After years of industries like food, healthcare and home decor successfully transitioning to an e-commerce model, it was without question that cars were next. If we can order a rideshare, pizza or prescription at the tap of a button, why can’t we buy a car from a trusted and reliable platform in the same way?
Answer is: we can.
Online car retailers are still relatively new to Canada, but in the US it has been a growing category for several years. In 2020, 10% of US car buyers purchased their car online. While that might not seem like much, just two years prior, in 2018, only 1% of US car buyers had turned to online shopping. If the category’s success in our neighbouring US market is any indication of its potential in Canada, it’s something to keep an eye on.
In 2016, Clutch Founder, Stephen Seibel, had a frustrating experience when trying to purchase a car from a dealership. This experience was enough to inspire Seibel to start Canada’s first online car retailer and a solution to the existing and often frustrating car buying process. This platform offers an end-to-end digital purchasing experience which includes financing, insurance, and seamless home delivery.
After living through the pandemic, a chip shortage for new vehicles and the car rental shortage, dubbed as the “carpocalypse”, online car retailers are seeing a rise in demand for pre-owned vehicles. Clutch recently reported that it tripled its sales from 2020 to 2021 and continues to see increasing interest from Canadians who want to purchase used cars. But what are the benefits of embracing this modernized online car buying experience?
Competitive Pricing
Auto manufacturers and dealerships have been competing fiercely for years to offer competitive pricing that meet the needs of consumers for affordable, high quality cars. One of the biggest obstacles that these companies face when pricing their cars is the overhead operating costs that act as a barrier to reducing rates beyond a certain point. These costs include everything from fancy showrooms to charming, albeit extremely talented, car salespeople.
By removing the flashy overhead costs that come with the traditional dealership model, online car retailers are able to offer a range of vehicles that are competitively priced and extremely convenient to purchase with financing available online and the car being delivered right to your door.
The Gift of Time
It typically takes the average person roughly 20 hours over the course of three weeks to purchase a car. This includes everything from the initial research and financing to visiting multiple dealerships before finally making a selection and getting insured.
If time is money, then online car retailers are giving customers the gift of both with this one-stop-shop model that removes the travel time between dealership visits, provides quick access to reports on each of its vehicles and offers financing and warranty options directly through their sites.
Safer Shopping
Anyone who has purchased a car knows it comes with its own set of challenges: pushy sales people, high prices and the all-too familiar cash-saving option of purchasing a car from online classified websites or social media “buy & sell” groups. These alternative ways often result in a sketchy parking lot meetup for a used car that lacks information on both its history and current state.
To combat the worries that typically come with purchasing a used car, online retailers have implemented rigorous inspections. Clutch, for example, tests its vehicles with a 210-point inspection to ensure reliability. It also offers a 10-day money back guarantee with no fine print on every car purchased. On its website it links directly to the Carfax reports for each vehicle, which include a detailed history on the car along with a valuation.
The Test Drive
Arguably the biggest deterrent for purchasing a car online is the fear of making such a big purchase without being able to test-drive the car. While most first-time car buyers might not know what to look for, they do know that throughout their lifetime test-drives were one of the main indicators of a good car. With such detailed reports on cars available online, is the test-drive a step that can be skipped?
Some online purchases can come with a 7 to 10 day return policy that acts as a test-own period, allowing customers to go about their life as they normally would while testing out their new ride. However, be wary of the fine print on the money-back guarantee for the test-own period as cars that are financed often can’t be returned.
The e-commerce adaptations of the automotive retail industry puts customers front and centre by making trust and convenience a top priority. As the world continues to embrace e-commerce, it is clear that the modernized online car buying experience is here to stay.
Dan Park is the CEO of Clutch.
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