In 2015, Aaron Krane, at the time an entrepreneur at a Silicon Valley venture capital firm, tried to buy a car. He expected the buying experience to mirror a typical online shopping process.
"I'm ready to buy. I know exactly what I want," he said. "These dealers even put their products in great detail on their websites. All these conditions reinforced my assumption that there would be a 'buy' button there."
But there wasn't. So the following year, Krane created Drive Motors, a car-shopping and financing platform for dealership websites.
Krane recognized that although he and his peers had the tech savvy to develop an online car-buying product, as car-buying rookies, they needed automotive expertise to truly understand how to make the product easy, effective and useful for dealerships.
"When I built the operating team, I wanted to see a combination of dealership expertise because I recognized that's what I lacked," he said. "If I was to avoid the mistakes previously made in this vertical by tech companies, I would need to truly align with dealerships."
At this point, Krane considers himself "an enthusiastic student of automotive retail" and a "developing expert in automotive e-commerce."
One of Krane's hires was two-decade auto retail veteran Matt Weinberg, now senior vice president of consumer experience for Drive Motors.
Weinberg worked as an e-commerce director and Internet sales manager at dealerships early in his career. In 2005, he began developing dealership websites for Izmocars and conducted Internet sales training at dealerships. By 2010, he had begun his seven-year tenure at Showroom Logic, working in the marketing e-commerce sector of auto retail. Showroom Logic was acquired by PureCars last year.
‘Staying patient'
Today, Drive Motors, in San Francisco, processes more than 1,300 car orders a month for its dealership clients, which number in the hundreds, including stores owned by public dealership groups Asbury Automotive Group Inc., Lithia Motors Inc. and Penske Automotive Group Inc.
Drive Motors features a checkout feature on dealerships' websites. When customers click, they can structure their deal before finalizing and taking delivery of the vehicle at the store.
The customer can submit the information in five to 10 minutes, even while the dealership is closed. The information will populate into the dealership's Dealertrack and RouteOne platforms, saving time when the customer enters the store. The company partnered with Ally Financial in March, making Ally its preferred finance company. It also has added a tool for customers to upload required documents such as a driver's license and proof of insurance, trade-in information and other stipulations.
"A certain group of dealers has wanted this for a long time. There just hasn't been a proper execution of it," Krane said. "What we're starting to see are newer companies that actually understand how to align the buyer and the dealership needs. That's been the real change, a credit to dealerships for staying patient."
Weinberg recalled that about two decades ago, dealerships bought leads from AOL, the primary Internet service provider at the time.
"I thought I was doing e-commerce all these years. It turns out it was an illusion of e-commerce," he said. When Weinberg joined Drive Motors, "It really hit me that [before] I was really taking online leads and driving them into a traditional experience."
Dealers must realize that an online transaction option is crucial to their business, Weinberg said.
Customers are "comparing the experience at the dealership to the best experiences they are having online. They're comparing dealers to Amazon, Apple, Uber, Lyft," he said. "When you connect those dots for [the dealers], they start to realize that this change is going to happen whether they like it or not. They need to start to shift their attention from price, price, price and start focusing on how [to] provide a better experience for the customer."
Combined skills
Establishing a successful digital retail experience requires multiple skills, Krane said: an auto retail background, a knack for training at the store level and technology acumen.
"It requires a technology- and user-experience-driven leader. Ultimately, what everyone wants is something that buyers will adopt," Krane said. "Someone who brings the expertise of e-commerce from other verticals is a good leader, but dealership expertise has to be the other path of that leadership."
Those who come from outside the auto industry also must have the patience and humility to recognize what they don't know, said Krane.
"The big mistake Silicon Valley has made in this vertical is arrogance and thinking they can tell dealerships what to do, thinking they can convince the buyer to, in the words of some other companies, 'skip the dealer,' " he said.
After a startup builds a product, it must also take the time to "be a teacher of that product," Krane said. "Products like ours, based on the numbers, tend to sell themselves in concept, but in practice, people like Matt are what make them really work."
You can reach Hannah Lutz at hlutz@crain.com -- Follow Hannah on Twitter: @hm_lutz