Brand Protection in the Increasingly Digital Automotive Industry

Blogs | June 26, 2020

State of the Industry

Due to Covid-19, 44 million Americans have filed for unemployment as the economy has been sent reeling. With closed businesses and decreased spending, entire industries have been forced a different hand as consumer habits have changed. The automotive industry is no exception to this, as current sales have slowed greatly. Unlike others, however, there is a light at the end of the tunnel as people are delaying their automotive purchases without abandoning them entirely, with 73% of online auto shoppers planning to make purchases by the end of 2020. Similarly, a CarGurus study reveals that 87% of shoppers still plan to make automotive purchases, just later than expected. Of that subset of shoppers, 68% are researching cars and car parts, while just 6% have indefinitely postponed their buying plans. 

Where The Industry is Headed

Despite its solid outlook (relatively speaking), the auto sector will be forced to adapt given shifted consumer demand, availability of information, and evolving expectations for how consumers shop online. For years, the industry has lagged behind others in becoming fully digital – beholden to the dealer networks for the last mile of any purchase. While its online presence is noteworthy and has certainly grown, the very nature of it has always been based on the trust and connection of human interaction and in-person selling (though that can often be anxiety-inducing for shoppers for the fear of getting taken advantage of!). 

Consumers have expressed their shifted desire and willingness to buy online as 32% of consumers are open to making their automotive purchases online — and a survey fielded during the pandemic showed 61% feel comfortable making automotive purchases online. Companies such as Tesla have invested aggressively in e-commerce capabilities and a more direct-to-consumer approach to its showrooms. Other companies like BMW, now offer at-home test drives which enable customers to have the driving experience without the added hassle or risk of traveling to a dealership. While some consumers think these practices and demands are only worth noting for the next few months, the majority of these consumer preferences have been prevalent long before the pandemic; Covid-19 has simply altered the way we do business and sped up the automotive industry’s transition to e-commerce. 

The Common Watchouts of e-Commerce and How to Avoid Them

While the auto industry gains more of an online presence, manufacturers must continue to experiment with new ways of selling and be ruthless about reducing the friction between consideration and purchase. As more products in the automotive industry are sold through online retailers such as Amazon and eBay, the risk of distribution from unlicensed vendors increases with it – damaging brand reputation with the consumer and eroding value for the supplier. Consequently, manufacturers are stuck between a rock and a hard place with the need to meet consumer demand by selling products online, but also ensuring that it has not opened the floodgates to everyone selling everything — finding the balance of sustainable long term growth will be key. 

This damage can be felt by all companies regardless of size. For example, the Ford Ranger’s Hellwig rear sway bar has accumulated increasingly negative reviews largely due to third parties listing these products on Amazon without being authorized to do so by the brand/supplier. The product’s negative review rate of 11% largely stems from these sellers, which reflect poorly on Ford and Hellwig, rather than the sellers shipping the product. The same phenomenon occurs on other sites such as eBay, as demonstrated by recent reviews for a Chevy Cruz camshaft valve. The product has received less positive reviews and more negative reviews from third-party sales — a potential red flag that should be noted for the brand’s marketing strategy. These retail marketplaces are not just platforms selling products, but they’re also massive brand equity drivers as well. 

Guaranteed Protection in Uncertain Times

All is not lost, however, as many industries have shifted from 10% to 30% or even 50% of their business online already. Toys, electronics, beauty, and grocery categories have all charted the path forward to help automotive businesses navigate the online landscape. Digital marketplace success will be measured by data (no surprise) that offers actionable insights into the efficacy of media, the importance of content, and seller behavior online. With 86% of online shoppers hesitant to buy a product with negative reviews, brand image is everything. In these uncertain times, the security of brand image isn’t just a privilege, it’s a necessity for customer loyalty.

3-Step Action Plan for Online Brand Success: 

  1. Understand that the automotive industry is transitioning to an e-commerce centered approach – shoppers’ expectations were already changing, the Covid-19 pandemic just accelerated that change.
  2. Look to other categories to determine what will happen in the automotive sector. As more automotive sales and car buying shifts online, the dealer networks and auto shops may look to make up some of those lost sales/margins by selling OEM parts on eBay or Amazon. Putting price compliance, content tracking, and brand protection policies in place now will be much more efficient than retroactively doing so when it’s too late.
  3. Realize that in an e-commerce world, sales and marketing are the same things. How your products are listed online reflects your brand image. Negative reviews for one of your products shipped incorrectly from a third-party source will reflect poorly on your brand – not the third party seller.

As always, please connect with our team to learn more about our online brand protection services.

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