What are the implications for auto retailing and financing in the switch to mobile buying by consumers?
Mobile shopping is becoming more pervasive, with nearly half – 45% – of shoppers surveyed in Synchrony Financial’s Digital Study claiming to have used a mobile device to browse for purchases. The number is up 4% from last year’s figure. With the rise of smartphones, using a computer to shop is becoming rarer; shopping in person – rarer still.
Synchrony surveyed 7,000 cardholders and random shoppers nationwide. It is an intriguing point that only 18% of them said they use smartphones to make purchases, a far smaller number than browsers. Thus, browsing on the go, it seems, is more widespread than actually making a purchase.
Social media adds to the mobile-buying trend, as 45% of the consumers said they follow brands on social media. That number, predictably, consists mostly of Millenials – 52%. Those that follow brands on social media indicate that favorable reviews from peers affect their own purchasing habits. Having a purchasing mechanism for people on their smartphones, then, allows companies to capitalize on this buying impulse.
The impact these figures and trends will have on the auto industry is hard to pin down. On the one hand, a car is a consumable item like any other, and auto retailers would benefit from having an increased presence on social media. Auto financing would also receive a boost from an improved online presence. An increased connection online and on social media could also demystify the auto financing process to the average consumer.
On the other hand, a car is one of those things that, traditionally, is bought after in-person deliberation at the dealership. The process of taking a test drive, and the haggling are, after all this time, ingrained in the U.S. tradition and psyche. Not to mention, state franchise laws also stack the deck in favor of bricks-and-mortar showrooms.
Buying a car is also such a huge financial decision it’s natural that most customers still want to see, hear and feel the product and the buying process in person.
So no matter how convenient it might be to buy a car via smartphone, auto retailing and auto finance are more in the “browse via phone” category, and less in the “purchase via phone” one.
