Lotus Drive: award-winning e-commerce platform explained
Fresh from Lotus Drive being named ‘Best Online / e-Commerce Experience’ at this year’s “Automotive Marketing & Communications Awards, presented by Autocar Business”, Geoff Dowding, Executive Director, Commercial Operations, Lotus Cars, shares his thoughts on the importance of the customer journey, personalisation, residual values and how Lotus, once again, is an innovator.
With the arrival of the Emira, Lotus has changed the way its customer buy their cars. What’s changed, why, and how is it different to our competitors?
From last year, we started selling direct to the customer and doing it through the Lotus Drive e-commerce platform – now an award-winner. Previously, the customer bought from the dealer, who had bought the car from us. It was the dealer who had the relationship with the customer, not Lotus. We have pioneered this new ‘direct sales’ approach in the UK and with a single price nationwide, customers can be assured they’re getting the best deal and the car that they actually desire.
Why make the change?
To many people, buying a car is not seen as being an easy and relaxing process. It should be and it needs to be. The motor industry needs to take as much stress out of buying a car as possible. That’s what we are looking to do and we’ve moved it online because it gives customers the choice of transacting either in the showroom, or at home, or wherever they choose, but using the same system. Twenty years ago, customers for all sorts of goods embraced and welcomed internet shopping, but the motor industry has been very slow to adapt. Lotus is innovating in that space.
The different types of digital retailing all have similar names – direct sales, online selling, agency model. Can you explain the differences?
Online selling is where you buy from an internet retailer who then delivers to you, and you’re not buying direct from the manufacturer. Amazon is the obvious example. The agency model is where the customer buys the car from the manufacturer, but they have to do it through a local agent. ‘Agent’ is the industry’s new name for dealers if they’re not actually selling cars anymore. Car manufacturers are starting now to go down that route. But that’s not what Lotus is doing as we didn’t want to force that on the customer. We have moved to direct sales. Our customers can order and collect a car through their local agent if they wish, or they can collect it from the factory, or we can deliver it to their house or place of work directly.
So how does that benefit the customer?
Car retailing has been the same for decades. At each stage of the transaction, each party takes a financial cut to make their own business work. The manufacturer needs to make a profit, so does the dealer, and in some cases there is an importer too. Everyone needed to make a margin and so the price reflected that but, at every stage, these margins are flexible due to supply and demand and individual negotiations. The customer knows that, so feels under pressure to haggle with the dealer to get what they think is the best price, and this can be very stressful for them. In the end the customer will often be left wondering whether they got a good deal or not.
Direct sales also benefits the customer because they can order their perfect specification of car directly from us, the factory. They are not under pressure from a dealer to take one of the cars in stock which may not be exactly what they want. This personalisation makes the customer feel good about the experience, as their dream spec car is being built just for them on the assembly line at Hethel. Finally, we get to understand customer preferences. We never build for our own stock, but previously we would build for dealer stock should the dealer request it based on what they think will sell. Sometimes it would sell immediately, sometimes it wouldn’t. If it doesn’t, the dealer is forced to discount it to move it on, and that affects depreciation and resale values, which in turn affects the customer’s monthly repayments.
Direct sales is clearly of benefit to the customer, but what about the agents?
We have a fantastic network of loyal agents who are passionate about the Lotus brand and what it stands for. They’re also hugely supportive of the Lotus Vision80 strategy that’s guiding our transformation to a global performance business and brand. By moving to the direct selling model, a lot of pressure is taken off the agents as they receive a fixed commission for every sale they facilitate and support. Plus, they do not have to buy stock as we own the demonstrator cars, they do not have the pressure of negotiating margins with us, or with the customer. And, of course, they still have contact with owners through their servicing and aftersales.
Has the move to direct sales meant change for Lotus?
Yes, and it has been a learning curve. With the end of the Elise, Exige and Evora, the arrival of the Emira, and our decision to move to an all-electric future that’s starting with the Eletre, it was the right time to make the change. But that meant that we had to be the motor industry ‘pathfinder’ and navigate issues along the way. But we’ve learned from other industries, for example, the banking sector, which has led the way online with processes, technology, customer service and innovative products. There have been some teething issues for us – and I won’t shy away from them – but they have been due in part to the phenomenal level of interest we’ve had for the Emira. That’s now being replicated with Eletre. We have had to improve a few of our systems, such as communication with the customer and we need to keep learning and improving. But I am particularly proud of the fact that a customer can arrange their financial services online, get an immediate trade-in value and get to an agreeable monthly payment which makes their buying process far less pressured. And this can all be done in their own time – not just during dealership opening hours – and without sales staff breathing down their neck.
So what is next?
Our goal is to roll out the direct selling model to other markets around the world, with eight countries planned in Europe for this year.