tl;dr version: Peer-to-Peer (P2P) rentals allow owners of vehicles to rent directly to people that want to try them out. Fun-2-Rent is a new company that provides the technical infrastructure and the legal and liability protections to allow it to happen. This market can help salespeople at dealerships sell more units so it’s in our interest to promote Fun-2-Rent to our customers.
I like radical & disruptive ideas, especially if they have the potential to be totally symbiotic (i.e. win-win for everyone involved). I like to see people start companies or try out ideas that are contrarian, crazy, and that the established powers deem to be a failure from inception, only to be proven drastically wrong.
I think I’ve just discovered a company that has the potential to become the biggest thing to happen to our powersports industry in a very, very long time.
Hyperbole? Read on, and if you think I’m wrong, then please offer up a substantive counter-argument because I can’t find one thing about this that doesn’t make it a huge boon for our industry at a time when it needs all the help it can get.
If you think I’m right, then I’d say that it behooves you to get on board and spread the word.
The concept I’m writing about is Peer-to-Peer (or person-to-person) rentals (P2P from here on out as it’s establishing itself as the established nomenclature for this type of rental structure), and the company that’s bringing it to our industry is Fun-2-Rent.
First, a bit about the concept of P2P rentals (check out the Wikipedia or the Peer-to-Peer Foundation if you want to learn more about the concepts and check out this great write up in TechCrunch). P2P renting works like this: A person owns a bit of property they don’t or can’t use 100% of the time, which leaves some “down time.” They list their property on a P2P marketplace run by a 3rd party. Another person needs that same bit of property for a limited amount of time. They go to the P2P marketplace to find someone that has what they need at a location and a price that seems reasonable. The 3rd party marketplace facilitates the rental transaction between the owner and the renter.
If you are a salesperson (or the manager of salespeople) and you can’t see the tremendous potential to use Fun-2-Rent to close a huge percentage of business that you would never be able to close any other way, then you are really in the wrong line of work…
The owner benefits because they can generate some revenue from an otherwise inactive asset that can be used to counter things like depreciation, finance charges, etc. The renter benefits in three main ways:
the item in question is privately owned and is therefore more likely to be “taken care of” because it’s a person’s own property.
the selection and variety of rentals is likely to be much more varied and interesting as the rental pool does not need to conform to a “fleet” model that traditional rental companies use to achieve economy of scale in things like service, parts, etc.
because the owner is not trying to run a business but merely looking to generate a small amount of supplemental revenue to offset ownership costs, the rental rate is typically half to one-third the rate of rentals in the general rental market.
As the enabling technology (i.e. the internet) matures, and as the business processes and consumer expectations evolve, you’re seeing more and more P2P rental concepts pop up (and in some cases receive immense start-up funding rounds) in several markets:
Fun-2-Rent is bringing this P2P marketplace to our industry and it’s an opportunity to sell more vehicles. There are a few others like Qraft [CB Profile] dipping into this space, but they are lacking in terms of liability, legal issues, insurance, etc.
F2R is the only game in town in the powersports peer to peer market that has the technical infrastructure as well as the legal liability and insurance protection pieces (for both renter and owner) put together in a nice neat package with minimal friction. I think the idea is, on balance, not only non-threatening, but has the ability to provide a sort of internal multiplier effect in terms of vehicle interest, usage, and thus sales.
If you work at a shop I know you get people calling to ask (potentially on a regular basis): “do you rent _____?” or “where can I rent a ______?” I know that most of you say “No” or “I don’t know” because there isn’t, or you don’t know of, a place where people can rent. The good news is now you do have an answer for this question, and it’s an answer that will eventually result in more of what you care about, vehicle sales.
Now I know that vehicle dealers/retailers typically have a negative, Pavlovian response when they hear the word “rental”:
They don’t want to operate a rental program out of their shop because they have heard the horror stories of the shops that tried it and got sued for the whole ball of wax when some jackass wrapped the rented Harley around a school bus.
They fear rentals because “why would someone buy from me if they can just rent when they need it?”
I’m here to explain to you that what Fun-2-Rent is offering via the P2P rental market is not something that should occupy the same parking space in your brain as other rental concepts. Not only is P2P rental in our industry not a “bad thing”, if we in the industry play it right it can be a very, very, very good thing for us!
Here’s the two primary ways how…
The first way that a healthy P2P rental market is good for us is that it provides a tool to overcome objections and obstacles in the sales process.
If you’ve spent any time on the floor selling vehicles in the last few years you know that getting customers that require (or are considering) financing into a unit is getting more and more difficult.
Maybe they have good or decent credit but are leery of taking on any more payments because they are worried about their job security, their investments, their home value, etc. etc. etc.
Maybe they have less than stellar credit because of age, financial track record, etc. If you’re even able to get them into financing the rates and/or payments are crazy high vs. what the customer wants or is able to swing.
Whatever the reason, they are afraid of assuming the new level of risk reflected in the payment. They want the vehicle, but they are afraid. You need to offer them something that can overcome that fear. Fun-2-Rent is the only legitimate tool you can use unless you have some great stock tips or a “sure thing” down at the horse track.
You whip out Fun-2-Rent’s brochure or show the customer the website and explain to them that if they list their soon-to-be purchased vehicle on this site and rent it for 2-3 days per month via the P2P market, they will essentially be able to own the vehicle for free!
If you are a salesperson (or the manager of salespeople) and you can’t see the tremendous potential to use Fun-2-Rent to close a huge percentage of business that you would never be able to close any other way, then you are really in the wrong line of work…
Even if you are selling something like a $50,000 wake boat to someone that has no issue swinging the payments, or can just plop down the cash on the barrel head, you’re still going to deal with the hesitancy that this vehicle is going to be spending a lot of its life idle. You can demonstrate that all the customer has to do is utilize the highly efficient and effective P2P marketplace that Fun-2-Rent has set up to rent out the vehicle two or three times a month to offset a lot of the vehicle’s depreciation or financing charge.
The Second way that a P2P rental market is good for us is that it create a valuable customer referral loop (i.e. word of mouth sales).
Here’s two scenarios that illustrate how this works:
Scenerio #1:
Joe lives near a body of water and owns two PWC and a trailer that he bought from Sam, his sales guy down at JimBobs Power Palace after Sam explained how Joe could offset ownership costs by renting it out a few times. Even though Joe lives close enough to the lake to use them quite often, he still likes the idea of offsetting some of the costs by using F2R’s P2P marketplace. So he rents them one weekend to Dave. Dave takes them out with his family and they LOVE it. So much so that they decide that they want to get one of their own. So of course Dave asks Joe where he got his… Next thing you know Dave is visiting Sam.
