Online sales: Creating a 'buzz' and new business

Forays into social media and Web shopping malls

With competition white hot in the real marketplace, some carmakers are turning to online retail sales to create a buzz and boost brand awareness.

Domestic automaker Geely announced that in the first four months of the year it sold 1,200 of its Gleagle brand cars on Tmall, a popular e-commerce portal.

That was more than its total sales of 1,038 units last year at brick-and-mortar Gleagle dealerships.

On April 7 alone as the Gleagle Tmall shop celebrated its second anniversary, the automaker sold 122 units, a record for cars on Tmall.

But Geely isn't the only automaker going online.

In January, Mercedes-Benz sold 666 of its small urban brand smart priced at 128,888 yuan ($19,828) through the micro blog Sina Weibo.

In September last year, 200 smarts went on sale at Taobao - the parent of Tmall and China's largest e-commerce platform - offering group buyers a 23 percent discount from the sticker price of 176,000 yuan at actual dealerships.

The first car sold in just 24 seconds, with the rest purchased in three and a half hours.

The company initially estimated it would take 21 days.

A salesman at a traditional Mercedes-Benz outlet in Beijing said he was stunned.

"More than 100 cars were sold in just an hour - at our dealership, we just sell one or two smarts a day," he added.BMW, Audi, Volvo, FAW Toyota, Dongfeng, Nissan and Beijing Hyundai have all now started online shops at Tmall.

Super car brand Lambor-ghini made an attempt at online sales in May 2011, but the move turned into a target for online pranksters.

Just a week after a 6.48 million yuan model was displayed on its Taobao showroom for sale, more than 10,000 people placed orders - but no one ever paid.

A Taobao visitor wrote on his micro blog that "whenever I'm in a bad mood I 'buy' a Lamborghini. Then I feel I am extremely rich."

The online showroom was forced to close in just a month with no deal ever made.

Yet in the world of online and social media marketing, it was termed a success.

"We never expected to actually sell a Lamborghini on Taobao," said one of the Lamborghini personnel in charge of online sales.

"We just wanted to make the brand known to more people. Taobao is just a channel for our marketing strategy."

Several forms

Online vehicle sales have taken on several major forms.

Many automakers have opened online shops to just take orders with a small deposit, but the deal must be finalized at a real dealership.

The deposit for ordering a Geely Gleagle is 500 yuan, while a BMW is up to 10,000 yuan.

Some online operations offer group sales discounts, like what Mercedes-Benz did to sell its smart cars. They also require buyers to finish the process at a traditional dealer.

A third form is complete online selling - buying a car just like buying a T-shirt - with all the procedures finished online.

But in China or other countries, only a few automakers have made such attempts.

In 2009, US automaker General Motors cooperated with online auction company eBay to enable customers in California to bargain with dealers and pay for a new car online.

Yet even in the US where online vehicle sales emerged earlier, such moves are rare.

Normal online operations offer information on vehicle models and take orders, but the deal is closed in person at dealerships.

"Actually most US people view vehicles on the computer but still buy one at a dealer outlet," said Liu Shuang, an executive at Jing-dong, another popular online retail website in China. But other forms are beginning to emerge.

The third-party vehicle trading website Yiche.com provides comprehensive services including model comparisons, detailed consultation and dealership selection.

It sends customer needs to various dealers, helping them trace potential buyers.

Skoda invented another form. It began cooperation with Alipay - a third-party payment platform - in early 2009 to offer online services including consulting, model display and door-to-door delivery. But buyers still have to finish the deal in a real dealership.

More for advertising

Online vehicle selling are still more about marketing, rather than actual profits, said industry insiders.

Several bottlenecks must be cleared - including test drives, deliveries, after-sale services and online car loans - for truly digital deals to become common, they said.

Yang Xueliang, Geely's public relations chief said the online approach will not affect traditional dealers in the next five to 10 years. But he warned that if online sales surpass 10 percent of the total, actual dealers will have to make some changes.

Still, the potential is large in China, according to a survey by consulting agency Arthur D Little of potential customers in China, the US and Germany.

Results showed that 86 percent of Chinese respondents might be willing to buy a vehicle online, compared to 42 percent in the US and 38 percent in Germany.

xuxiao@chinadaily.com.cn