I get asked a lot of questions about the auto remarketing industry, but there’s one question that gets raised the most: What does the digital age mean for the future of physical auctions?
The digital age has caused a shift in how consumers engage with companies and products — we can now purchase just about anything online and either download it instantly or have it delivered to our door within 24 hours. While this newfound convenience is disrupting business operations across industries, including auto remarketing, the life of physical auctions is far from over. Just as the fulfillment of online transactions requires physical assets; that need is even more essential when the product is large, unique and valuable — a used vehicle, for example. Simply put, we cannot store used vehicles in the cloud.
Synergy between digital technologies and physical assets is the key to the remarketing industry’s success today and in the future.
Improving access and efficiencies
Digital technology allows sellers to bring used-car auctions to more customers beyond the boundaries of their physical space, expanding access and giving rise to efficiencies. However, we also find that different buyers have different preferences. Some buyers want to buy exclusively online, whereas others prefer attending the auction in person, where they can see the vehicles up close. These preferences continue to evolve.
Instead of forcing customers to choose between an online auction and a physical one, why not tie the two together? By integrating online features into physical auctions, customers get the best of both worlds. We can meet the customer wherever they want to do business.
Delivering a complete solution
I’ll admit that when I co-founded OPENLANE 20 years ago, our goal was clear – to disrupt the physical auction business. However, it didn’t take long to realize the value that physical locations created for customers — from securing and storing the vehicle to enabling a detailed inspection and vehicle reconditioning services, as well as providing an efficient hub-and-spoke logistics network. These services increase the value of the vehicle, improve the process for the customer and underpin the resiliency that auctions have shown the past two decades.
These services continue to be relevant in the digital world, and physical auction facilities are uniquely well positioned to deliver these services at scale.
Focus on the overall experience
One lesson from the digital age is that great customer experiences help build great companies. That’s why our team at KAR is focused on delivering the best customer experience in the industry. Digital technology has become a differentiator for KAR; the acquisition of OPENLANE in 2011 was a key milestone on that journey. Integrating data, analytics and machine learning can make the auction process smarter. KAR’s recent acquisitions, like fleet management software company STRATIM and online auction company CarsOnTheWeb, help us to continue delivering seamless, convenient and connected services on a global scale.
At KAR, we sell well over a million vehicles per year that never arrive at our auctions. When we run a vehicle in a lane at our auction, we see bidders in the lane and online. The buyers in the lanes are often using their mobile devices to learn more about the vehicle in front of them. With a scan of their phone, they can access vehicle condition reports and history. Sometimes, they are bidding online but experiencing the auction in person. In short, whatever the mix of digital and physical our buyers want in their personalized purchasing experience, our goal is to deliver it. We can do that, thanks to KAR’s depth of offerings.
While it’s reasonable to question whether the rise of online auctions could render physical auctions obsolete, it’s evident that the relationship between these two modes of buying and selling vehicles is far more nuanced and interconnected. It’s an interplay between two very complementary types of assets – a robust, global, data driven digital platform, supported by a network of physical assets needed to fulfill the transactions. Both are essential.
This evolving landscape presents an opportunity to impress and engage customers in new ways. Those who can deliver that solution most effectively and the best customer experience possible will find themselves ahead of the competition.