Now think about this… Dave begins with a desire to try out a PWC… Maybe from seeing other people on the lake, maybe it was a TV commercial… Whatever it was, something caused Dave to want to try it out. He jumps on Google and types something like “waverunner rental” or “jetski rental.”
In today’s market, all he’s going to find are a few rental places at marinas that may or may not be where he wants to go.
If they are too far away, he never rents, and Sam never makes the eventual sale.
If they are where he wants to go, but the rental rate is too expensive Sam never makes the eventual sale.
If Dave rents them and they are worn out pieces of shit and his wife is stranded in the middle of the lake Sam never makes the sale.
Because the rental places force Dave to assume ALL responsibility for damage to the vehicle if something should happen to it, and ALL the liability if something should happen to a rider, bystander, or other property, Dave rightly does not think that renting a waverunner is worth playing Russian roulette with his financial well-being. Ergo Sam never makes the sale.
Now in a world where P2P rentals are a viable option because of F2R, imagine that there’s four or five folks listing their PWC on the F2R site in Dave’s area. They are listed there because when Sam sold them, he told his customers about F2R. Dave rents Joe’s PWC via F2R. Joe and Dave are both covered for liability and damage by way of insurance that is a standard part of the rental process with F2R. Dave gets the recommendation to visit Sam. Sam makes the sale and there’s another PWC in F2R’s system that can lead to more sales. Rinse and repeat!
Scenerio #2:
A lot of the customers in our market may only own a dirtbike, or a UTV, or a PWC, but almost all of them would like to have the opportunity to at least try some of the other forms of powersports out there. If they don’t have friends or family that own the vehicles, and their can’t (or don’t want to) try their luck with the existing rental options then there’s not much of a chance they will ever expand beyond the powersports niche they are currently in.
This is of course similar to the first scenario, except this time we’re dealing with a P2P rental transaction between two people that are already both in the powersports fraternity, just different houses.
Joe has a Jetski and wants to try a RZR out on the dunes. Dave has a RZR and wants to try a Jet Ski. The each rent though F2R and pay each other $100 day making it basically a trade. Joe likes the RZR and decides he wants one himself. Dave tries the Jet Ski and decides it’s not as much fun as he thought, but he got to try it basically for free because of F2R.
It’s “winning” all the way around!
Now, it’s possible that the above agreement could have come about through some kind of deal on craigslist, but you have to deal with non-vetted users, lack of legal and insurance coverage, etc. No thanks…
With F2R, you have renter and owner rankings (think eBay’s rating system), insurance, liability coverage, etc. all wrapped up in a single one-stop site.
To give a little more info about how Fun-2-Rent works (visit their site for all the details):
The owner and the renters both need to have accounts on the site that are linked to a real identity.
Owners, renters, and vehicles can be rated just like on sites like eBay so you know if a renter has a history of abusing vehicles or an owner has a knack for putting off maintenance so you’re running the risk of getting stuck in the woods.
Renters are required to take online safety course for the vehicle type in question (i.e. online boating safety course for watercraft).
Owners and renters are required to get liability and damage insurance through Fun-2-Rent as part of the rental process so everyone is protected.
All-in-all it’s a pretty basic matchmaking system that has efficient safety mechanisms built in that protect the owner and renter about as well as you possibly can. Fun-2-Rent has a rock-solid legal and insurance framework behind them that places them well in the lead of any other P2P outfits that may be out there or may pop up in the future.
Again, I encourage you to check out their site, give them a call, and maybe even try it out for yourself.
The concept of peer-to-peer rentals is here. It’s proving itself out in other industries and there’s a viable way for us in the powersports market to benefit from it. I’d like to think that for once our industry can actually take advantage of technology and business process improvements early on, instead of following the demonstrated mode of not getting on board for 10 years after everyone else has tried. Computerized point-of-sale and inventory control, dealer websites, and e-commerce, are just some examples of technology and practices that are still being slowly accepted in our industry despite long-standing and widespread adoption in the greater business world. Let’s not let the significant potential of peer-to-peer rentals pass us by too.
All you, as a salesperson in the powersports industry, need to do to help make this P2P marketplace the industry accelerator it could be is to:
Know it exists and understand how it works.
Tell everyone you know about it and explain how it can help them get into the vehicle they want.
That’s it! Think about it… There’s no risk for the salesperson or shop. It can help you close deals you would never be able to close any other way, and once word gets out, and it creates a positive customer referral channel right back to you.
All you gotta do is tell people about it. Not a bad deal.
…And he just checked in to your shop on Facebook Places. Or on Gowalla… Or FourSquare… Or Loopt… Or Yelp… Or any number of “location based social networking” clones that are popping up all over the interwebs.
What are these sites/services? How do they work? Who uses them? Why should you care? This month I’m going to make an attempt to give you a primer on the subject that makes at least a rough pass on those questions.
Basically, the core of the idea is that now that people have gotten used to the idea of social networking by using sites like Facebook and LinkedIn, and a lot of those people are using “smart phones” that have fast(ish) connection to the internet and have some method of determining where you are physically located (GPS, cell-tower triangulation, etc.) it was natural that someone would come along and make the big connection: Combine the social networking experience with location-aware features while providing opportunity for the business location to participate. Except for the creepy stalker / exhibitionist aspect of the whole thing, it’s pretty brilliant…
Here’s a (by no means exhaustive) list of sites that play in this space:
Here’s how most of these types of services work. You sign up for an account with a site like FourSquare (www.foursquare.com). When you go someplace (a restaurant, a concert, a club) you use the application on your iPhone (or whatever device you have that is supported) to “check in.” You’re basically broadcasting to your social network (or at least the part of your social network that is using the same service you are) a message that says “Hey I’m HERE!” (and when I think about it cynically, you’re also saying to any potential robbers, “My apartment is empty, go for it!”). From there, depending on the service/site, a lot of other things can happen. If you have “friends” that are on the same location-aware social network, and they have also checked in, you can basically hook up, you can earn loyalty points (which I’ll go into later) from the business, etc.
