Benefits and utilities for the Volvo dealers from launching VolvoNet

The dealers we have been in contact with do not see brokering services as a choice but as a necessity, no matter whether it is good or bad for them. Car brokering services will be launched whether the dealers want them or not, thus, it is necessary for the dealers to join in an early stage in order not to lag behind. (Lööv, 24/11/98, Eneqvist, 25/11/98)

In this situation it is important that Volvo conveys the benefits and utilities of being connected to VolvoNet for the dealers. By doing this dealers can be more co-operative and contribute in the work of making VolvoNet competitive. It also becomes important to explain the specific benefits of joining VolvoNet instead of third party brokers such
as Bilweb or Autobytel.se, although many dealers may choose to join several different services.

The benefits presented below are specific for the dealers and VolvoNet. These benefits can only be utilised by Volvo dealers if they become a part of VolvoNet, or at least the benefits will have greater effect coming through VolvoNet
than through a third party broker. These dealer benefits will in turn benefit Volvo indirectly.

Closer co-operation with Volvo

Volvo dealers have been working with Volvo before through the traditional channels. By continuing to work with Volvo on the Internet the co-operation will be strengthened and enable dealers to gain from some of the utilities below together with Volvo.

VolvoNet enables dealers to take advantage of a well-known brand name

VolvoNet has an advantage by being used in connection with a very strong brand name compared to third party brokering services that have to establish a new brand and communicate it to the consumers’ minds. By co-operating with an already well-known and established brand such as Volvo, which they already do through the traditional channels, the dealer can take advantage of the already existing goodwill and market awareness of that brand. The dealer will be exposed together with the Volvo brand on VolvoNet. This means that the dealer can
capitalise on Volvo’s goodwill and be perceived by all visitors as a recognised part of the Volvo association. The Volvo dealers tied up to VolvoNet will also be helped along with their promotion of the web site, that is, Volvo will subsidise the dealers’ promotion when they combine it with promotion of VolvoNet (Eneqvist, 25/11/98). By joining VolvoNet, the dealers’ partnerships with Volvo will deepen.

As mentioned in the estimations of the number of VolvoNet users, using a well-known brand for a brokering service may cause a higher proportional market share on the Internet car brokering market; higher than the share on the ordinary market. If Volvo sells morecars over the Internet, the dealers benefit thereof.

VolvoNet enables a deepened partnership between dealers and Volvo

Many dealers are family owned companies, who have been working with Volvo for decades. The mutual trust and knowledge of working processes built up during their previous co-operation will mean that the need for organisational changes for the dealers will be of smaller proportions with an introduction of the VolvoNet as opposed to other brokering services. The benefits can also be greater, as VolvoNet is a part of the whole concept of communications tools between Volvo and its dealers. The other services are just that, services bought and paid for, without any deeper co-operation. VolvoNet also brings dealers and Volvo closer together. An example would be
that information derived from VolvoNet could be integrated with the already functioning inter-organisational computer system. The fact that dealers are familiar with whom they are working also helps decreasing the risk and insecurity attached to a project such as entering the market of car brokering over the Internet. Establishing and building a serious relationship with a new company is costly, demands a higher degree of commitment from the dealer, and it also increases the risk with entering the Internet. Instead of just one new uncertainty factor, i.e. the Internet as a new commercial channel, another one is added; the new and unknown partner.

VolvoNet increases information exchange

VolvoNet will lead to the benefit that a large amount of customer information can be gathered by Volvo as well as by the dealers. Dealers can for example notice how the customers are affected by VolvoNet and give feedback to Volvo. Information of customer preferences and interests exchanged between the two will give both parties a competitive advantage. If you look at the only online service functioning today, Bilweb, there is no information exchange except for the request mediation and the offer, thus no statistics or other customer information is exchanged (Eneqvist, 25/11/98). Nor does Autobytel.se plan to have any information exchange of this type between the dealers and Autobytel.se (Nordh, 19/11/98).

