Top tips for high-performance inventory management
Well-publicised stock shortages and pent-up buyer demand form a potent mix… and proactive dealers are ensuring their supply chain is rock-solid to take advantage of what comes next.
‘Supercharging your supply chain’ is the core subject of our latest webinar, with Ren Blanning, carsales’ Head of Executive Business, Business Consultancy Services, identifying key strategic areas where dealers can commit to best practice… and watch conversions soar.
Customers cool on trade ins
“On the customer side, we’re seeing high urgency when the time comes to dispose of their current vehicle,” Blanning said.
“carsales’ internal data shows that many seek a dealership valuation, but then decide to privately advertise on carsales. Nearly 30 per cent of these do so within three days of the dealer’s evaluation.¹”
With 42 per cent of recent survey respondents² indicating they would currently sell privately, this demonstrates “a healthy conquest opportunity,” according to Blanning.
“But it’s also vital to work with the 33 per cent indicating they would trade in to a dealer². Our data shows that figure drops to only 10 per cent when the vehicle is sold²… which is not a great conversion rate. These customers are effectively yours to lose without the appropriate strategy,” Blanning said.
Market transparency, with customers able to research trade-in values online and therefore being “informed before they have even walked in the door,” reduce the traditional reliance on dealer information… and demand dealer transparency too.
And with 61 per cent of buyers also having a car to sell¹ the importance of this interaction is even more important.
Dealer play
“On average, the Australian automotive industry organically trades at 30 to 34 per cent conversion¹,” explained Blanning.
“But are you willing to settle for mediocre? The top performing dealer groups report ‘Valuation to Intake’ conversions between 48 and 54 per cent.¹”
High-performing dealers are capturing used stock before it shifts to private sale, rather than spending additional time and resources on prospecting the private ad pool… and competing with other dealers.
“Between July 2020 and June 2021, more than 27,000 private ads on carsales were re-listed as dealer ads¹,” said Blanning. “Are you losing trade opportunities to other dealers?”
Core supply channels
There are four key inventory acquisition channels, according to Blanning, split across two seller types.
“You have motivated sellers that are looking to either trade in or sell privately, while passive sales come through B2B channels such as auctions, tenders and fleets. Current customers are another ‘passive’ source, through your aftersales channels such as servicing or finance and insurance.”
How a dealer resources across these channels is vital, with a focus on the trade-in process offering further value-add opportunities.
“Trade-in is not a simple, ‘one-and-done’ transaction,” said Blanning.
“There are opportunities to improve customer engagement and provide ancillary services to these clients, increasing retention… and the same is true when prospecting more passive sellers discovered through your service and F&I channels.”
Robust supply chain strategy
As detailed in our last webinar, supply chain health is critical to profitability, and key metrics such as stock turn and lead spread need constant evaluation.
These metrics can inform a broader supply chain strategy that challenges the status quo.
“You don’t want to miss out on what is a hot market,” said Blanning.
“It’s time to re-define your strategy by thinking outside the box. Bring a new attitude: You are buying inventory, rather than selling a car, so make sure your strategy allocates appropriate people, time and budget to mine this area,” Blanning said.
Another tip is to ensure the strategy is well-documented and clearly communicated, with set expectations and a focus on simplicity – both for the customer and the business.
“You also need to assess where you are today and track key metrics to keep the team accountable… you can’t move the needle if you don’t know where it currently sits,” explained Blanning.
As well as stock turn and lead spread, other important measures that can assist strategic inventory refinement include:
- Inventory tracking by source
- Conversion by department
- External purchase percentage
- Market-targeted valuations
This last point is particularly important, given the level of research most selling customers have completed prior to contact.
“Use appraisal tools (such as LiveMarket) to ensure you’re providing an accurate value and increase the likelihood of conversion,” said Blanning.
Simple wins to maximise inventory opportunity
Introducing – or increasing the visibility of – your website’s ‘trade-in’ option is an easy first step to improving supply.
“Our data shows that up to 60 per cent of website traffic can be lost once visitors need to start scrolling¹,” explained Blanning, “so make sure you have a call-to-action for your trade-in section at the top of the home page.
“The top-performing dealers in this space showcase trade-in sections, and the result is high traffic flow.”
Once supply is shored up, a look at current new car supply constraints provides opportunity to sell used inventory through, increasing turnover.
“International travel restrictions, chip shortages and increased demand has seen new car lead times balloon out to six months or more… but we know that 58 per cent of intenders are ready to buy within the next month²,” said Blanning.
“Converting these customers to a quality used vehicle is a great option for those wanting to upgrade now, providing you with a purchase opportunity,” Blanning concluded.
Top supply chain tips
- Tap into the 61 per cent of buyers with a vehicle to sell
- Make it easy for your customers to contact you, at any time
- Introduce or highlight a ‘trade-in’ section on your website
- Look at your customers as not just buyers, but sellers
- Long new car wait times? Switch your customer to a used vehicle
¹carsales internal data, October 2021
²carsales Buyer Sentiment Survey COVID Wave #9, October 2021 (n= 1695 completed surveys)