So far, the big dog in this space has been FourSquare. They were the first big player that developed a large user base, got a lot of press, and captured the hearts of the VC’s. However, now that the concept is starting to prove itself, the really big dogs in the main-stream social networking space like Facebook (with Facebook Places) are starting to roll “check-in” functionality into their service offerings. It seems to me that now that Facebook is playing in this pool, where most people already have their social graph, sites like FourSquare are going to have a lot less room to move around. That is assuming that Facebook doesn’t eventually blow itself up due to privacy concerns.
Most of these location-based social sites like FourSquare have methods to provide incentives to people that check into a location a lot. The idea works like this: Business A has an account with the location-based social service and “claims” their business. Business A provides incentives (special services, discounts, free stuff, etc.) to people that meet certain levels of participation. For example, with FourSquare a user can earn points the more they check into the same location. Earning more points leads to various “badges” that tell the world “I’m a regular.” With FourSquare folks aspire to be a location’s “mayor.” Typically a business owner will provide more perks the higher up the ladder a user goes.
By themselves these location-based social services can be thought of like a game. But where they should be interesting to you is as a means to advertise your business, participate in the various ecosystems that will develop around these growing social networks, reward loyal customers, and so on.
Sites like FourSquare, Gowalla (gowalla.com), etc. are hot right now as companies look for more effective ways to use social networking tools and sites to market their businesses and make money. At the most recent Search Engine Strategies conference I just attended in San Francisco, it was very clear that businesses are becoming more and more disenchanted with the typical paid search advertising (if you purchase Google Ad Words, you know that our industry has managed to jack up relevant keyword prices to levels that are just goofy…). Display ads and other content network ads are proving to be very costly and difficult to measure except for companies that can afford complicated advertising attribution tools and services. Advertising on social sites like Facebook is reportedly not very effective for a lot of companies. Companies see the advertising and marketing opportunities that these new social networking sites offer because they mostly hinge around actually having live customers physically in their store. These sites/services may finally be the holy grail union between local, web, and social people have been waiting for. Or they may be just another flash in the pan web sensation that caters to narcissistic exhibitionists… Who knows? Some folks thought TV was a fad.
You should already be able to envision ways that you can leverage the functionality these sites provide for your dealership. Especially if your shop has, or could be made to have, a reason for people to hang out. You could also partner with establishments in your area that are hot hang-outs for riders. Here’s something to get the ball rolling around in your head: If you live close to a track, partner with the operators by offering free oil changes or something like that to the trackday-rat “mayor” of that facility. It’s a safe bet that a lot of tracks, especially ones that sit empty quite often, don’t have owners or operators that are even bothering to “claim” their business in sites like FourSquare, Yelp, etc.. Offer to step in and do it for them! I’m sure once you start using these things, more brilliant ideas will come to you.
In closing, I recommend that you keep a close eye on this area of the social web. It’s attracting a lot of attention, companies playing in this space are raising a lot of money from VC’s, and it’s already starting to develop some technical extensions and meta-level technologies that hope to provide additional value to the participants. An example of this is TopGuest (www.topguest.com) that links “check in’s” with a user’s loyalty programs (frequent flyer program for example) allowing them to earn points.
This month I’m going to dive into a topic that I believe will be one of the most important factors contributing to the long-term viability of the business model that drives our industry. That topic is the retail supply chain in our industry. Specifically the issue of suppliers that sell direct to your customers.
Long before I got into the e-commerce and internet marketing racket or got professionally involved in the powersports industry I received my college degree in what’s now called (but wasn’t yet widely known as) supply chain management. Combining that education with a lifetime of being a computer geek, and being smack dab in the middle of the dot-com boom in Silicon Valley in the middle and late 90′s has provided me with a rather unique perspective with regards to how the internet and related technologies relate to doing business on the web.
Some of my first thoughts when e-commerce burst on the scene back in the dark ages of the web was that the internet was obviously going to have a tremendous disintermediation effect on pretty much every facet of the traditional supply chain. In a nutshell, disintermediation is the process of removing “links” in the supply chain.
Low and behold through a series of twists and turns in my schizophrenic career path I end up with the amazing opportunity to watch, comment on, and participate in the very phenomenon! Not only do I have this opportunity, I have it in an industry that has been so benighted, backwards, and generally late to the party when it comes to modern technology, modern business practices, and attitudes that it’s getting hit harder and faster than a lot of other industries ever were.
That post generated (relative to the majority of posts on the DN blog site) a large number of comments. I strongly suggest you go and read that post and the comments. While you’re there, take some time an offer your point of view on the subject. Our industry needs more dialog on these issues.
Arlo again touched on this issue in June with his excellent job of moving this along by offering an introduction to Shopatron, a company that allows OEM’s to sell direct, but have the actual fulfillment handled by dealers that participate in the Shopatron program.
All of this has done an excellent job of laying out who some of the players are and the techniques they are using to transform the retail supply chain for (currently only) PG&A.
I want to spend a little time looking at why the OEM’s are doing what they are doing, what you need to be thinking about and more importantly how you can prepare for how all of this is going to shape our industry in the future.
First, one has to ask: “why the manufacturers are doing this in the first place?” Why would a manufacturer that has had a retail supply chain in place decide to radically alter that by selling direct to the consumer? Based on conversations I’ve had, things that I’ve read, and my own analysis, I think it comes down to the OEM’s not believing in either the long-term vitality or maybe even the long-term survival of the powersports industry’s retail supply chain.
Put simply OEM’s don’t feel that the traditional dealers are adequately meeting the market demand for their products. That can be in terms of gross numbers, product mix, whatever. The bottom line is that for OEM’s to make this move it’s a signal that they don’t trust the established retail channel to move enough product. An OEM that’s selling direct is saying to you, “you’re not getting the job done, so we’re going to work on cutting you out.”
Quite a few of the OEM’s that want to sell direct are currently willing to use services like Shopatron (or 50 Below’s “Referral E-Commerce” affiliate program for distributors), but I think they are only doing it for two reasons: self-serving interests and political cover.
The self-serving interests has to do with Shopatron’s stated policy that fulfilling dealers must have the product in stock in order to “bid.” This has the effect of forcing inventory deeper into the supply chain, pushing it down to the retailers that want to participate. This helps the OEM’s books by allowing them to recognize the revenue and get that inventory off their books freeing cash and increasing profits. Of course this also pushes the excess and obsolete risk to the dealer/retailer, eats up their cash, and violates pretty much every tenet of progressive, modern supply chain management principals. The deeper in the supply chain a product is carried the lower its utility and the higher its cost.
