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The current economic state has made it clear that moving to a sustainable agency sales model is no longer just an option for original equipment manufacturers (OEMs) and dealers but rather a must.
Though, there is not much time left for the implementation.
New models for sale in the fast lane
In the B2C segment, market participants such as Tesla have relied from the start on the concept of offering online sales with strategically located showrooms.
In dissimilarity, many established OEMs still rely heavily on traditional three-tier sales, but this is no longer sufficient because:
- Decentralized and outdated IT system environments prevent constant use of sales channels
- Today’s retail processes alone cannot achieve customers’ end-to-end experience.
- Storing customer data in silos makes constant interaction with the customer difficult.
- Inventory capital freeze increases the risk for distributors
- A dealer-focused, margin-based price war leads to lengthy price negotiations by the customer.
However, in the short term, the goal should not be to replace the dealer network that has developed over time with a direct online sales channel.
But instead to run different sales models in parallel to balance organizational and technical challenges and use the existing dealer assets.
A solution for the upcoming agency sales model:
- By combining OEM-led online sales with traditional retail, the agency model achieves a balancing act. It makes optimal use of existing dealer infrastructures and digital sales to benefit all businesses.
- Parts for the first time, such an ecosystem at all distribution levels enables OEMs to achieve a 360-degree view of the customer, reduce the cost of sales, and generate new revenue streams.
- It covers the way for an innovative and customer-centric omnichannel sales process, a goal-oriented approach, and see-through reporting.
- In this model, distributors evolve from simple offline sellers to agents while providing customers’ faces. Temporarily, OEMs interact directly with customers as they become accountable for the sales transaction.
- New challenges emerge as OEMs take charge of dealer processes and workflows and assets and risks (e.g., capital commitment, inventory management).
- This shift in errands protects dealer networks, especially in times of crisis.
Time to be brave:
- By transforming parts of their sales models into agency sales. OEMs can drive sales and secure a clear edge in the marketplace.
- Rousing to an agency model is a unique option for OEMs. And, gradually, they may have few other options to do so.