Amazon Proved Online Retail Prowess, Tesla Destined To Do The Same

from left: Tesla Model S, Tesla Model 3 and Tesla Model X

MAR 10 2019 BY EVANNEX 16

AMAZON PUSHED PRODUCT RETAIL ONLINE, CAN TESLA DO THE SAME FOR CARS?

It’s not uncommon to see Tesla compared to Amazon. There’s also a bit of a rivalry between Jeff Bezos and Elon Musk. Bezos has systematically extracted mass market product retail out of traditional brick-and-morter stores and into its industry-dominating Amazon marketplace online. Could Musk be taking a page out of the Bezos playbook — going all-in with Tesla’s online sales strategy?

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Matt Pressman. The opinions expressed in these articles are not necessarily our own at InsideEVs.

Above: Ordering a Tesla online (Image: Tesla)

Furthermore, could Tesla be the first automaker to have the moxie to attempt such a bold Amazon-esque move? In the article, In 1 Astonishing Sentence, Elon Musk Just Revealed the Sheer Insane Power of the Tesla Brand, Chris Matyszczyk writes in Inc., “Musk offered several statistics that might stress the minds of traditional automakers,” but one particular sentence stood out to him: 82 percent of customers bought their Model 3 without ever having taken a test drive. 

Matyszczyk says, “How many brands can possibly inspire consumers to part with vast amounts of money simply on their cachet and hearsay? It’s one thing iPhone buyers being prepared to sacrifice $1,000 on the altar of self-regard. It’s quite another to part with, say, $40,000 in order to buy a car.”

Above: Carvana’s CEO says he “wouldn’t be betting against” Tesla’s recent push for online sales (Youtube: CNBC Television)

Talking Tesla, Analyst Gene Munster told Fox Business, “Basically you don’t need that sales force… actually no one likes buying a car in the current [dealership] model.” With online sales, Munster concedes that Tesla might actually “find a way to improve the buying experience.”

Indeed, Forbes published a report that found car salespeople remain “one of the least trusted professions in America today.” And Bloomberg predicts that Tesla’s move to online sales “will turn out to be prescient… [as] 78 percent of all Model 3 sales were already online last year. And millennials — one of the key targets for the Model 3 — have highly favorable views of the Tesla brand and are keen to buy products over the internet.”

Above: The only group of professionals less trusted than car salespeople are Members of Congress (Chart: Forbes; Source: Gallop)

In turn, Markets Insider reports that “Millennials are piling into Tesla” stock after the company announced the base price Model 3 and its transition to online-only sales. It’s reported that, “Users of the free trading app Robinhood, which is popular among younger traders, increased their holdings of Tesla by nearly 20% over the past week… just behind Amazon.”

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Sources: Inc.CNBCFox BusinessForbesBloombergMarkets Insider

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers, free of charge. Our thanks go out to EVANNEX. Check out the site here.

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16 Comments on "Amazon Proved Online Retail Prowess, Tesla Destined To Do The Same"

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Just like the over-automated factories that didn’t work, this won’t either. I own a few hundered TSLA shares, I’m not selling any, as I hope Elon will find out he was wrong and he’ll fix things later. The 80% number tells me that the die-hard fans love the company no matter what, or they are simply not that discriminating when it comes to cars. Now it’s time to convince the regular consumer and that is done through good advertising and test drives. Elon says that good product doesn’t have to be advertised, as it sells itself, not true. When I bring up Tesla with people who don’t follow the company, all I hear is they are going bankrupt, and they make cars with inferior quality, nobody knew that they were planning and are now selling a car for $35k, nobody knew Teslas are the safest cars on the road, nobody knew of superchargers etc etc. Closing stores is the wrong move to me, especially here in Europe, Tesla should be opening them and not closing them…

It is a major purchase….many would never buy a car without a test drive. Tesla should rethink this strategy.

Lots of ways to implement a test drive opportunity other than stores and car lots. Turo-type rentals, in which the cost of a 24 hour rental is reimbursed if you purchase within a week. Some reward to a current owner for demonstrating the car to a prospective owner, kind of like a dating app. Tesla Owners Club rodeo days, where everyone gets together for coffee and Tesla proselytizing. None of these require spending time with a guy in white shoes and transition lenses.

“Turo-type rentals, in which the cost of a 24 hour rental is reimbursed if you purchase within a week. ”

What consumer would pay for a test drive? makes no sense.