Paradoxically, the more “successful” Shopatron and the OEM are in getting dealers signed up, the more competition there is for each of these orders. As the deciding factor for who gets the order from the Shopatron system is based on the combination of having the item in stock and the physical proximity of the dealer to the customer we end up with more dealers/retailers carrying more and more inventory hoping to collect more and more of the crumbs that fall from the OEM’s table.
This is great news for the OEM’s (except for those that have generous inventory rotation or send-back policies. If there’s an OEM that has a no-questions asked, unlimited return policy that is also participating in Shopatron, I would argue that they need to fire whomever is running their channel strategy). The OEM’s now have an enticing carrot to get retailers to carry more of their inventory which is something that they have always seemingly wanted more than anything, even if in this time of relatively cheap expedited logistics it’s a stupid thing to do.
Of course if the retailers/dealers balk at taking a bite at the carrot and don’t sign up for Shopatron or don’t increase their stocking levels, the OEM will make the sale anyway (most of the time at full retail!).
The OEM’s can always defend their decision to sell direct by saying, “hey, we offered the olive branch of giving you the opportunity to participate in Shopatron and make this sale. Don’t be mad at us!”
Shopatron is win-win for the manufacturer. There is no downside for them, but there’s plenty of potential downside for the dealers. I’ve already brought up the issue of inventory liability. But what about direct competition?
Take for example a prominent vehicle OEM (we’ll call them BRANDX) which sells direct from its own Shopatron powered site shop.BRANDX.com.
Let’s say that I’m a dealer that has spent considerable time and energy building an e-commerce operation selling their stuff. That includes significant investment in things like SEO to make sure my site shows up high in the search results.
I’ve managed to get ranked in the top 5 for several BRANDX related keywords. Keep in mind that several studies have shown that as you move down the search engine results pages (SERPS) the chance of getting someone to click on you drop dramatically.
Now BRANDX comes along with a naturally highly ranked domain name (BRANDX.com) that is running its store at a subdomain (store.BRANDX.com). All of a sudden my previous #5 rank in Google is #6 because BRANDX’s own site is ranked #5. Using some of my SEO tools that check search engine position, that has indeed happened. This is not a hypothetical. There are retailers/dealers that are indeed losing real online sales to their own OEM and by extension to a competing dealer that is participating in Shopatron or to the OEM themselves if it’s for a product that no one bids on in Shopatron.
Of course the situation is even more heinous if the manufacturer that’s selling direct is not using Shopatron or any other method to pass the sale on to its dealer/retail channel. If you are competing directly with a manufacturer for retail sales, you need to really question why you are doing business with them and selling their products. There may be some legitimate reasons to do so, but in our industry the way it is today, those reasons are few and far between.
Why have we gotten to this point? I believe that it comes down to the systematic failure of our industry to adequately develop a supply chain that meets the needs of the modern marketplace. That, combined with the fact that OEM’s, distributors’, and retailers’ motivations and incentives are often at best incompatible, if not downright counter-purpose. Mix in thousands and thousands of retailers/dealers that are all selling virtually undifferentiated products that are relatively low margin, high cost, and high-cube and you’ve got the situation we’re in now.
So what do we do about it? Well, the first thing you need to do is get signed up for Shopatron. That’s a 100% complete no-brainer. As long as it’s there, you need to sign up for it and monitor it for any orders that you can fulfill. Keep in mind that these are already lost sales. Only by being in Shopatron can you attempt to recapture them. Unless you have a strategic interest to really jump into Shopatron, I would not recommend increasing your inventory stocking levels until you get a feel for what the market is like for the brands and products. Just use Shopatron like a line in the water initially.
To conclude, I don’t think there’s necessarily anything overtly nefarious about Shopatron, or OEM’s trying to fulfill what they see as un-served or under-served demand in the market. OEM’s that I’ve talked to say that they have basically been pushed into this position as they have customers contacting them directly wanting to buy because they can’t find what they want in the retail channel. I just think that the current solution is at best a band-aid that still tips the playing field too far in the OEM’s and large retailer’s favor at the detriment of the rest of the dealers.
Ultimatly one of two things will happen: Better information systems and processes will be developed that allow real-time sharing of supply and demand information up and down and across the powersports supply chains to insure more efficent operations… Or… There will be less and less opportunity for the smaller dealerships and retailers that make up the current landscape.
Imagine this scenario: You’ve survived the Great Recession. However to make it through the epic national blood-letting you had to dramatically reduce your shop’s staff. However, now that riding season is here you’ve got customers coming into your shop looking to buy gear or get information on vehicles. Unfortunatly, you don’t have the staff level required to give personal attention to everyone. What can you do to help mitigate this issue until you can get staffed up again?
Well, do you have a website? One of those fancy e-commerce enabled ones that you’ve never really been able to do a whole lot with or see a dramatic ROI?
Here’s this month’s mind-bending idea… Turn your web presence inside out! Set up a few obvious, friendly, comfortable locations in your dealership where customers can access your website and get information about vehicles, parts and gear.
The formal name for these would be Internet Kiosks. They are a great way to leverage a powerful asset that you are most likely not using to it’s full potential right now. It allows customers to do a certain amount of self-directed research or shopping in a similar way that they do now with a brochure (but you never run out) or with those stacks of parts catalogs (without all the counter clutter).
Kiosks are not just a band-aid for a lack of staff. They have proven to be worthwhile enough that major retailers like REI, Staples, and Best Buy have made them part of their stores. In addition to just having customers use the kiosks on their own, they are useful as a tool to have your parts or sales staff use with the customer.
By seeing how effective your site can be in a real-world scenario maybe you can justify spending the time and money to make your website even better. Merchandise your site and create useful product groupings to help customers in your shop and you’ll automatically have a website that will perform better out in its natural habitat of the internet.
So how would you pull this off? Well, there are companies that can provide you with ready-made internet kiosks (Google “internet kiosk manufacturer”) so you can just plug-and-play. If you have access to someone with adequate technical capability you could also whip these up yourself.
Browsers like Internet Explorer, Firefox, or Chrome all have the ability to be run in a Kiosk mode. Kiosk mode basically locks down the browser so that the user is very limited in what they can do. There’s no ability to access the OS, run other programs and so on.
