Transition to Transformation

Let me share the AutoTrader digital transition and now digital transformation story with you… questions that, especially now with COVID-19, every business, including car dealerships are grappling with:

  • How do I take my business more online?
  • How do I “digitise” more of my businesses processes?

There is a difference between digital transition and digital transformation. AutoTrader first had to go through a digital and print to online transition. Then, once that had occurred, from 2017 we begun our digital transformation, using data that the online transition and digitisation enabled. Let me explain:

  • A digital transition is  the moving of the paper world (magazines, documents, etc) into a digital format. This can be an internal digital transition of internal systems and could very well have nothing to do with the internet in your car dealership.
  • An online transition however, is moving systems and processes of your car dealership onto the internet.
  • A digital transformation is a very different thing, where your car dealership uses the internet, cloud computing, artificial intelligence and so much more to totally transform your car dealership and your products.

Can you copy international markets?

When AutoTrader transitioned from print to online, we quickly learnt that there’s no ‘cookie cutter’ approach to anything. One couldn’t use similar strategies from the past or those implemented by similar businesses overseas – our market was different.

What we chose to do, was try and learn from the lessons experienced from UK and US markets and through the relationships we had built overtime, we were able to learn how other people did things. In South Africa AutoTrader transitioned a lot slower to online compared to anywhere else in the world.

We eventually got the high speed internet that everyone else in the world head had. After that, we started seeing the strong correlation between the speed of internet and internet user adoption. Now, in South Africa, we have over 31 million internet users, but it took 10 years. A lot slower than first world countries.

Car dealerships lag the consumer

Businesses however seem to always lag the consumer – same was true for car dealerships, to this day in  fact. Whilst corporate businesses and entrepreneurial businesses don’t want to change fast enough, we as consumers are changing very fast. It’s strange though, because we’re all consumers inside those same businesses that resist change: an oxymoron, I think!

We found that for us to successfully change the mindset of the car dealership, AutoTrader had to take the car dealership on a journey rather than them identifying the internet as another platform.

How did AutoTrader take the car dealership on the online journey?

In many ways, AutoTrader paved the way for pure play digital competitors, but this had to be done for the good of AutoTrader, the industry as well as car dealerships. We realised that we needed to make changes to the way in which we did things with car dealerships. We couldn’t any longer do what we were doing at scale. E.g. We couldn’t send out traditional photo agents to photograph cars, this was impossible to do across over  70,000 cars. So we had to make the switch with the car dealership…fast!

We tracked the transition of the consumer enquiring via our  digital platforms vs enquiring via the print magazine. We used our new found technology in Call Tracker. AutoTrader regularly communicated how the consumer market was transitioning online to the car dealership. We made the consumer data transparent. We embraced transparency in those early years.

Car pricing, valuations and data – still a challenge for car dealerships

Over the years we soon realised that one of the biggest challenges car dealerships faced was data, particularly car valuation or car pricing data. Antiquated businesses, systems and car price valuation data was still being relied on and progressive car dealerships were asking:

  • How much do I trade a car in for?
  • And how much can I sell this car for?

The way in which car dealerships used to get to answer these two questions in the past and how they should be doing it now is very different. The antiquated ways of car valuations is one of those things that just doesn’t work in present day. There are way too many variables at play that influence car valuations today that without access to the right data, car dealerships could be doing car valuation wrong. That’s not to mention the transparent  live nature of car pricing data. what the car buyer sees on the internet is the “value”, because this is the  only  version of the truth to them, and this online  value changes minute to minute, like a stock market. If a car dealership prices a car today, it may have changed by the end of the week after factoring in changes to demand and supply.

It is evident that by not having the right underlying data structures in place, it’s very difficult to get a handle on the value of a car, the same is true for the private seller too. Part of  the AutoTrader transformation was to build solid  data structures. As a result of the transformation since 2017, AutoTrader now provides valuation tools to the market.

It’s unfortunate that internationally, data stores are easily accessible as they are largely driven by the government, so as one registers a car or changes ownership, the system captures the information in an efficient way – something that takes years to build and get right. South Africa is yet to get to that level of accuracy.

AutoTrader realised that the data structures in South Africa was messy and we had to do something about, so we built our own. It took us about five years to build a really solid VIN database. During that period car dealerships didn’t understand why we wouldn’t accept “feeds” into the platform. And the main reason was not wanting “dirty data” in our cleaned databases.

To explain to the car dealerships was very difficult at the time because every other classified accepted everyone’s feeds. Now when you look back, and realise how clean the data is that AutoTrader has, that the journey was worth it in the end.

Even today, most 3rd party suppliers to car dealerships and the industry don’t have the underlying data structures, API’s and technology to be able to properly integrate with AutoTrader and more importantly the automotive industry. It’s an ongoing education to help car dealerships understand the now transformation the industry is facing.

The layers on top of the data structures is what can be monetized

The way I look at data is, if you’ve got the underlying data structures right, then one can monetize everything else layered on top of that. Like the behaviours and interactions that layer over those data structures, like – car buyer search behaviour based on make model & variant; demand, supply and price trends.

All that data is monetizable. Online data structures shouldn’t be monetized. That’s like monetizing your ID number.

Either way, I think there’s missed opportunity for the automotive industry, car dealerships, like AutoTrader are sitting atop a lot of data that’s not being used or monetised. And one of the reasons it’s not being used is because businesses don’t know how to make sense of it. But where do you start?