New car-buying website - how will it affect dealers?

In an article rather sensationally entitled Website plans to leave car showrooms in the dust, the Financial Times* reports the launch of a new car-buying website, Carwow (slogan: "Let car dealers compete over you"), which it describes as doing for the new car market what Expedia has done for travel. It will farm out consumers' requirements to dealers, who will make a best and final offer, and the website will take a commission of £250 from the dealer. That doesn't sound to me as if it will leave showrooms in the dust.

Bemoaning the fact that the Internet has never taken off as a platform for selling new cars, while for second-hand cars it it suggests that the Internet is very widely-used, the FT mentions the deterrent effect of the 14-day cooling-off period for distance selling transactions. Given the enormous drop in value of a car the instant it is first registered, then driven away from the dealer's premises, this is more than a deterrent: it must be almost a complete block. Add to that the fact that people still, rather quaintly, like to look at cars, sit in them, and take test drives - none of these matters for which the Internet is well-adapted - and I think you have your reason. That's not to say that online sales will never take off, just that they will remain a small proportion, for the time being at least.

Anyway, even for second-hand cars it must be true to say that the Internet is used as an advertising medium rather than an e-commerce platform, and on that basis the new-car market isn't far behind. The FT article notes other changes in the market, citing "Apple-style" outlets where consumers can look at the cars and engage with non-sales staff to learn about them before buying online (thus creating the distance-selling problems that dealers are understandably worried about).

The dealer system as we know it might be a long way from perfect, and there are surely more efficient ways to get cars to buyers, but it still seems to be the best choice for a way to handle new car sales. Will Carwow make much difference? Actually, it looks as if it might help the present dealer network model, perhaps even giving it a boost which will help it to stave off a shift towards full e-commerce. So long, of course, as it doesn't get too carried away like TrueCar in the States.


* The FT is usually a model of sober reporting, but the headline-writer has got a bit carried away here, like his or her predecessor (it can't have been the same person, it's too long ago, 30 years to be precise) who headed an editorial comment on the block exemption "Feather beds on wheels". Obviously very memorable, if it has stuck this long in mine!





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OFT urges top retailers to change their websites

"The OFT has written to 62 of the top online retailers ahead of the busy Christmas period after a sweep of 156 websites found signs that many may not be fully complying with consumer protection law", according to a press release from the Office. They were looking for for breaches of the Distance Selling Regulations and other consumer protection laws. The press release goes on the detail some of the areas of concern:

• 33 per cent of sites that provided information on cancellation appeared to impose unreasonable restrictions on customers' rights to a refund. Most common was requiring that the product must be in the original packaging or in the original condition, which can infringe on consumers' rights to reasonably inspect/ assess the product.
• 60 per cent provided a web contact form rather than an email contact address, as required by the E-Commerce Regulations. Two per cent provided no electronic contact details at all.
• While 60 per cent of sites indicated upfront that compulsory charges would be added to the first price shown, 24 per cent of these sites went on to add further unexpected charges at the check-out.
• However, the sweep also found that the majority of sites were compliant with the DSRs in providing other required information to the consumer. For example, 99 per cent of sites provided details on when the goods would be delivered or the service would start and 95 per cent provided a full geographical address when payment was required in advance.

Huge numbers of websites fail miserably to comply with the fairly simple legal requirements, and it is not just retailers such as those the subject of this OFT initiative (though their failings are likely to have particular effects on consumers). Dealers should watch out too.

For the full story, follow the link to the press release.