A basic PC from Dell or HP that would be suitable can be had for a few hundred bucks. You can even go for one of those new touch-screen based all-in-one models. A fairly stylish computer stand from Ikea will set you back like another hundred bucks.
You could even pull off this idea with one of Apple’s new iPads. Regardless of the computing device you choose you’ll of course want to make sure the entire thing is secured to avoid having it walk out of your dealership.
And speaking of security, you’ll want to either install filtering software on the PC or control access at your store’s network router to limit the sites that the kiosks can access. You don’t want customers surfing porn or, worse yet, visiting competing dealer’s or retailer’s sites!
Finally you’ll want to communicate to your staff what’s up with the kiosks. Make it clear that you don’t see the kiosks as a way to replace the humans in shop. Educate your staff that the kiosks are a tool that they can use to actually improve customer interaction when they have the bandwidth or as a way to allow customers to do a little “self help” when things are crazy. It’s better than having customers wander aimlessly around your shop twiddling their fingers waiting for someone to help them.
Don’t let the lack of staff be the only reason you try out the kiosk idea. Many top retailers have found that having shopping kiosks are a great way to flesh out a full multi-channel retail strategy. Maybe you’ll discover you’ve been sitting on a secret gold mine all this time. You just needed to look at it differently!
I’ve created this post for the purpose of insuring that as long as OEM’s and other sources of supply in the motorcycle and powersports industry continue to create and enforce M.A.P. (minimum advertised price) policies (thus creating what are essentially price fixing scenarios) that all violators are treated the same.
The goal here is to make sure large retailers and small retailers are all being held to the same standard when it comes to MAP.
So, when you see a violation of MAP anywhere (email, print, website, eBay, Amazon, Google products feeds, etc.) in addition to following the policy of the OEM and reporting the violation to them, report it here as well so everyone can see it. Simply use the comments at the bottom of the page. You don’t need to use your real name to leave a post. I’ll be moderating the comments to eliminate spam, but that’s it. I take ZERO responsibility as to the accuracy of the MAP violation claim. I have no idea if the items actually violate any given OEM’s MAP policy. That’s for the OEM to decide.
The OEM’s with MAP are more than welcome to post their responses to MAP violation claims here as well. As are the offending retailers.
When the offending retailer has made the change to their site, etc. please update the comment section. Likewise, if after reporting the violation to the OEM/Disti you don’t see the retailer being forced to toe the MAP line make that clear as well.
Hopefully by having this fully open and transparent discussion of MAP and all of its tangential issues we can work to create a more fair, competitive, and vibrant powersports market.
The idea for this month’s column came to me last year when I was out doing some Christmas shopping. I didn’t have a specific item in mind, but I did have a general idea. Now this is a store that I don’t normally do a lot of shopping in so I’m sure when I walked through the door I had a little of that “deer in the headlights” look. Fortunately this store was staffed with knowledgeable and helpful staff and I think even more importantly, the products were organized and presented in a manner that made it, if not enjoyable, at least pleasant to shop in.
One thing that’s pretty obvious from looking through those stacks of catalogs on your parts counter is that we are in an industry with an insane number of products that our customers can choose from. While a small percentage of the hard-core enthusiasts know exactly what they want (you know the type.. The ones that have the distributor catalog memorized and come in with reams of printouts from the forums) most people need some help figuring out what they need or even more importantly what they don’t know they need.
Unlike in your physical store where you can have one of your knowledgeable and helpful staff aid a lost customer, on your website for the most part, the customer is on their own (unless of course you’ve got some type of online chat and co-browsing or co-shopping application on your site).
When it comes to e-commerce, the only tool you really have to help the customer is the merchandising on your website. For the purpose of this column I’m going to define merchandising to encompass three things:
Organization of the products (product or feature groups, category and taxonomy development, etc.)
Selection of products (what product go into those groupings or receive some other type of “feature” status)
Presentation of the products
The first two elements go hand in hand. You can create a “category” on your site and call it something like “Maintenance Essentials” with products that pretty much anyone that rides any type of powersports vehicle is going to find useful or necessary. One of those items may be chain lube. Let’s say you’ve got access to like 10 different brands each with 3 variations and 3 different sizes. That’s 90 different combinations! For one simple product!
Imagine this type of scenario that I think makes up 80% of the shopping situations out there: A guy rides his motorcycle as an alternate commute vehicle and an occasionally for recreation. He likes his motorcycle, but he’s got a life. He doesn’t spend every waking moment on forums to determine what the ultimate chain lube is. He doesn’t ride with a big group of people that will sit around debating the relative benefits of various type of chain lube. All he knows is that his chain looks dirty and needs cleaning and lubing.
He goes to your site, or any typical site, and types in chain lube and is presented with almost 100 choices! For a simple product like chain lube! You need to make sure that on your site that you’ve picked the “best” one or two options for these major product types and present them in a way that makes it 1) easy to find and 2) communicate that based on your expert opinion that these are the ones to go with. Basically the exact same thing that a good parts person would do in a face-to-face situation. The difference is that online you need to do all of this before the customer ever comes onto your site.
There are a few different ways that you can do this. The first is the idea of creating multiple personas of model customers and so scenario planning on how they may interact with your site. Create like 3 to 5 customer types (the hard-core enthusiast, the casual rider, the spouse or parent of a rider, the total noob, etc.) and then imagine a few different scenarios for each type (a major part broke and they need to find a replacement right now, they are new to riding and need everything but don’t know anything, they need to buy a birthday gift for their wife, son, friend that rides, and so on). Pretend to be these various types in various situations and try to organize your site so that there are obvious categories and product assortments that make each customer’s shopping experience as fulfilling as possible.
If your site has been live for a few years and you’ve been using a good analytics package, you can use its data to see how people use your site and utilize real-world data in your scenario planning. Where they go, what they buy, what they look at and don’t buy, etc. etc.
Obviously this is all a lot of work. It’s so much easier to just buy a site from a 3rd party vendor with all the catalogs pre-loaded, or build your own and dump a product feed into it, have a few general categories like helmets, exhausts, etc., and be done with it. That’s what 99% of the sites out there do, and that’s why 99% of the sites out there suck and don’t sell anything! Not only does merchandising make it easier to shop, it’s just about the strongest tool you have to differentiate your site from all the other sites out there!
