Used-car retailer CarMax Inc. has been happy with an omnichannel sales model it rolled out in Atlanta in December. Now it’s moving to bring ecommerce car vehicle purchasing to the majority of its customers, starting with new rollouts in Florida.
In a March 29 conference call with analysts to discuss results for the fourth quarter and fiscal year ended Feb. 28, 2019, CarMax CEO Bill Nash said the company plans to create three “customer experience centers” (CECs). The centers will help customers over the phone or online with shopping, comparing financing options and other questions. Each center will have a staff of about 300 and will serve multiple states.
Late last year, CarMax introduced omnichannel sales to the Atlanta market. The new online capabilities allow customers to buy a car entirely from home, in a store or via a combination of online and in-store interaction. Services include delivery and an express pickup option, which allows customers to complete most of the car-buying process online and finish a purchase in a store in as little as 30 minutes.
After browsing available vehicles online, shoppers can hold a car for seven days or request a transfer to a more convenient location. Customers who purchase online can get the car delivered to their homes or workplaces. CarMax also will bring vehicles to customers who want to test-drive them before deciding whether to buy. As with all CarMax purchases, customers can return cars for up to seven days for a full refund.
A CarMax spokeswoman says the company developed its omnichannel strategy based on feedback from customers.
“Our extensive testing and research have shown that customer’s expectations are changing. Customers want a personalized, on-demand and convenient experience from retailers, that allows them to shop on their terms, whenever and wherever is most convenient to them,” the spokeswoman says.
However, buying a car online is not as simple as ordering other products. For example, car shoppers want access to expert advice and guidance when they need it. Providing that help will be the job of the CECs.
“This new omnichannel offering focuses on meeting customers where they are today and where they’re going. We plan to continuously improve the new omnichannel offering and scale nationwide,” the spokeswoman says.
CarMax’s first CEC will be in Atlanta and will open early in the second quarter. In addition to Atlanta, the center will support the rollout of omnichannel sales at Florida stores, he said. Nash did not say which local markets in Florida will be the first to start using the omnichannel model debuted in Atlanta. CarMax operates 20 stores in Florida, including two each in the Jacksonville, Miami and Tampa areas.
CarMax expects to open its second CEC site in Kansas City later in the second quarter, and is “currently working on the third site,” Nash said during the conference call. The goal is to provide the omnichannel experience to the majority of CarMax customers by February 2020, Nash said.
Nash said CarMax has been “pleased with the high conversion on home-delivery sales, although it represents a very small percentage of overall sales at this point.” He noted that adding omnichannel capabilities will come with some initial challenges and inefficiencies, and CarMax expects that.
“As a result, our sales in the Atlanta market are a little less profitable per unit compared with other markets at this point. We do believe that we will be able to improve on this as we continue to roll out omnichannel and as our consumer experiences mature. We also believe this unique experience could be more efficient than our current model,” Nash said.
CarMax operates nearly 200 stores in 41 states. During the 12 months ending Feb. 28, 2019, the company sold approximately 750,000 vehicles to retail customers. It sold another 450,000 to wholesale buyers at in-store auctions.
Carmax is not the first used-car retailer to sell online. Competitors like Carvana.com now allow consumers to shop for and purchase used vehicles online—sometimes on smartphones. 20% of Carvana shoppers complete the whole transaction—from finding a vehicle to viewing it to financing—on their mobile device, Ryan Keeton, Carvana’s co-founder and chief brand officer, said in August. For millennials, that percentage is closer to 30%, Keeton said.