Amazon is truly the company on the tip of everyone’s tongue. By re-writing the retail model, they’ve damaged and permanently closed thousands of businesses. Although the automotive industry has remained relatively unaffected, all signs point to a future dominated by Amazon- and unfortunately, that includes car and parts retail.
Laying The Groundwork
When we say all signs point towards Amazon’s involvement in automotive retail, we really do mean all signs. In 2016, they launched Amazon Vehicles; a self-described place to “Find reviews, specs, images, and more for thousands of new and classic cars, trucks, SUVs, and vans”. For now, the platform in and of itself doesn’t compete with dealers, but it does challenge some of the largest car buying sites like AutoTrader, KBB, and Cars.com which could impact dealers in a more passive way: leads. These major sites make a sizable portion of revenue off of leads to car dealers and manufacturers, but they run the risk of losing these potential leads to a platform branded as the best place for the best price. As Amazon gains traction as the go-to place for car information and comparisons, dealers may need to shift relationships to give Amazon priority. Amazon is also giving nationwide parts suppliers a run for their money, appealing to consumers desire to have life delivered to the doorstep. Because of their sheer size, parts pricing is extremely competitive as well.
The Trend of Takeover
Amazon has a trend of creating a service for themselves, then expanding that platform as a product sold to consumers. A few examples are Amazon Web Services, Amazon Marketplace, and Amazon Fulfillment. Given the trend, it’s likely that they will create their own delivery service- thus launching their direct involvement in automotive. They’ve already started “in house” delivery with their flexible Uber-like program Flex which allows car owning individuals the ability to deliver packages with their own vehicle.
Additionally, Amazon already shows a massive interest in automation. From exploring automated stores to creating plans for the future use of self-driving cars for delivery, it’s clear the company understands and wants to be on the forefront of an automated future. Given all this, it isn’t much of a reach to assume Amazon will create an in-house delivery service, and likely use their massive wealth to explore automation in all forms.
For dealers, Amazon is one to watch. From emergency part orders to a lead source, a strong relationship with Amazon just may be the ticket to long-term well being.
Thanks for dropping by! If you liked this post, check back for more of our Future of the Industry series. Thoughts, questions, or opinions? Get in touch!