That doesn’t mean that you should do away with the potentially millions of other products in your online catalogs. More often than not, you’ll want to present that potentially overwhelming selection on a second layer behind the your primary merchandising and allow customers to drill down to explore. Always have a “See all of our chain lube products” link next to your hand-picked selection. Of course a robust and powerful search tool is your best bet to handle these kinds of shoppers.
So now that we’ve dealt with the product selection and organization ideas, let’s move onto the final piece, the presentation of those products.
There are so many cool technologies these days that can help you communicate the features, advantages, and benefits of the products that you sell. You’ve of course got the good ol’ custom written and compelling product description. You’ve got the ability to take your own product photos that show things like the product in use, various angles or views, mounting options and so on. You’ve got videos that you can post on YouTube and embed in the product page. You can post sound files of exhaust systems. The limit is really only your imagination and the amount of time you want to devote to it.
At the very top you can even go big time and use rich-media technology like Adobe’s Scene7 (www.scene7.com) that can provide a huge range of presentation and interaction opportunities.
Try to remember that you are the expert in what you sell. Use that expertise to help customers figure out what they should be buying and communicate it through professional merchandising on your site.
The idea for this month’s column came to me last year when I was out doing some Christmas shopping. I didn’t have a specific item in mind, but I did have a general idea. Now this is a store that I don’t normally do a lot of shopping in so I’m sure when I walked through the door I had a little of that “deer in the headlights” look. Fortunately this store was staffed with knowledgeable and helpful staff and I think even more importantly, the products were organized and presented in a manner that made it, if not enjoyable, at least pleasant to shop in.
One thing that’s pretty obvious from looking through those stacks of catalogs on your parts counter is that we are in an industry with an insane number of products that our customers can choose from. While a small percentage of the hard-core enthusiasts know exactly what they want (you know the type.. The ones that have the distributor catalog memorized and come in with reams of printouts from the forums) most people need some help figuring out what they need or even more importantly what they don’t know they need.
Unlike in your physical store where you can have one of your knowledgeable and helpful staff aid a lost customer, on your website for the most part, the customer is on their own (unless of course you’ve got some type of online chat and co-browsing or co-shopping application on your site).
When it comes to e-commerce, the only tool you really have to help the customer is the merchandising on your website. For the purpose of this column I’m going to define merchandising to encompass three things:
Organization of the products (product or feature groups, category and taxonomy development, etc.)
Selection of products (what product go into those groupings or receive some other type of “feature” status)
Presentation of the products
The first two elements go hand in hand. You can create a “category” on your site and call it something like “Maintenance Essentials” with products that pretty much anyone that rides any type of powersports vehicle is going to find useful or necessary. One of those items may be chain lube. Let’s say you’ve got access to like 10 different brands each with 3 variations and 3 different sizes. That’s 90 different combinations! For one simple product!
Imagine this type of scenario that I think makes up 80% of the shopping situations out there: A guy rides his motorcycle as an alternate commute vehicle and an occasionally for recreation. He likes his motorcycle, but he’s got a life. He doesn’t spend every waking moment on forums to determine what the ultimate chain lube is. He doesn’t ride with a big group of people that will sit around debating the relative benefits of various type of chain lube. All he knows is that his chain looks dirty and needs cleaning and lubing.
He goes to your site, or any typical site, and types in chain lube and is presented with almost 100 choices! For a simple product like chain lube! You need to make sure that on your site that you’ve picked the “best” one or two options for these major product types and present them in a way that makes it 1) easy to find and 2) communicate that based on your expert opinion that these are the ones to go with. Basically the exact same thing that a good parts person would do in a face-to-face situation. The difference is that online you need to do all of this before the customer ever comes onto your site.
There are a few different ways that you can do this. The first is the idea of creating multiple personas of model customers and so scenario planning on how they may interact with your site. Create like 3 to 5 customer types (the hard-core enthusiast, the casual rider, the spouse or parent of a rider, the total noob, etc.) and then imagine a few different scenarios for each type (a major part broke and they need to find a replacement right now, they are new to riding and need everything but don’t know anything, they need to buy a birthday gift for their wife, son, friend that rides, and so on). Pretend to be these various types in various situations and try to organize your site so that there are obvious categories and product assortments that make each customer’s shopping experience as fulfilling as possible.
If your site has been live for a few years and you’ve been using a good analytics package, you can use its data to see how people use your site and utilize real-world data in your scenario planning. Where they go, what they buy, what they look at and don’t buy, etc. etc.
Obviously this is all a lot of work. It’s so much easier to just buy a site from a 3rd party vendor with all the catalogs pre-loaded, or build your own and dump a product feed into it, have a few general categories like helmets, exhausts, etc., and be done with it. That’s what 99% of the sites out there do, and that’s why 99% of the sites out there suck and don’t sell anything! Not only does merchandising make it easier to shop, it’s just about the strongest tool you have to differentiate your site from all the other sites out there!
That doesn’t mean that you should do away with the potentially millions of other products in your online catalogs. More often than not, you’ll want to present that potentially overwhelming selection on a second layer behind the your primary merchandising and allow customers to drill down to explore. Always have a “See all of our chain lube products” link next to your hand-picked selection. Of course a robust and powerful search tool is your best bet to handle these kinds of shoppers.
So now that we’ve dealt with the product selection and organization ideas, let’s move onto the final piece, the presentation of those products.
There are so many cool technologies these days that can help you communicate the features, advantages, and benefits of the products that you sell. You’ve of course got the good ol’ custom written and compelling product description. You’ve got the ability to take your own product photos that show things like the product in use, various angles or views, mounting options and so on. You’ve got videos that you can post on YouTube and embed in the product page. You can post sound files of exhaust systems. The limit is really only your imagination and the amount of time you want to devote to it.
At the very top you can even go big time and use rich-media technology like Adobe’s Scene7 (www.scene7.com) that can provide a huge range of presentation and interaction opportunities.
Try to remember that you are the expert in what you sell. Use that expertise to help customers figure out what they should be buying and communicate it through professional merchandising on your site.
Welcome to 2010! I want to kick off this year with a column about selling online, but selling someplace else other than your own website. This is something that you can engage in even if you’re not directly engaged in full-blown e-commerce on your dealership’s primary website.
What I’m talking about is taking advantage of things like e-commerce applications on social networking sites like Facebook and other “widgets” that you can embed in blogs or forums.
The first example I’ll point out is a company called Payvment [http://www.payvment.com/] that has a nifty little storefront application for Facebook.
