Disruption: it’s one of the most important words in 21st century business, offering investors and entrepreneurs the promise of huge returns and striking fear into the hearts of established businesses in stagnant industries.
Disruption has already transformed the service economy, re-writing the rules for everything from taxicabs to food delivery. But disruption has also had a major impact on some of the biggest industries in North America, including retail and media giants who dominated the landscape mere decades ago, and many industry watchers have suggested that dealerships may be next.
Since the end of the Second World War, the dealership sales model has maintained a remarkable degree of security, serving as a reliable middle-man between automotive giants like Ford and Chevrolet and the customers looking to upgrade their vehicles.
But even as dealerships have become stalwarts of the local economy in towns across the continent, dealership salespeople have developed a reputation for being untrustworthy up-sellers who drive a hard bargain and know every trick in the book for getting ordinary people to part with their hard-earned money.
Given all this, it is perhaps unsurprising that dealerships are among the most-disliked businesses in North America: according to a 2016 study, 87% of Americans are unhappy with the dealership shopping experience. Many respondents said they would prefer to clean their houses, do their taxes, and even have root canals rather than negotiate with dealership salespeople.
If the dealership is, as it seems to be, an aging sales model that has failed to keep up with consumer needs and which has earned the ire of its customers, then it would naturally follow that auto sales are ripe for disruption. And this disruption may, in fact, already be underway.
For several years, industry insiders have been talking about whether or not the e-commerce boom that has swept the retail industry will reach the automotive sector. A huge number of used cars are already being sold or traded in peer-to-peer sales platforms and digital marketplaces, and with the rise of websites like Kijiji Autos dedicated solely to selling brand new cars online to customers throughout the country, it is only a matter of time before purchasing a new vehicle online is as common as ordering a toaster oven from Amazon.
It is unclear what this will mean for the dealership sales model. A growing number of dealerships are adopting new online-facing tools like live dealer chat to connect with customers through their websites, but given the general frustration and anger many customers feel toward dealerships, it is possible these innovations are too little, too late.
As younger generations who have grown up with online shopping come to represent an ever-larger segment of the market, it is only natural for automotive sales to move online, too. As previous waves of disruption have shown, businesses built on connecting producers to consumers can quickly come to be seen as irrelevant if the Internet offers shoppers more seamless and intuitive ways of purchasing the products they need.