Buyers finding deals not just on romantic items, automobiles, too

It has become an increasingly common practice in recent years for Chinese to celebrate Nov 11 as "Singles' Day".

Ever since e-commerce giant Alibaba launched its first Singles' Day sales campaign in 2009 on its online platforms Taobao and Tmall, the holiday has grown into one of the biggest sales days for the nation's online retailers.

In addition to bras and lingerie - two items that reportedly saw the best sales at the two sites this year - more and more people are purchasing larger and more expensive items, such as cars.

Shen Enhua, a public relations manager at Tmall, said dealers at the website sold 10,700 motor vehicles from Oct 14 to Nov 11, five times the number sold last year, with combined sales revenue hitting about 800 million yuan ($131.28 million).

He said some 1,700 dealers representing 16 brands participated in this year's campaign, making it the largest ever since the first auto brand appeared on the business-to-customer portal Tmall in 2010.

"This reflects automakers' growing recognition of and support for online sales. You see we have not only Chinese brands, such as Geely and BAIC, but also joint venture and overseas brands, including Buick, Shanghai Volkswagen, Citroen and Skoda," Shen said.

He said Dongfeng Peugeot Citroen Automobile Co Ltd, Shanghai GM and Geely Group each sold more than 2,000 units during the promotion.

Several auto portals in the country followed suit by launching online sales campaigns this year.

Major players include bitauto.com, autohome.com.cn, and auto.sohu.com.

Statistics from the three websites show their orders on Nov 11 totaled $3.85 billion.

If they are filled, the orders will generate sales revenue nearly 30 times the amount car dealers realized at Tmall.

Website autohome.com .cn won 17,776 orders from potential buyers and by Nov 13 a total of 3,500 orders had been finalized at its partner 4S stores.

Maiden attempt

"Things have turned out a little better than we had expected now that it is our maiden attempt," said Ma Gang, deputy president of autohome.com.cn.

Ma said he expects another 5,000 to 10,000 orders to be finalized by Dec 12, the deadline for those who submitted orders online to enjoy discounts offered during its campaign.

He said the success is the result of a combination of factors, with the foremost being the change in people's shopping habit.

"Now people have accepted online shopping. Whenever they want to buy something, they would see whether it will be cheaper to buy it on the Internet."

Ma said other contributing factors are the company's experience in organizing online group buying and similar offline events as well as its popularity among auto owners.

One of the largest auto portals in China, it receives some 5 to 7 million visits a day, Ma said.

In addition, Ma noted that his company would not have made it without its partner car dealers.

According to a report at auto portal cheyun.com, autohome has partnerships with dealers representing 60 auto brands in Beijing, who offered more than 230 models.

However, Ma said the auto industry is actually divided into three groups in terms of their enthusiasm in online sales.

"All believe online sales are an inevitable trend, but some believe the time has not yet come.

"Others believe the conditions have long been ripe, while still others are not sure but want a try."

He said that those who are not sure constitute the majority in the industry.

"But the sales figures might help convince some and consolidate the confidence of others."

Among them is Pengyuan, a BAIC 4S shop.

Though unavailable for an interview at press time, the car dealer's excitement was made plain in a message sent on Sina Weibo on early Nov 12.

"A total of 95 orders were finished in one single day, a number far higher than our expected goal of 45."

Online-to-offline

Despite the rising number of platforms dealing with car sales, one thing they have in common is the online-to-offline mode.

In other words, except few models for group sales at Tmall, buyers usually submit their orders online and then sign the contract and make the payment at brick-and-mortar stores.

While some people wonder whether it can be made easier, both e-commerce providers and industry experts said the mode will not change in the near future.

"The mode is something new so it is too early to predict whether it will continue or change soon," Ma at autohome told China Daily, "although we hope that someday you just give a click, and the car you order will be delivered to your door."

Ye Sheng, executive director of Ipsos Auto in China, said, "This mode fits large, movable items, such as cars."

He said some complicated factors involved in buying a car, such as test-driving, negotiations over the insurance premium rate, maintenance and vehicle delivery, remain to be settled in 4S stores.

"Some of the steps are necessary for customers to make a reasonable decision," he said.

Charles Mills, vice-president of global retail experience at JD Power and Associates, noted that dealership experience is essential for car buyers.

"Few customers would be willing to buy a new vehicle online without touching it."

He explained that is because buying a car is among the highest-involvement purchases people will make, so they want to see, touch, and drive as well as their family's approval of the decision.

"All this requires a physical location," he said.

Nevertheless, he urged brick-and-mortar dealers to take the initiative to adapt to the new world of online shopping rather than just waiting passively for customers to come from third-party websites.

Citing data in a JD Power survey that some 80 percent of customers visit more than three auto websites before they make any purchase decisions, Mills said dealers have to understand that the Internet is now an important part of the shopping experience for cars.

But the study also showed that people tend to be less satisfied when they are researching on more than three websites because there is too much information.

Therefore, it is a good opportunity if dealers could take care of their customers by ensuring a great online experience in the first step, he said, adding that in the US and other Western markets, some of the best dealers are building their own websites as a part of their dealership now.

Some websites at the dealer or brand level have information on other brands' products and prices so that customers can compare and they can highlight their own advantages, he said.

Meanwhile, as the Internet empowers the customers with better understanding of prices, Mills suggested that dealers should shift their profit focus from new car sales to more transactions with the customers into a longer lifecycle, such as after-sales service, repeat business and vehicle trade-ins.

"It's important to get all of that future business. It's what we called lifetime customer value," he said.

Contact the writers at [email protected] and [email protected]