

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