Ford Motor Co. has big plans for ecommerce. It’s in the process of reinventing its supply chain and changing the way its dealers sell cars, says CEO Jim Farley.
To achieve its new ecommerce strategy, Ford is borrowing a page from the playbook retail chain Target Corp. developed and uses to keep pace with Amazon.com.
Amazon ranks No. 1 in Digital Commerce 360’s database of Top 1000 e-retailers. It ranks e-retailers based on web sales. Target Corp. ranks No. 5.
“It’s kind of like what happened between Amazon and Target. Target could have gone away, but they didn’t,” Farley told attendees at the Alliance Bernstein 2022 38th Annual Strategic Decisions Conference on June 1. “They bolted on an ecommerce platform, and then they use their physical store to add groceries and make returns much easier than Amazon. They use their expertise as a physical retailer to their advantage, but they modernize the ecommerce piece, so it would be easy to do business with them.”
Online sales strategy
Now, Ford will use the same online strategy to change how its network of dealers sell vehicles, Farley says.
“It’s exactly what we have to do on the retail side,” he said. “We got to go to non-negotiated price. We got to go to 100% online. The vehicle, there is no inventory, goes directly to the customer, 100% remote pickup and delivery.”
Ford and Farley did not reveal many details on the vehicle maker’s ecommerce plans, but ecommerce is a big part of Ford’s enterprise-wide digital transformation — and how they do business as a car company.
“We spend $600 or $700 on a vehicle to promote it, and we spend nothing post-warranty on the customer experience. And the problem is on a parts business, which historically has been very profitable, we only get maybe 10% or 20% of the customers come back to us,” Farley said. “It would be much better if we tried to develop an ecosystem where 100% came back, and we gave them experiences, and that is our marketing. You buy Ford Model E, and after a year, we are going to give you a complete detail of the vehicle, check all your software’s up to date. You get a complete birthday for your vehicle.”
Ford first looked at selling direct online to consumers in 2000 but met stiff resistance from its dealer network. Instead, Ford launched Ford Direct as an organization to use the web to drive foot traffic to dealerships. But now Ford is looking to change the way its dealers sell to consumers with a digital-first approach.
“The vehicle, there is no inventory, goes directly to the customer. 100% remote pickup and delivery,” Farley said. “But then we have this opportunity to use our physical presence to outperform them (the competition).”
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