Well, I think you’re wrong on a number of points, the least of which is that Tesla buyers are not very discriminate, in actuality it’s quite the opposite.
A number of the other statements you make are similarly inadequate, but what you hear, and believe, even though they may represent what the general public believes is no reason to try and convince a knowing public otherwise.
Advertising is antithetical to Tesla’s MO.

You may hold your own views and believe them to be correct, but you could be wrong too, considering the huge demand for the Model 3, and it’s general acceptance and praiseworthiness, among better informed individuals.
The remaining public will get it eventually.

Although I think Tesla need to, and will keep some stores open, and expand their service centers into to some of those vacated spaces.
Service is the main problem they must address at the moment.

Wow, so it seems it didn’t take Tesla that long to reverse the idiotic decision from last week. They (Elon) were thinking demand would go through the roof, it did not. So as I said, it’s time to sell to people outside of the Tesla bubble…

Tesla’s future is mostly about transportation as a service with robo taxis so the little sales Tesla will do to people should easily be done online only. As long as Tesla has enough service centers it will be fine.

It’s ironic but the attempt and success of keeping Tesla stores out of a number of states or to restrict sales had an effect on this decision. Clearly, at least probably, if there had been no restrictions more sales would have come through the stores, but now I guess we will never know.

Good move Tesla will keep most of it’s galleries open. But when I hear stories about some of the Tesla stores that the personal there seem to lack Electric Vehicle and or Solar Battery knowledge and even suggested at buying a ICE instead. That I find real disturbing. At least having an online service will allow Tesla to record conversations with customers to find out the truth. The personal don’t understand the product there selling or if a troll is completely lying. With computers you can speak and see each other if you wish and get answers immediately online just like you were in a store. Also you can place an order 24/7 online and a representative can be there to answer questions just like you were in a store. Thousands of people placed orders for a TM3 site unseen. Spending money on advertisement is just wasteful. I doubt those commercials sell more beer, cars, or anything They spend millions for a 30 second commercial for the superbowl. Heck the way some of the commercials air I’m not sure what there selling. Online sales save customers money, just like Amazon saved people money. Just like American’s complain about China but… Read more »

Reasons for Tesla moving to this model are multiple. First is it reduces overhead and allows Tesla to maximize profits and value to customer by cutting out the middle man. Second, it enables Tesla to outflank regions who’ve generated artificial barriers to Tesla/EV adoption due to anti-progress or pro fossil fuel political stances. This marketing model is proven to have both benefits and appeal. I think Tesla is leveraging a number of advantages that will enable its continued expansion. So called ‘capitalists’ fighting Tesla on this should sit up and take notice.

As long as they have 3 day return policy and a full 3yr warranty I am fine ordering a car online.
I have been doing it via email without test driving for about a decade.
I watch car reviews online and the experts do the test drives for me.
I negotiate the price before I walk into dealership. I inspect and test drive to make sure the car is not defective and sign the papers and drive it home.

It is a bold strategy and I hope it works. I like the idea of eliminating stores in order to drop the car price. But will it work? I don’t know.

I think the test drive situation is being misunderstood.

There will be test drives available to anyone who wants one from the Galleries. It’s been made clear they will be keeping/converting a number of them for the purposes of showing & driving. Once you decide to buy, you do it online. Not unlike going to the Apple store to check out a produce, then buying online.

The main difference is you might have to go a bit further to a gallery, because there will be fewer of them. But that is not much different that going a bit further to a car show to check out models before buying. Many people already do that rather than going to a dealership (because you can’t get a shower after talking to a sales weasel).

“There will be test drives available to anyone who wants one from the Galleries.”

That’s at best an over-generalization. There are some States where State laws prohibit Tesla from offering test drives thru Stores or Galleries. I hope that Tesla can offer them thru their Service Centers, but for all I know, some State laws may block that too.

From what I understand, only Michigan outright bans manufacturers from offering test drives (as well as everything else).

It should be noted that all the major manufacturers regularly offer special test drive events throughout the country. Tesla too has mobile test drive units regularly offering test drives in states banning direct sales.

I regard the closing of Tesla Stores as a grand experiment. Will it work, or won’t it? I think it could go either way.

I can understand jumping to the conclusion that Tesla will stop offering test drives — I had the same reaction myself when I first read Tesla’s press release, which talks up a 7-day return policy as if it’s replacing test drives.

However, so far as I know, Tesla has nowhere stated it will stop offering test drives. I can see the possibility that they could offer them thru Tesla Service Centers. After all, the Service Centers have to keep loaner cars around; why couldn’t some of those be used for test drives?

Not saying that will happen… just suggesting that is something which Tesla might be considering.