Here is a novel idea – Buy a new car without ever speaking with salesperson or visiting a dealership. You can even test drive the car for three days. All this from a vending machine. It is true. Alibaba (BABA) opened the first of several such vending machines across China in an attempt to expand online retailing to the physical shopping experience.
Here is how it works – Customers go to Alibaba’s website and book a test drive and go to the local service center where the customer is recognized via facial recognition and the requested car is delivered from an eight story vending machine. In the meantime, Alibaba’s financial arm – Ant Financial Group confirms the customer’s Sesame credit score (from his history of purchases and payments on Alibaba’s retail website) and gets ready to offer the customer a purchase price by the time he gets back from his test drive. If he accepts the offer, the car is his to keep. Else, he returns the car after three days back to the service center and the car is put back on the vending machine.
Unless the customer enjoys eating three day old cookies and drinking yesterday’s coffee while haggling the sales price of the car with the annoying salesperson at the dealership, this alternative from Alibaba could provide customers with the smoothest automobile purchasing experience to date.
Future Wealth’s View
The beauty of the model is its simplicity. China and the rest of the world are now grappling with new customers i.e. the millennials who have grown up having minimal in-person conversations with friends and relatives and instead, communicate via chats, facebook messenger, email etc. To attract these customers into a dealership and negotiate with the slick haired automobile salesperson is simply a big ask.
In many ways, Alibaba’s approach mirrors Amazon’s efforts to automate the supermarket shopping experience where customers can pick up whatever they need and simply walk out instead of attempting to find the shortest line at the cashier and waiting their turn to pay for the goods. Digitizing the operations to grow beyond their core business and changing the way consumers shop is the hallmark of both these companies – Amazon and Alibaba.
If anyone in the US auto dealerships doubts that Amazon does not have similar plans for the US and will soon obviate the need for these institutions, they may want to a take another big gulp of the two day old coffee from the corner of their own dealership showroom.