News: SeeDealerCost site meets a consumer need, says Taylor
March 16, 2011
Filed under Mike Davin
By Mike Davin, online editor, Boating Industry — SeeDealerCost.com, which went live today, caused a stir in the marine industry before it was officially announced in January.
The site was created to be a consumer information resource — comparable to auto industry sites such as Edmunds.com or Kelley Blue Book — for boats and motors as well as motorcycles, ATVs, snowmobiles, PWCs, and soon RVs.
The controversial aspect of the site is the inclusion of dealer invoice pricing in addition to MSRP and product specifications. Groups such as the Marine Retailers Association of America contend the prices do not accurately reflect what dealers are paying and could exert downward pressure on razor-thin margins, potentially driving dealers out of business.
Representatives of the site have heard those criticisms, but believe that their site will actually improve the boat-buying experience.
“It really has stemmed from a consumer need,” said Dave Taylor, a former marine industry executive who now works for the site, in a recent interview with Boating Industry magazine. “If you think about it, we as consumers in the past 10 or 15 years — things have changed a lot in regards to how we shop and how we make purchasing decisions.”
As proof of the consumer demand, Taylor said Edmunds.com has polled its users, and the number four most frequently asked question is when and where similar information can be found on boats, RVs, ATVs and snowmobiles.
SeeDealerCost.com from the inside
Initial reports cited Taylor and another former industry executive, Jack Malone, as founders and owners of the site, but Taylor said they are actually employees who became involved with the site around the time of the Ft. Lauderdale Boat Show in late October. The name of the privately owned company behind the site remains confidential at this point.
The founders started working on the concept about two years ago and today the site has about 25 employees, with plans to grow significantly, according to Taylor. He said the site’s technology is proprietary and has been developed from the ground up.
The site is needed, said Taylor, because consumers have come to expect easy access and transparency of information and pricing, and the recreational products industries haven’t kept up with those expectations.
“We have easy access to information with the Internet that has really changed how we shop and how we gather information and how we make purchasing decisions,” Taylor said. “In addition to that easy access, we think the retail experience for us as consumers has vastly improved.”
Consumers have grown tired of the negotiation game, said Taylor. Instead, they want a no pressure, non-confrontational sales process based on how they buy almost everything else. Taylor said the disconnect between how the consumer wants to shop and the reality of the marine industry can cause tension.
“Having this lack of easy access and transparency of information and pricing causes what we see as consumer frustration and unfortunately some distrust of the retailers themselves,” Taylor said. “And it’s not about the retailer, it’s the process that is disconnected that causes that.”
If information is not readily available, consumers move on to the next brand or retailer, according to Taylor.
“We think (the site) will take some of that tension and distrust out of the process,” he said. “If the baseline pricing information is available from a third party, it doesn’t have to be as negotiated from the dealer, and then they can work with the dealer on finalizing pricing. And finalizing the deal. And finalizing the delivery and all those kinds of things. And we’ve heard from the car industry that it’s taken some of that craziness and distrust out of that whole process.”
Having automobile pricing information available has made it unnecessary for car buyers to shop or call 10 different dealers, said Taylor. With a baseline they feel comfortable with, consumers can concentrate on working with their local retailers, he added.
“We always hear this in the industry that consumers go home and they dial for dollars, or they e-mail 5, 8, or 10 dealers or call 5, 8, or 10 dealers to get a price,” Taylor said. “Well, yeah, they’re trying to get an understanding of what the baseline price is. And they’re trying to validate that price they’re getting from their local dealer is something that they can feel comfortable with.”
Why include invoice?
See Dealer Cost chose to include dealer invoice pricing because MSRP isn’t a reliable indicator, said Taylor.
“The problem is that not all manufacturers have an MSRP. And the MSRPs that are out there are all over the board — there’s really no consistency whatsoever with it,” Taylor said. “In a lot of cases, the MSRP is not really very closely related with what a normal or average or baseline selling price is.”
Taylor thinks inflated MSRP prices can cause confusion and drive people away, as opposed to being a guide.
“We think sometimes consumers look at a product or the MSRP and say, ‘Geez, that’s way out of our range,’” he explained. “And they go over to a used product, or they decide to buy something that’s not a boat or a recreational product at all.”
Knowing invoice price will help customers understand whether they are able to afford a particular boat and make a decision more quickly, he said.
“We think it will help qualify consumers, help them self-qualify,” Taylor said. “We also think it’s going to reduce their information gathering time, and therefore their decision-making time. The time that consumers are in the sales funnel is very, very long, and the longer in, the more opportunity for them to fall out or lose interest. So we think it will help speed that process up.”
He added that because of recent repos, liquidations and auctions, invoice pricing is already fairly readily available in the marketplace.
The site provides no guarantees that the information is 100 percent accurate, complete or reliable, or that there aren’t any errors or omissions, and it includes a disclaimer to that effect, said Taylor.
