January! Ah, I love the start of the new year — a completely clean slate with nothing but opportunity ahead.
The trouble with opportunity is you have to manage it to get results.
Opportunity for us in the pre-owned segment of the automobile business means only a few things: customers, inventory and sales process.
While some of these are not within our control, one definitely is: our inventory.
Sometimes I think of pre-owned inventory selection and management as like owning a deli. I know this sounds a bit odd, but I have owned a deli. The key to having a great deli is having a great selection of sandwiches.
Yes, you do have your specialty, an excellent Italian grinder is a must, but you must have selection. Pre-owned inventory is very similar.
There are sandwich shops that just make sandwiches. Nothing special. Nothing fancy. But is that what you want your inventory to look like?
How many times have we, as dealers and managers, drove by dealerships with pre-owned inventory that just looked like a row of vehicles? Nothing special. They all look the same with nothing unique.
Trying to get inventory to stand out is critical. We can sometimes get stuck in just offering what our customers expect to see and lose sight that this is an emotional purchase.
The customer’s eyes and senses have more impact on what they will purchase than the strategy of just putting a bunch of cars out there.
Every market has a niche. One of the dealerships I managed was a domestic line, and our pre-owned inventory was — you guessed it — primarily domestic because that's what we sold.
But a strange thing happened when a customer traded in a European SUV that we had another dealer bid, of course. But before we could get the wholesale order done we retailed it at a nice margin. So why not try it again?
We purchased one, and it sold. And so began an almost four-year run of selling a significant number of those European SUVs. This led to branching out into other European products that all performed nicely.
All this to say that market research didn't lead to this discovery, and there was no significant sales numbers that indicated this was a good idea.
Watchful observation and the willingness to try something different was all that it took. However, as far as the deli business goes, headcheese is still an acquired taste.
Amazon has mastered this process. Amazon doesn't just throw anything and everything into the marketplace. They recognize the value of the real estate on your screen and consider the activity of new products they put in front of you.
No customer activity and poof, it's gone. Their goal is 100-percent customer engagement. Stopping you in your shopping tracks to get you to click through seems reasonable.
This is what inventory should compel a potential customer to do: stop what they are doing, click or come into the dealership, and look at the car, SUV or truck.
I have seen this same idea repeat over and over in dealerships. A Korean dealership that can sell Jaguars. A Honda dealership that can sell lifted trucks and SUVs.
My point is that it is wise to find your niche in additional inventory of pre-owned models. It takes work, but the reward is definitely worth it. I have seen stores where niches have turned into 20 percent or more in additional sales.
I took a chance with grilled Panini sandwiches, and it was a great move. It rapidly accounted for 40- percent of our sandwich sales. But I couldn't have sold them if I didn't stock them!
So, the question is for the start of this new year is this: should we manage inventory like we did last year?
Or, perhaps seek new strategies for finding the next inventory opportunity and add to what is already working?
For me, the only thing that sounds better than this is making the perfect sandwich, sitting down and searching out those opportunities. ‘Til next month, see you in the lens of the lanes.