Autotrader V eBay – let battle commence

For a considerable time now have had it virtually all their own way with regard to being the top dog for on-line used car advertising in this country. With eBay’s recent acquisition of trade2trade however, is someone else after a shot at the title? Of course there are other players – MSN Autos, Yahoo and Fish4cars to name a few – who are trying desperately to hang on to their coat tails but eBay are by far and away the biggest pretender to the Autotrader crown.
The recent expansion of eBay Motors Pro and acquisition of trade2trade would appear to assist eBay in accelerating its plans for market domination, bringing with it a significant database of motor dealers currently trading cars to each other but with presumably stock that eBay would also love to help them shift. Currently the cost comparisons for advertising trade stock for many dealers both independent and franchised would certainly be more favourable with eBay over Autotrader but they would counter this with their impressive stats of over 10 million unique visitors each month as opposed to eBay Motors 3.5 million.

The one thing they both have in common, however is cutting edge technology and they will obviously – if not already – be bringing in showreel imaging to better enhance the saleability of the cars they are marketing. Although Autotrader has worked tirelessly over the years to maintain its position as number one (and we assume will fight tooth and nail to keep it) with eBay’s growing influence in the car sales sector and virtually unlimited resources in getting there, it will be a fascinating battle. One thing is for sure they both realise what’s at stake in terms of growth and profitability and these two heavyweights are fighting for a large slice of a massive industry.

The difference with eBay, which could ultimately tip the scales in their favour, is their ability to market cars for their customers not only in the traditional “buy it now” format but the increasingly popular open, real time, on-line auction format, which could ultimately administer Autotrader a KO.

The attraction to more and more people, both buyers and sellers, private and trade, is that buyers genuinely believe that they have an opportunity to bid and buy a car they want for a great price and can have the excitement of seeing the action unfold in front of them from the comfort of their own homes with their feet up and a nice mug of tea. Because of the unique way that eBay grade all their subscribers in terms of feedback, users can be fairly satisfied that they are buying a car from a reputable source. They also, of course don’t have the rigmarole of physically viewing lots of cars before deciding – after lots of wasted journeys – on one that suits. Because of the information they can have at their fingertips on, for instance, the amount of watchers or bidders on any car they have for sale, sellers, particularly dealers, can gauge any future purchases on the strength of trends and activity. They can therefore be more accurate when it comes to acquiring stock which may be profitable next time they auction that car.

The Autotrader model could probably produce similar stats on request but will they be as accurate or as powerful as actually knowing for yourself that more than 500 people are currently watching a car and may well make a move at any time to put in a bid? A dealer who has been using eBay for some time now told us how he once took in an older Mazda MX5 as a Part-exchange, he usually took this kind of car to auction, but something told him to try it on eBay. He valued it as per his experience, the trade guides and time of year etc, but was astonished to not only be inundated by people looking at the car but also the eventual thousand pound profit he made on it. The flip side of course is like anything once sellers get to know the rules they can abuse the system and some people have indicated that there are dealers setting up alternative accounts on eBay and bidding on their own cars in different names to help the cars sale price or perhaps even ensure that nobody can buy it too cheaply if it doesn’t reach what the dealer wants for it! eBay say they have programmes with sophisticated algorithms to detect this type of fraudulent behaviour but we are sure many unscrupulous dealers may be tempted to play the system.

Of course customers who have had a bad experience with a car dealer find that they can negotiate on a car on line without the hassle of being worn down by a sharp speaking car salesman, as of course traditionally people in this country are uncomfortable with haggling.

Perhaps the biggest change that will occur is that the traditional placing of a car advert through a magazine and on-line is starting to run its course. Even traditional physical car auctions around the country reporting massive growth in their on-line auctions which allow people to bid in real time and view the car they want to buy on their computers without having to attend the auction themselves. Most tellingly, though if our information is correct is that many dealers are now saying that although they split their advertising budgets between their own website and then between Autotrader and eBay, they are starting to gain the impression that the eBay formula is the way forward.

There is a downside and disturbingly some users have stated that the heavy handed tactics of the eBay “machine” is crucifying their businesses. If any rules are deemed to have been broken, even if you have an unblemished record, an excellent feedback rating and indeed sometimes the status of a “power seller”, they will still immediately suspend your account, thus potentially disabling your business for up to a year in some cases. If, as is the case with some businesses, they have been so successful using eBay that they have put all their eggs in one basket as it were then the results can be catastrophic. With little chance of appeal and no form of communication open other than e-mail, and certainly no chance of arguing your case with real human is there a chance that eBay will go the way of other successful businesses in that having established themselves and generated huge profits on the backs of these same small businesses they then shun the very people who helped them achieve this success? Will Autotrader counter what eBay are offering, or are they so far ahead in terms of their database of buyers and sellers and massive advantage in terms of long term reputation that eBay wont concern them?

These concerns aside does the fact that selling cars on-line and drastically cutting the overheads of having to physically display cars on a forecourt mean that the eBay model will eventually become the virtual showroom of the future? Will a customer be able to buy, sell and finance his car all on line without having to visit a showroom? And will this prove a more profitable option for car dealers in the future? Only time will tell, but we were talking to a colleague recently who has operated a small car sales operation quite successfully for many years, he has always sworn by Autotrader as his best medium for selling his selection of cars. He has however recently decided to enter the 21st century and set himself up an account on eBay and embraced technology and he simultaneously advertised his stock in both formats “buy it now” and auction. Now whether the current market clouds the real picture or it is an actual snapshot of the future, he was shocked to discover that the cars advertised on Autotrader have drawn a few lacklustre phone calls in two weeks, in the same time period he has sold 4 of them on the eBay auction!

Autotrader V eBay you decide.

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2 Responses to Autotrader V eBay – let battle commence

  1. Mark Robbins February 24, 2009 at 12:05 pm #

    All of this is fine if the customers play by the rules as well, but they dont! all very well having 500 watchers on your car but the reality is they are just that, watchers, not buyers. There is also the tendency by the customer to “Hide” behind their computers safe in the knowlege that no salesman can talk to them face to face, this in turn allows them to put in bogus offers (that they rarely follow up) many pointless and time consuming questions often just “picking your brains” so to speak, using the dealers as little more than information bases. Of course many hundreds of vehicles are sold on both Ebay and Autotrader daily, but Ebay in my opinion allows for much greater “messing about” by the consumer, and in these lean times they are the sort of customers we can all do without !

  2. Phil Johnstone March 23, 2009 at 10:13 am #

    I have been having this debate with a colleague recently who uses solely eBay, whilst I am pretty loyal to the Autotrader format but have tried eBay a couple of times.

    Without doubt my colleague sells more cars than me on a like for like basis, sticking vigourously to the 5-day auction format with Buy-it-Now option. ALL his cars sell within the week, and very few deasl fall through.

    However, very often it is his profit which suffers; often making little or no profit after he has paid his fees. Also, despite the selling price of the car in auction, he has several times had to negotiate further with buyers who turn up and wish to offer less than the final bid for some miniscule item not included in the description. (For the record, his descriptions are always cringeingly accurate, describing even the scabby bits of his stock.

    For my part I find Autotrader can take up to 3 weeks to sell a vehicle, BUT (and this is the important bit) I almost always make profit, averaging £700 nett per unit on an average stock-in cost of £900.

    I prefer the A/T format because it gives me the sales process with my customers; I can give a general description in my advert, sell up the good points on the telephone, deal with objections in person and, most importantly of all, I can negotiate face to face!

    Anyway, for the record, my colleague and I both trade from home addresses after many years in the showrooms. We both sell cars in the £1500 – £3000 bracket.

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