However, the site has a staff in place that will continuously be looking at the information on the site, according to Taylor, and they believe the information will be reliable.
The invoice price on the site is calculated to be same as the amount the dealer is invoiced by the manufacturer for the product, including any optional features the manufacturer installs. Unless otherwise indicated, it doesn’t include shipping, handing, preparation, tax, title, or any of those other fees. Retail and wholesale incentives given to the dealer are also not included in the cost. Taylor admitted that leaves out many costs incurred by the dealer.
“It doesn’t include any dealer or retailer cost associated with running their business,” Taylor said. “There are a lot of things there. They have inventory carrying cost, and insurance, and labor, and marketing, and advertising, and parts and accessories, and other overhead. And all that’s not included in invoice.”
Because of those omissions, Taylor said the invoice price is just meant to provide a baseline.
“Basically, what we’re putting out there is an invoice price that we think will serve as a baseline for consumers to understand what kind of a baseline they should be looking at,” he said. “And they need to understand the costs that aren’t included and the features they may want that aren’t included as well.”
He thinks most consumers do understand those costs.
“Having a lot of discussions with consumers — and we get on the message boards and the blogs — what we’ve found is that most consumers understand that the retailer needs to be profitable in order to offer product and run their business and give customer service that’s expected after the sale,” Taylor said.
For those who don’t understand, the site explains what is not included in the invoice cost, according to Taylor.
“In our frequently asked questions section, we also state that one thing that’s not included in the price is dealer profitability, which is important for a retailer to invest back in their business and facilities, their people, their customer service,” he said.
In terms of hurting margins, there have always been customers who won’t accept a fair deal, said Taylor.
“There’s always going to be those shoppers that will try to steal a product from the retailer, and they’ll use every means possible, and they do that today,” he said. “That happened before our site, and it will continue to happen. But the bottom line is, only the consumer can determine what they’re willing to pay for a product or service, and only the dealer can determine what they’re willing to sell a product for. And it’s been that way before our site, and it will continue to be that way once the site’s launched.”
Using the site
When consumers go to the site, they have the option to register using their contact information, which allows them to save product and pricing configurations. It also allows them to request a quote from a dealer, a feature only available to manufacturers that pay a subscription fee for those leads.
“When you look at other industries that do that, it becomes an extremely high quality lead,” Taylor said.
If users choose not to register, they still must provide their zip code, which allows the site to customize advertising to their location.
Users can search by category, by brand or by the closest dealers. They can configure models with various options, and the site will automatically calculate the total price.
In addition to new model pricing information, the site includes safety and education articles (they have a writer on staff); users can search for used product pricing through NADA; there are finance and insurance resources and a glossary of terms; and additional content will be rolled out during the coming year.
If a consumer doesn’t want to request a quote or register, they can have a PDF of the configuration and pricing they created e-mailed to them, which provides another type of lead for the lead subscription service.
The revenue model for See Dealer Cost is similar to that of Edmunds.com, which makes money from advertising and providing leads to manufacturers and dealers.
Advertising will be the site’s major revenue stream, according to Taylor. The display advertising on the site allows brands to get in front of consumers while they’re in the “shopping and decision-making process,” he said.
The second source of income will be the lead subscriptions, which the site can provide in real-time to manufacturer subscribers or distribute directly to those manufacturers’ dealers.
The bottom line
The industry needs change, according to Taylor, and this site is one part of that change.
“I get asked, and I know other people and manufacturers in the industry get asked, is this downturn cyclical or is it systemic? And I think the answer is yes. It’s both,” Taylor said. “It’s cyclical, yes, because you always have your downturns, and are we going to start to see some improvement – hopefully this year, but if not, the next? Yeah. Inventory dries up, that happens. Things will start to improve. But there isn’t anybody in the industry who is going out on a limb to say business will get back to where it was five, six, eight years ago. That’s a problem. That’s systemic. And there are a lot of different reasons for it. And there are a lot of things that need to be worked on to get the industry back to where it was and to what it can be. But I certainly do believe this shopping and information gathering experience is very much disconnected with consumer expectations. It’s one area that needs to be worked on.
“Something like this, although controversial, can create change and is necessary because it’s a consumer-forced need,” Taylor said.
Now that the site is finally live, he invites critics to experience it before passing final judgment.
“What I would say to those in the industry, I would say take a look at the site, and then ask some questions,” Taylor said. “And I think some questions are — will it make it easier for consumers to gather the information they’re looking for? Will it speed up that information gathering and decision-making process? Will it help consumers get an idea of a baseline price? Will it help them self-qualify? Will we be able to add credibility as a third party to pricing process? Will it lessen the tension and distrust in the sales process? We think the answer to all those questions is ‘Yes.’”
Finally, Taylor thinks that by improving the consumer experience, the site will in the end benefit the industry:
“The bottom line is, if the consumer experience is improved in any industry, it’s ultimately good for the industry.”