group jcais, hkust. inside the shop…… salescustomer

Group JCAIS, HKUST

Group JCAIS, HKUST

Inside the Shop……

SalesCustomer

Group JCAIS, HKUST

Isn’t it very troublesome to go through sooooooooo many processes???!!!!???!!!

PurchaseRepair

Insure

Resell

Stay informed

Service

Finance Negotiate

Identify andevaluateproducts

Identifysellers

Customize

Drive

Group JCAIS, HKUST

NOW……….

• We can slim up the all the procedures by only visiting…..

Group JCAIS, HKUST

Group JCAIS, HKUST

Autobytel.com Case Study

Annie LamJanet Liu

Cherry SunIrit Zhang

Simon Zheng

Group JCAIS, HKUST

Agenda• Company Background• Autobytel.com ‘s features• Problems and solutions• Theory• Sources of Revenues • Updates: Autobytel.com TODAY• Suggestions to Autobytel.com• Q&A

Group JCAIS, HKUST

Company Background:• Founded by Pete Ellis• Initially owned 16 dealerships in California and Arizona• 1980s business was in upside• 1990s hit by the recession, went bankrupt• 1995, Auto-By-Tel Corporations was off and running• 1998, name changed to autobytel.com• Business has been running well since then until now

Group JCAIS, HKUST

Autobytel.com as in Infomediary

Customers

Buy

Drive

Alternative BrandsInsuranceFinanceContent...

CoreCoreCompetenceCompetence



OrderOrderFulfillmentFulfillment


OEM

Dealer

Dealer

Supplier

OutsourcedServiceService

OutsourcedService

Supplier

OutsourcedServiceService

OutsourcedService

Generating Leads

Group JCAIS, HKUST

Benefits for Customers:

• Keep Customers totally informed• Offer haggle-free low prices• Variety of choices in shopping for vehicles• Provide specific vehicle-related decisions• Comprehensive service range, like

Financing, Insurance and Warranty…• Online shopping minimizes transportation

and other related costs

Group JCAIS, HKUST

• Problems and Solutions

• Theory

Group JCAIS, HKUST

Group JCAIS, HKUST

As a Internet Company

• Six years compare with Nasdaq(like technology and internet) in stock market

Group JCAIS, HKUST

Competition

• Auto Vantage

• Microsoft’s CarPoint

• Auto Connect

• CarsDirect.com

• Manufacturer and Dealer Sites

Group JCAIS, HKUST

Competition

• Just low price is not enough.

• To face the rapidly changing market, there is no time to reflect.

• Advertising should be traditional media plus modern media.

Group JCAIS, HKUST

Problems and Solutions• Loyalty

– Dealer • Autobytel gave each dealer an exclusive geographic

territory power using Autobytel system, which was always larger than the territory assignment by manufacturer.

• Autobytel guarantee a large enough volume of quality purchase requests for dealer to reduce their cost.

– Customer• Loyalty program: rewards, points accumulation and

discount based on track record

Group JCAIS, HKUST

Problems and Solutions

• How to arrange customers to dealers– Separate subscription fee

• Dealer’s subscription fee based on a number of factors, including the location of dealership, the type of franchise (likes BMW vs. Benz), internet penetration in the area.

– Sign-up fee• Dealer also need to pay sigh-up fee based on per car

brand when they join Autobytel.

Group JCAIS, HKUST

Two-sided Market

• Car dealer Dealer was charged $500--$7500 US dollars monthly.

• Car buyer Consumer paid nothing for the services.

• Existence of Car dealer– Most state franchise laws made it impossible to cut the

dealer out of new car buying process. – Autobytel.com make the contact with the dealer

effective and pleasant.

Group JCAIS, HKUST

Traditional Problem

• Asymmetric Information– Higher margin– Moral hazard– Transaction cost

• Lemon Market– Pre-owned Car

Group JCAIS, HKUST

Information Searching Services

• Symmetric information to build trust• Intermedia platform for matching

• All you want to know– Even for how to drive…

• Once information were publicized, the best way is to join Autobytel at the first time.

Group JCAIS, HKUST

Dealer

• Requirement for being an accredited Autobytel.com dealer – Sign agreement to provide prompt responses to

customers, no-haggle pricing, and full disclosure regarding vehicle availability, add-ons, and related matters.

– Meet a variety of criteria like customers satisfaction metrics and sufficient inventory.

– Go through the extensive training at Autobytel University.