In order for this to work you’ll need to have a Facebook fan page set up for your dealership. You simply install the application on your page, set up the look at feel of the storefront using the tools that Payvement gives you, enter in some information about your shop, and then start loading products. (Obviously there’s more detailed steps involved and Payvment’s site provides all the details).
I’d recommend experimenting at first and a load a small selection (around 10) of products that are impulse buy, gift, general interest type of products. You’ll want to keep in mind that Facebook is not really a shopping destination, and typically you’ll want to focus on the interaction and social networking aspect of Facebook and keep the sales pitches to a minimum. But since it is a fan page, I see it as a great way to sell things like t-shirts, hats, and other items branded with your shop’s logo, or the brands that you carry.
Considering that Payvement is totally free to use right now, there’s really no reason to not give it a try and see if there’s a sensible way for you to fit it into the overall online activities.
One dealership that has begun experimenting with Payvment is Ducati Seattle [http://tinyurl.com/ykppl42]. What’s interesting about the fact that they have this e-commerce application running on Facebook is that they don’t even have any e-commerce on their primary dealership website!
Ducati Seattle’s Cindy Wallace is in charge of the Facebook storefront as well as their eBay store where they focus on selling crash damage take-offs, excess & obsolete, etc. Cindy told me that based on a combination of factors (strong local community support & involvement in the shop, etc.) Ducati Seattle has made the decision to not have a full-blown e-commerce operation. “People prefer to come into the shop to buy things where they can actually see them and to see other people there as well.”
But that doesn’t mean that they are not active online in other ways. Based on leadership by Ducati Seattle’s owner David Roosevelt they have made a decision to be very involved in social media like Facebook. Considering that they have over 1,200 fans on their Facebook page it makes sense that they are giving the Payvement application a test ride.
Another Facebook application for selling products from within your Facebook page is Nimbit MyStore for Facebook [http://tinyurl.com/yzvdzxh]. Nimbit seems to be going more for the rock band trying to sell merchandise angle (so they offer features like the ability to sell tickets or downloadable music), but I don’t see why you couldn’t use it to sell merchandise for your shop. Nimbit has several offerings that range from free to about twenty bucks a month.
Moving away from Facebook, I want to point out that there’s a growing number of widgets that allow you to place shopping experiences on more content-centered (as opposed to shopping-centered) websites and pages. A widget is a small bit of code that you embed in a webpage that provides a little area or box where something shows up that gives people information (weather, race results, etc.) or in our case a product display with the ability to buy it right there.
These widgets allow what I call contextual commerce. Where you can offer products that go along with the content the visitor is reading about. Writing a post in your blog about how to bleed the brakes? Why not have a widget in the side bar selling brake fluid, brake bleeders, pads, etc?
Check out Widgetbox (a clearinghouse of all things widget) as well and check out the ecommerce tag http://www.widgetbox.com/tag/ecommerce. Finally, of course, you can always Google “e-commerce widgets” to track down more of the latest and greatest as developers keep the wheels of progress humming along.
Having a storefront on Facebook or an e-commmerce widget on your blog is most likely not going to be a silver bullet in terms of generating a huge amount of extra revenue. A lot of this has to do with the fact that most people out there are not in the shopping mood when they are on a social site like Facebook. However, having a good selection of impulse purchase products and gifty items makes a lot of sense. It gives you a chance to have a few more hooks in the water in terms of selling things and it keeps you abreast of what’s going on in the world of e-commerce technology and off-site merchandising.
If you give this a try, please let me know how it works for you!
Last month’s column generated more emails than any other that I’ve ever written. After years of telling dealers they needed to get online all it took was the near collapse of the Western world’s economy to get through to you. You’re a hard bunch to motivate.
The reason I’ve been so gung-ho on the web was because it was the only practical way for a dealership to dramatically grow its revenue. A dealership could do nothing and float along with the economy, and we’ve seen what’s happening to them. A dealership could try to expand it’s physical presence into other markets by opening more shops, but that’s expensive, difficult, and risky. Or a dealership could take on the web in a big way.
On one hand, it’s good that so many of you seem to be doing this now. On the other hand I think a lot of you may have missed the window of opportunity. At least as far as jumping into straight e-commerce goes. Especially if my email load is any indication. I know of at least 10 dealerships that say they are going to jump in. Add to that the huge number that didn’t write to me, the number of dealerships already doing it, and of course the huge pure-play e-commerce guys like MotorcycleSuperstore and RevZilla, and as you can see, the pool is pretty darn crowded now.
So given this situation, I want to end my series of columns for 2009 playing Nostradamus and set the stage for a plausible future that I think you need to be thinking about, if not outright planning for.
The year is 2012. The previous two years didn’t provide the much hoped-for economic recovery (think I’m being overly pessimistic? Read this: http://blogs.harvardbusiness.org/tjan/2009/09/the-next-crisis-coming-in-2011.html). The economy as a whole managed to eek out a small amount of growth but only enough to keep it from sliding backwards. What’s worse is that it proved to be a totally jobless “recovery.” Consumers in the USA didn’t have the disposable income nor the security necessary to fuel the powersports industry at a level necessary to maintain it’s current model. More and more dealers closed. So many closed in fact that large urban centers around the US were now without a single powersports dealership. OEM’s were sitting on warehouses and leased lots full of vehicles that were working on their second or third birthday. Production back in their respective home countries was at a virtual standstill.
The dire economic situation had now forced the OEM’s (as well as parts, accessory, and gear manufacturers) to rethink not only their own business models, but the overall business model for our industry as a whole. The idea of having literally thousands of typically undifferentiated retailers across the country selling virtually undifferentiated products out of establishments that by their very nature were burdened with unsustainable overhead and other expenses had finally proved its ultimate folly.
Customers still wanted their motorcycles, ATV, PWC’s, etc. The OEM’s still wanted to stay in business producing them. The ultimate problem was the distribution and retail sales system. Finally, the smart OEM’s hit on a model that had worked before. They looked at the personal computer market pre-Dell and realized that there was an opportunity to leverage the phenomenal opportunity that the internet provided and essentially sell semi-direct. Customers would shop on the OEM’s, pick out the vehicle and options, and then buy it online.
However, unlike the relatively inexpensive and “basic” home PC, the products in our industry presented a level of technical, financial, and legal complexity that they still required one more node in the supply chain. Unlike a PC from Dell, the vehicle would not be shipped directly to the end customer.