More efficient handling of the customers

By the increased amount of information exchange to and from customers, the dealers are able to handle
customers more efficiently and be better prepared for the customers.

VolvoNet makes customers more knowledgeable

VolvoNet offers its visitors the most comprehensive information of Volvo cars and related information available on the Internet. You can therefore expect that the VolvoNet customer, who has actually made a request for a car, have better knowledge of the product than any other potential Internet customer has. That is, the gap for a Volvo buyer between product received and product expected is the least from a VolvoNet customer. The better knowledge thereby decreases the customer’s perceived risk of the purchase, which brings the customer closer to the time of purchase (Assael, 1995, p.252p). This in turn means that the closing rate of a VolvoNet customer, who has made a request, can be expected to be higher than for Volvo customers from any other Internet brokering service as well as higher than for a traditional customer. Although, it should be noticed that early numbers of closing rates for Internet car brokering in Sweden point in the opposite direction. Jan Lööv (24/11/98) estimated the closing rate for traditional
customers to be 1 out of 25 – 30 while the equivalent for Internet customers was 1 to 50. These numbers could be explained by the fact that brokering services for new cars are new and scarce, and people as well as competitors and other interested parties want to try them out. We believe that as the services become more accepted the ratios will change.

Furthermore, customers who are interested in buying a car and have configured a car on VolvoNet already know quite accurately what they want. If going through Autobytel.se or Bilweb, that does not have the full range of offers, the customer may find out about new models or optional packages when arriving at the dealer and then has to reconsider the requested offer. Since VolvoNet has an extensive list of optional packages, colours, engines etc. the customer will not find any new options when arriving at the dealer’s location. Hence, the dealer does not have to spend time informing customers of different models, versions, prices, colours etc.. The implications for the dealers from this utility should be seen in a long–term perspective. Due to the current low frequency of requests generated by the Internet services, the two dealers we have been in contact with do not see any possibilities for rationalisations in the short run. However, Jan Lööv (24/11/98) estimated that a customer who has made a request over the Internet saves up to 30 minutes of the salesperson’s time. Bear in mind that the negative effect of this is that the salesperson
loses half an hour of relationship building with the customer. Another drawback for the dealers, due to the benefit, is the customer empowerment it leads to.

As mentioned earlier in the VolvoNet satisfies customers’ information needs section, more informed customers could contribute to a decreased demand for brochures. Thereby the dealers’ cost for handling requests and distribution of brochures should be decreased as well. Fewer brochure requests save working hours and fewer brochures to send out save distribution cost.

It should also be mentioned that the brokering services function as important information channels although they do not always lead to online requests. A customer can gather information on VolvoNet and then decide to buy the car
through traditional channels, but VolvoNet has still contributed to the enhancement of the buying process both for the customer as well as for the dealer.

VolvoNet facilitates planning for test-drives

The visitors of VolvoNet can ask the dealer to contact them in order to book a test-drive with requests for a certain day and certain time, i.e. the customer can request a certain day of the week and approximate time for the test-drive.
This gives the dealer knowledge of customer needs and requirements in advance and enables the dealer at an early stage to anticipate the inventory and work effort needed. Although the booking of the date and exact time is realised over the phone, and not over the Internet, the customer is at least encouraged to book a test-drive, which facilitates time scheduling. The alternative being that the customer turns up at the showroom for a spontaneous test-drive or does not even bother to test-drive a car at all.

Dealers maintain revenue from financing services

Dealers risk losing parts of the car financing business unless they can offer a financing service on
the Internet like the third party brokers do.

Analogous to Volvo with insurance (see section VolvoNet offers insurance for Volvo cars for details), the dealers lose revenue if customers cannot go through VolvoNet. As Bilweb and Autobytel.se co-operate with other financing institutions than Volvo Finans, dealers lose potential revenue from online Volvo customers, who choose the competitors’ services. A launch of VolvoNet would retain some of the lost financing revenues.