Thanks to a new e-commerce platform and digital twin technology, smart Europe is in the vanguard of automotive brands tailoring their business models to customer needs and direct online car sales.
Whether it’s streaming services, cell phones, or robotic lawn mowers, today’s consumers are more than happy to enjoy the convenience of buying high-tech products and services online. In a matter of mouse-clicks, they can configure a product and select whether to buy, lease, or subscribe – depending on their personal preferences.
But things are very different when it comes to buying a new car. A study by Deloitte found that three out of four consumers still prefer to purchase from an authorized vehicle dealership. Yet it also revealed that there was a growing appreciation of the benefits of virtual purchase processes. Consumers would like to see buying a new car become like buying a new cell phone.
“Our assumption is that there will always be people who visit physical dealerships to “feel” a car and test-drive it,” explains Björn Schick, CXO and member of the executive board of smart Europe. “But it won’t be long before they become the minority and more people start configuring and ordering their cars online – in just a few quick steps.”
Direct-to-Consumer (D2C) Vehicle Sales Are Booming
How soon that happens, Schick says, will depend hugely on whether suitably attractive offers are available. Increasingly, customers are willing to sign contracts online if they can obtain a favorable short-term lease or subscription deal on transparent terms. They then have a tendency to be more adventurous in their choice of car model and color.
“They’ll quite deliberately opt for a sportier model, maybe, or bright yellow paintwork,” says Schick. “That’s because the focus is not on the vehicle’s resale value when the contract ends, but on the customer’s preferences.”
Many of today’s market players – both established and new – are well aware of the business opportunities behind this change in consumer habits. They are muscling their way into online channels to claim their share of the rapidly growing D2C vehicle market. Alongside electric car pioneer Tesla, brands including NIO and Polestar are showing the way – and automakers across the world are following their lead.
Direct Sales on a Single E-Commerce Platform
smart Europe also sees strong prospects for its own new-vehicle business here and is aligning its entire company infrastructure accordingly. smart Europe is a wholly owned subsidiary of smart Automobile Co., Ltd., a joint venture established in 2019 between iconic German vehicle manufacturer Mercedes-Benz, which transferred its smart brand to the partnership, and Chinese automaker Geely. The aim of the joint venture is to offer all-electric smart models on a new e-commerce platform for climate-conscious, city-dwelling consumers for whom the online world is second nature.
“Our business model is based on direct business with consumers, whom we address through an omnichannel approach so that we can sell our cars virtually and physically on a single platform,” explains Schick.
Car dealerships play their part in this business model too. “We see them as a key element in our sales strategy,” says Schick. “Their role is changing, but it’s just as important as before. As a newly formed company, we’ve got the chance to reinvent and recalibrate our dealership model.” Dealers will no longer own vehicles themselves and sell them, but will serve as brand ambassadors for (joint) customers at the physical retail touchpoint and as sales and service partners. They will arrange test drives, hand vehicles over to their new owners, and invite customers to events targeted at particular client segments. In short: car dealerships as we know them today will no longer function chiefly as sales outlets, but as agencies that showcase the brand.
SAP Commerce Cloud as the Process Backbone for smart Europe
The foundation for this innovative style of cooperation is smart’s new e-commerce platform, which can be accessed not only by smart Europe employees and dealers but, for example, by repair shops as well. They can each see the data the customer has given its consent for them to access. The new platform will become operational at the end of 2022, coinciding with the launch of the first new smart #1.
Central to the platform is SAP Commerce Cloud, on which all of smart Europe’s e-commerce transactions will run, from product configuration to payment. “SAP Commerce Cloud lets us map all the country-specific tax and legal requirements so that we can manage all the processes for our business across Europe on a single platform,” explains Schick.
Coupled with SAP Customer Data Cloud, SAP Commerce Cloud also plays a key role in delivering hyper-personalized content on the front end because, when the two solutions are integrated, they push relevant data for a given set of parameters by country and customer segment. This means that, on the new e-commerce platform, someone who is sporty, adventurous, and has an eye for design will see different content and journeys than, say, someone with a different psychographic profile, such as an “information seeker.”
Accurate and Secure Consent Management Built In
SAP Customer Data Cloud and SAP Commerce Cloud form the backbone for authenticating and verifying customers and for managing customer consent. The SAP Customer Identity and Access Management solutions help ensure that all customer consent statements relating to being contacted or to personal data being processed are handled accurately and securely and – most importantly – in compliance with GDPR (the EU General Data Protection Regulation).
The major advantage of SAP Customer Data Cloud is that it records all customer data centrally, including conventional data like the personal “smart ID” that identifies any smart customer at any touchpoint and relevant product data as well. The digital key is an example of how this data can be used: owners of an all-electric smart can opt for a digital key to operate their car and can even share the key with friends via an app. The vehicle-locking mechanism, consent to the transfer of data, and so on are managed on the central platform.
“This shows that the new platform is much more than a marketing and sales tool,” says Schick. “It is practically part of the product.”
Enhanced 360-Degree View Supports New Business Models
More product data comes from the SAP Digital Vehicle Hub application, which serves as the digital twin of any smart car. The application contains not only technical data about a vehicle, but also provides insight into wearing parts that need replacing and about driver behavior. Connecting these two layers, customer data and product data – each of which allows a panoramic view of their object – creates 360-degree visibility into both the customer and their vehicle. This in turn opens the door to scores of new digital services, product enhancements, and personalized customer offerings.
“Having opportunities like this on the horizon makes working with SAP particularly compelling,” says Schick. “We’re on an innovation journey, interacting closely with SAP on what else the solutions might be able to do in the future.” smart Europe’s aim is to deliver on its vision of becoming an urban companion for its target market – for all of their vehicle-related service needs.
“Our motto is ‘try, learn, adjust, repeat!’” says Schick. “With that in mind, we’ll keep moving steadily along the road to our destination – but always be ready to change lanes if we need to.”
Top image courtesy of smart Europe.