The solution was to evolve to a model that traded information for inventory. Vehicle and PG&A inventory was now held as high in the supply chain as possible. What were once “dealerships” that occupied ten’s of thousands of square feet were now transformed into small “authorized delivery, setup, and service” locations. It was a radical transformation from huge dealerships to many more boutique-type establishments that now focused on much more high margin business activities such as the F&I portion of the sale, vehicle service and warranty work, and so on.
The fundamental discovery that allowed this model to work was the realization that the just-in-time logistics costs to get the right vehicle to the right delivery point at the right time could be done far more economically than the aggregated real and opportunity costs of the old (i.e. current) way of doing things.
Customers also shop for OEM branded and produced PG&A on the OEM’s site and have the opportunity to take delivery (for installation or set-up for instance) of the products from participating retail/delivery locations for a revenue share with the OEM.
These Delivery, Setup and Service locations were now composed of mostly high-magin activities and were relieved of much of the non value-added overhead burden from the previous industry model. However, because there was the potential for so many more locations in any given market, the emphasis on quality and high levels of customer service was even greater.
So what’s the moral of this cautionary tale? It’s this: “if you think the internet has been disruptive to your business so far, you’ve most likely not seen anything yet”! Our industry has not yet even begun to scratch the surface of what the internet and all of it’s prodigal technologies and business practices can do for (or to) us.
I’m sure a lot of you are shaking your head and saying: “this guy’s nuts!” Keep in mind I was telling you all two years ago to get into the e-commerce game. I’m sure more than a few of the dealers trying to finally get into the e-commerce game once said the same thing about selling on their websites. Most of you didn’t move until it was too late on the e-commerce front. What if I’m right about this? What are you going to do to prepare?
“Well the frost is on the pumpkin, And the hay is in the barn…” those lines from James Taylor’s “Walking Man” always remind me of this time of the year. It’s harvest time, and it’s time for the gardener/farmer to go out and start picking the crops they’ve been growing all season.
If you’re going to play in the internet you need to understand the importance of having a full time “gardener” for your online garden. Someone to nurture it, coax it along, do all of the right things at the right times. Otherwise you’ll end up with what I see a lot of out there: a land of promise transformed into a barren and forsaken land whose bleakness is only interrupted by patches of weeds, brambles, and thorns.
This month’s column compliments perfectly last month’s screed on the importance of hiring the right people. I was up in the air as to which one to present first, but once I seized on the garden/farming metaphor, I figured this one made more sense to run in October.
Last month’s column was all about why and how to hire the best people possible, this month’s column is about what you need them to do and why it needs to be a full-time position.
There’s a lot of moving parts in a modern, successful online operation. There’s the technical side of things to make sure the websites, databases, and applications all work the way they are supposed to. Then there’s the artistic and design aspects to make sure that the world perceives your brand as favoriably as possible. There’s the art and science of search engine optimization and search engine marketing. You’ve also got to consider product merchandising, promotions, and the overall shopping experience. Of course on top of all those, there’s the seemingly infinite number of other things that always seem to pop up. Broken things to fix, decent things to improve, opportunities to pursue, ideas to test and experiment with, etc. etc.
If you think that it’s possible to do all of this without at least one full time person, you’re delusional. In a perfect world you’d have at least one person working on each of these facets. If you want to be successful online, either via e-commerce or just online marketing and advertising (perhaps via social networking technologies like Twitter, Facebook, etc.) you need to have at least one highly competent and dedicated individual in charge of it all.
You need someone that can eat and sleep this stuff. There’s simply too many highly lucrative opportunities to fill this position with a 9-5 clock puncher. You need someone that is passionate about your market (motorcycles, racing, ATV’s, watercraft, etc.), passionate about the web, passionate about social technologies, passionate about design. You need to encourage and support them with the tools, technologies, and most importantly education necessary to stay on top of it all.
I can say with certainty that when a business has at least one person like I’m describing above, they are virtually unstoppable. When they don’t have that, they go nowhere fast and the decline is dramatic and almost instantaneous. It’s a hard climb to the top and it’s too easy on the internet to be knocked off your perch. It’s so easy for the competition to take advantages of unprotected flanks. You’re at the mercy of ever-changing search engine algorithms that can wipe you off the face of web with the flip of a bit.
If you think that you can just move someone that did a decent job as a parts manager into the role of running your websites, your e-commerce, your online marketing and expect to see anything short of poor results without a ton of training, development, and support, you’re just not being realistic.
But assuming that you do hire someone with the intelligence, drive, and potential, how do you get them started. Well, at the risk of being immodest, the first thing you should do is have them read all my columns. If you go wayyyy back to the very beginning, over the years I’ve laid out an almost step-by-step outline of what to do, how to do it, where to get more information, etc. Considering how much I charge for consulting, and considering you’re getting Dealernews for free, if you’re not doing what I’m telling you, well, then there’s something wrong with you. Look, I’m not being arrogant if it’s true!
This is an area of specialized expertise just like the other aspects of your dealership. Do you have a service department without a service manager? A sales department without a sales manager? A parts department without a parts manager? Not if you’re a high-performing dealership. Obviously if you’re doing e-commerce there’s going to be a lot of overlap into areas of the parts department, but you still need to think of your online operations like its own line of business.
I don’t think there’s very many retailers/dealerships out there that have figured this out yet. I think part of that is because a lot of the 20-type groups and other general industry consultants that may have years and years of excellent experience in the “traditional” dealership management roles don’t have a clue about the internet. They don’t properly recognize the immense potential it represents, nor do they properly understand or respect how difficult it is to do it right.
Because the majority of training and education dealerships do get (if they get any) is from these traditional sources, they are absolutely missing out on this stuff. That’s why I write this column. That’s why Dealernews is the only industry trade publication that has dedicated space to these topics for years. We recognize the need to get this information out to you, the dealers, retailers, and independent shops to help you survive the uncertain and turbulent future.
We’ve only witnessed the beginning of the amazing potential the internet has to dramatically and radically reshape the very nature of our industry. Next month I’m going to unleash on you my nightmare vision of the fiery hell-scape unleashed by the Internet Monster in all its fury. Whoa be unto those that have not embraced Todd’s Gospel of The Interwebs and are caught up in the chaotic aftermath (it will be right after Halloween after all!).
