Ecommerce will be key driver in EchoPark expansion
Ecommerce is a key vehicle for the route Sonic Automotive is taking to more quickly expand its growing EchoPark Automotive used-car program.
The retailer’s CEO said in the company’s latest quarterly earnings release that Sonic is partnering with Cox Automotive and Darwin Automotive to build “first of its kind proprietary e-commerce platform and user interface” that when launched later this year will help spur further growth in EchoPark and enhance the online experience for consumers.
“This digital retailing partnership will accelerate our EchoPark expansion plans and elevate the online retail guest experience on our franchised dealership websites and EchoPark.com beginning in the fourth quarter of 2020,” Sonic and EchoPark chief executive David Smith said in the release.
In Sonic’s earnings call, Smith added: “This digital retailing partnership will be key to accelerating our EchoPark expansion plans. We are dedicated to elevating our online retail guest experience to match the great guest experience our guests have come to expect on site at our franchise dealers, Echo Park stores and at EchoPark.com.”
The ecommerce platform will play a key role in EchoPark’s national expansion.
“By capitalizing on EchoPark’s highly trained guest experience center team, our centralized appraisal, inventory and pricing procedures as well as the development of the newly announced proprietary ecommerce user interface, we can strategically and efficiently build out a national footprint by opening new EchoPark delivery and buy centers in adjacent markets to our existing locations in a very capital-efficient manner, realizing returns on investment in excess of 55%,” Smith said.
“By utilizing enhanced online sales capabilities and a next-to-last-mile delivery model, this will allow us to quickly expand Echo Park into new markets across the country with minimal capital outlays or overhead costs as our customers nationwide will now be able to shop on EchoPark.com, through our EchoPark mobile app or on site at an EchoPark retail hub location.”
Sonic expects to have a national distribution network of more than 140 EchoPark retail hubs and delivery/buy centers by 2025, Smith said.
The company opened its first delivery and buy center in Greenville, S.C., in late July and was already starting to deliver vehicles there, with Smith saying that “progress is well underway for opening the next several markets.”
Sonic intends on opening 20 EchoPark delivery/buy centers in 2021, and will likely have three or four open this year, Sonic and EchoPark president Jeff Dyke said in the earnings call.
In addition to the 20 delivery and buy centers each year, Dyke said the company is likely to open three to five EchoPark retail hubs each year.
The expansion will begin with the Southern half of the U.S. and then moving north.
Dyke said that currently, within 200-300 miles, there is no delivery fee, but “we’ll play that by ear,” he said.
However, vehicles will not be delivered to consumers’ driveways, he said. Instead, there are brought to a central location. Last-mile delivery is not something the company is looking at.
“That’s where you have a lot of complexity and a lot of expense … We’re going to deliver it to the neighborhood, so to speak,” Dyke said.
In Greenville, consumers would pick up the vehicle at Sonic’s BMW/Mini store. But the company has property across the street from that store, so it does plan to build a facility there, Dyke said.
Adding some additional color on the delivery process, Sonic and EchoPark chief financial officer Heath Byrd explained that it doesn’t involve just a driver dropping a car off and getting a signature.
The delivery process for the end consumer involves someone who knows the vehicle providing that customer a walkaround, explaining the technology and giving them a proper delivery experience — one Sonic contends is better than just dropping a vehicle off.
And digital retailing and ecommerce for vehicles is different than most products in that it isn’t just clicking a button and buying a product.
“From our perspective, ecommerce is a spectrum. Ecommerce isn’t just someone that shops and buys a car completely online. In fact, that very rarely happens, even in our competitors’ world,” Byrd said. “Ecommerce is shopping, it is getting the price, it is getting credit, it is getting financing, it is putting down a down payment, it is getting the product, it is getting the paperwork done. And people go in and out of that spectrum at different parts of their experience.
“And so, you have to have an infrastructure that can handle each of those elements, and if someone stops on the third step, you can easily transfer it on site or remotely with our centralized call support.”
That’s where Darwin Automotive would come into play for this platform. Sonic is utilizing its technology to bridge the in-store and online experience, as consumers may toggle back and forth during various steps of the process.
For example, a consumer may be going through the process online, but once they hit the credit portion, they want to come in store or talk with someone. The technology allows Sonic to respond so that they don’t lose that customer
“This is not like buying a pair of shoes,” Byrd said. “There are too many parts.”
Essentially, what Darwin offers allows Sonic to toggle back and forth in working with consumers at various stages.
As far as the Cox Automotive piece, Byrd explained: “We did research on every single company out there and we are going with Cox Automotive.
“They have never built a proprietary system for any dealership group, and they’ve agreed to do that.”
Cox Automotive is building the user experience on top of what Darwin offers, providing an ecommerce experience that is expected to intuitive, easy to use, similar what other ecommerce models look like, Byrd said.
“That combination, we took our time, because this isn’t something that you should just throw together just so you can put a slide out there and name something whatever it is and say you’re in ecommerce. We want to do it right. We want to do it where the customer can shop the way they want to and it’s not something you throw together quickly,” Byrd said.
In terms of timing, the Darwin piece of it is rolling out currently on the franchised side and was set to go into EchoPark stores this month.
Sonic is then bringing Cox Automotive element of it in, with a likely rollout for the platform in the fourth quarter.
Auto Remarketing recently caught up with a pair of executives from Dealer.com, a division of Cox Automotive that powers the websites of Sonic and EchoPark, who shared some additional insights on this project as Cox is in the process of building the ecommerce platform for Sonic and EchoPark.
“We still believe that the digital storefront and the website is that central point, and dealerships understand that,” said Wayne Pastore, vice president and general manager of Dealer.com. “So, what the partnership with Darwin is, is leveraging their capabilities in digital retailing, our capabilities in digital retailing, our capabilities in a website and consumer engagement experience and tying it as closely as possible for Echo Park and hopefully eventually all of Sonic.”