Amazon, which launched with an ambition to become the “everything store”, is adding another product to its online shopping site: cars.
Buyers in the US will be able to browse and purchase vehicles from dealers on Amazon starting next year, according to an announcement from the company. The head of Amazon said the move was aimed at “changing the ease with which customers can buy vehicles online”.
The selection will be limited to the Hyundai brand to start, it said. Online car sales remain a tiny fraction of the car market, but a big surge in such transactions during the pandemic shattered the assumption that customers would avoid making such a big purchase online.
Forecasters are expecting such sales to become a bigger part of the business in the years ahead.
“There is certainly a segment of the population, which I believe is growing, which has huge trust in Amazon and other online retailers and they may prefer to never interact with another human being when purchasing a vehicle,” said Alan Haig, president of Haig Partnership, a Florida-based firm that advises on car dealer mergers and acquisitions.
Involving Amazon – already a huge brand and player in online shopping – get involved is what makes this announcement “transcendent,” he added.
“It's no longer a new app that somebody would have to load … it's sitting on their phone already,” he said. Since starting as an online bookseller in 1994, Amazon has moved aggressively into other areas, such as cloud computing, financial and medical services.
It made a foray into online car buying more than two decades ago, when it invested in an online site. Several years ago it launched an “online showroom” with Hyundai that allowed people to browse for cars. Until now, the final sale has happened off the site, at a dealer.
Hyundai Motor Co president Jaehoon (Jay) Chang said working with Amazon would help the firm “grow our sales network, transition to electrification and realize the future of smart mobility.” As part of the deal, Amazon's virtual assistant Alexa will be integrated into new cars starting in 2025. Hyundai also signed a multi-year deal for Amazon's cloud services.
Amazon did not provide details about how many dealers have agreed to participate or further information about how the relationship with dealers would be structured. It said it expected shopping to begin in the “latter part of 2024”.
“Customers will be able to search on Amazon for available vehicles in their area based on a range of preferences, including model, trim, colour, and features, choose their preferred car, and then check out online with their chosen payment and financing options,” it said in its announcement.
“This new shopping experience will create another way for dealers to build awareness of their selection and offer convenience to their customers.”
Mr Haig said some dealers may be wary, worried about how much of a cut Amazon might demand of their business and the distance using the platform will introduce between their firm and the customer. But they also stand to benefit, if using Amazon makes sales easier, and thus more frequent, or allows dealers to save on advertising,
“There's going to have to be a balance established where all parties would benefit,” he said. Shares in car sellers known for their online presence dropped following the announcement, with Carvana ending the day down more than 5%.
— CutC by bbc.com
