The customer may be going through most of the car transaction online, but interacting with another person in that process is crucial.
That’s one of the lessons CarMax has picked up in testing its home delivery program, the company’s president and chief executive officer said in an earnings call Wednesday.
CarMax Home Delivery, which is being tested in Charlotte, N.C., encompasses more than just the physical drop-off of a car at a customer’s house, CEO Bill Nash said.
The program is really a holistic view of the process, providing a way for consumers to go online to take care of tasks like setting up financing (which actually is now available nationwide) and getting an appraisal on their trade-in (which is being tested in Charlotte, as well.)
Home delivery is currently limited to a 60-mile radius of Charlotte and only within North Carolina, and vehicles can only be delivered to the customer’s work or home.
The process is finalized at the shopper’s home or business — after the car is brought to one of those locations, the customer test-drives the car before he or she actually buys the car. There is also a 5-day guarantee on vehicles bought through this channel.
Nash said he doesn’t envision CarMax “making them do everything online and then bringing them the car already bought.”
At this point, he said, “we’re going to continue to take it to them, let them take it for a test drive, and if they decide not to buy it, then we take it back to the store.”
Nash called this course of action “the right thing to do if we are going to continue to deliver it to home.”
Of course, there are varying state laws throughout the U.S. regarding online and out-of-store sales of which to be mindful. And on the profitability front, Nash said it was a bit too early to get into determining that at this stage.
But again, one thing that CarMax has been able to determine through is testing is that even with the online processes available, human interaction is key.
“Now, it may mean that they want to come into the store; it may mean that they want to talk to somebody on the phone. But regardless, because of the complexity of the transaction … the majority of consumers, to enhance their experience, generally you have to some type of customer interaction with them,” Nash said.
“So, we’ll continue to develop this product offering, but again, it’s really a series of a bunch of different things — whether it’s online financing, whether it’s online appraisals, whether it’s delivering the car to the house — kind of coming together and giving the customer the best experience possible.”
And CarMax has made upgrades to various pieces of that series. Nash pointed to the digital merchandising of vehicles CarMax has for sale, sharing the success of success of indoor photo studios to eliminate impact of weather to vehicle photos.
CarMax has opened 16 indoor studios throughout the U.S. and plans to open 18 more in fiscal 2018, he said.
Furthermore, CarMax has had online financing available for two quarters.
“We continue to be pleased with the results,” Nash said of the latter. “Customers are engaging well with this offering and it continues to contribute to increased leads, which we believe ultimately generates incremental sales. Now we’re focused on improving the experience and proactively marketing our online financing capability nationwide.”
Nash said the company is currently optimizing that online finance process and ensuring that it its “tailoring that specifically for different customers.”
CarMax is also testing online appraisals in Charlotte, which allows shoppers to provide information online and get a specific appraisal value on their car. “We’re receiving great back from both our customers and our sales team and are planning to expand the test to two more stores in Charlotte next quarter,” Nash said.
He said the company continues to “focus on learning how we can deliver CarMax’s hallmark exceptional experience to customers wherever and whenever they want to shop. We continue our home delivery test and one key learning we have found is human intervention at the right time is important to getting our customers the personalized experience that they expect.
“Our goal with this test is to build the functionality needed to fully integrate our online and instore experiences so that we can offer as much or as little of the car-buying process online as each customer wants.”
Asked about expanding home delivery, Nash said the company is “evaluating different options right now.”
In the meantime, it continues to fine-tune the process in Charlotte.
“I personally believe that consumers want to do more of the transaction online, and to the point that we can make that as easy as possible, speed up the transaction when they come into the store … then that’s a good thing for the customer,” he said. “As far as being able to do it all online, that’s our home delivery test, we’ve got that in a market right now and we’ll continue to improve that experience.”