Does e-commerce make sense for a company like Ford?

After 1999 and 2010, will Ford's latest attempt at selling cars online be a success in the UK?
22 October 2018 | 5 Shares

Should Ford try e-commerce again? Source: Shutterstock

In the UK, automakers are quite aware of the online car market and the potential and reach it offers.

Manufacturers have often worked in partnership with some of these portals to tap into new customers, provide value for existing customers, and ensure stronger demand for their product overall.

In Britain alone, the online car market is worth billions, with two-million-odd used cars being sold in each of the first and second quarters this year — according to the Society of Motor Manufacturers and Traders.

However, when it comes to selling new cars online, not many are up for it. Car trading websites such as ExchangeandMart and Autotrader UK for example simply link you up with dealerships they’re tied up with, offering the car you choose.

Obviously, when Ford entered the market selling cars online, it seemed odd although theoretically, it’s a perfectly rational decision and seems to make a lot of sense — especially with the SMMT estimating new car sales volumes to cross 2.3 million in 2019.

The site not only allows users to buy a brand new car but also helps them trade in their old one if they like — all with a few clicks. The new car is then promptly delivered to the customer, who usually purchases via Personal Contract Purchase (PCP) finance, the most popular method of buying a car in the UK for private customers.

To be frank, there’s no downside to what Ford is doing — but it didn’t succeed in the past.

The company tried selling its cars online twice before, in 1999 and in 2010. Both of those projects didn’t succeed, perhaps because the company was ahead of its time.

Now, however, being bold enough to sell cars online in the UK might set Ford up for success in many ways:

# 1 | Building a better customer experience

The sheer novelty aside, selling online can help Ford significantly improve the customer experience it offers.

Today’s customers want to customize their car to suit their needs, tastes, and preferences, and setting up shop on the internet allows them to do that quite effectively — without needing special attention or assistance from a salesperson at a dealership.

With people used to shopping online these days, they’re usually more excited about discovering all the options that are available to them, which is easy in an online shop.

Finally, in an e-commerce model, Ford will have more control over how much time customers have to wait for their cars, incentivizing them to supply sooner and earn brownie points (and positive online feedback/reviews) from excited customers.

# 2 | Reducing costs and streamlining operations

Selling online is expected to help Ford streamline its operations to quite an extent — especially if the project is successful.

It will also help reduce costs, which may not be a priority at the moment, but is always a strong business benefit as it boosts the return on investment for any project.

An added advantage to Ford, if its online selling project succeeds, will be the fact that the company will be able to streamline its dealership network in the long term.

Several studies believe that as manufacturers start selling connected and autonomous vehicles, they’ll be directly interacting with customers — and this is a good starting point for Ford.

# 3 | Leading a digital ecosystem

When customers opt to buy a car online, they will provide the automaker (Ford) with a lot of data and information about their tastes and preferences, and their choices.

The company can use that information to build a strong digital ecosystem for the customer, tieing up with leasing and finance companies, insurers, and infotainment developers, among other service providers.

As a result, new customers can leverage the digital ecosystems to make better (and maybe more economical) choices and therefore, appreciate the added value that the platform and the automaker bring.