Group JCAIS, HKUST

Customer

• Warranties for Customers– Manufacturer’s warranty

• Price

• Free from defects – any necessary repair at no charge

• Three years or 36,000 miles

– Pre-owned car• Translatable warranty

• Buyer's Guide Sticker

Group JCAIS, HKUST

Marketing Strategy

Group JCAIS, HKUST

Group JCAIS, HKUST

Income Statement 1995 1996 1997 1998 1999-Q1 1999-Q2 2003-Q3 2004-Q3

Revenues 274 5,025 15,338 23,826 8,032 9,203 15,508 21,478

Gross Profit 274 5,025 15,338 23,826 8,032 9,203 21,721 31,515

Operating Expense

Sales & Marketing 930 7,790 21,454 30,033 9,957 11,027 13,109 18,773

Product & Tech devmt 99 1,753 5,448 8,528 2,366 3,216 4,454 6,431

General & administrative 275 1,641 5,851 5,908 1,817 2,052 3,106 5,172

Total operating expenses 1,304 11,184 32,753 44,469 14,140 16,295 20,669 30,376

Operating Income (1,030) (6,159) (17,415) (20,643) (6,108) (7,092) 1,052 1,139

Net Income (1,030) (6,035) (16,810) (19,398) (6,141) (5,984) 1,122 1,265

Group JCAIS, HKUST

Sources of Revenue

Sources of Revenue

167%

211%

317%

45%

• 1. Lead Fee (US$ 21.5m)

• 2. Advertising (US$ 3.4m)

• 3. CRM Service (AVV) (US$ 5.3m)

• 4. Data & Application (US $1.5m)

Group JCAIS, HKUST

Latest Financial Data (Jul 2004)

• Revenue US$31.5m (45% inc y-o-y)

• 2 acquisitions (iDriveonline & Car.com)

• Net Income US$1.3m (13% y-o-y inc)

Group JCAIS, HKUST

Latest Financial Data (Jul 2004)

• Total Purchase Request 1.2m (45% sequential increase) (139,000 Financial Request)

• Dealer closing ratio : 18%

• Dealers: 35,800

Group JCAIS, HKUST

Branding

• #1 in automotive e-brand in mid-99

• #7 most recognized e-brand in US

• Building Brand awareness

• Driving traffic to website

Group JCAIS, HKUST

Brand awareness

• Co-op with Yahoo!, Excite, Infoseek, Netscape & Lycos (many of them are EXCLUSIVE!)

• Provide engine for the automotive information service like Edmunds.com, Kelly Blue book & IntelliChoice.com

• Spent US$3.7m on Internet marketing & advertising

Group JCAIS, HKUST

Traditional advertising

• Ad in Computer & hobbyist magazines

• Ad in Major automotive magazines

• TV Ads (CNN, CNET, NBC, MSNBC)

• FIRST Internet Co appear in SUPER BOWL in 97 & 98

Group JCAIS, HKUST

Today…

• Most visited new vehicle buying & research destination (03 & 04)

• 76th most visited property on the internet (3Q 2004)

• 8.2m average monthly unique visitors• #1 Ward’s Dealer Business e-Dealer 100 report

(2004)• Web Control as #1 independent customer

management tool

Group JCAIS, HKUST

Autobytel Worldwide

• UK (1998)

• Sweden (1998)

• Japan (1999)

• Europe (2000)

• Netherlands (2001)

Group JCAIS, HKUST

More than Auto-by-tel?

• AVV, Inc. (Dealership Mgt System)

• AIC (Online automotive information & content provider)

• Autoweb.com (research-driven buyers)

• Autosite.com (entry level buyers)

• Carsmart.com

• Car.com

Group JCAIS, HKUST

AutobytelDirect

• Integrated Multimedia Marketing Tools

• Allow marketers to search active customers

Group JCAIS, HKUST

What’s next?

• Enter Chinese Market?– Soaring Car Sales (Car sale grow at an annual

rate of more than 10%, accounted for 15% of global growth in the next 5 years)

– Lack of high quality service– Under developed after-sales sector

Group JCAIS, HKUST

Conclusion

• Profit shows that Auto-by-tel is moving to a good direction

• Making use of its own advantage to generate more revenue

• Must plan ahead

Group JCAIS, HKUST

Q & A

Please feel free to raise questions.

Group JCAIS, HKUST

Questions

• What’s the value of Autobytel.com to Customers??

• What is the key elements that contributes to the success of Autobytel.com? Explain.

group jcais, hkust. inside the shop…… salescustomer

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