The whole experience of purchasing a car can be very challenging and frustrating. It is a fact that consumers are perceived to really dislike car sales people …why??? Because they are so unrelenting and insistent that at the end of the process, you as a consumer just want to literally “kill” them.
Autobytel founder Pete Ellis had been in the car industry for many years,he became a very successful business man in the car industry opening many stores during the 80’s; After the “Glory Years” the country was hit by a fiercely recession in the 90’s and California, where most of his stores were located was hit very hard. Pete lost a lot on the money in the process until in the he had a brilliant idea “To empower consumers by giving them control over the vehicle purchasing”; and he was to do that by educating consumers providing them vital information that they did not have before when walking into a dealership (invoice prices) allowing consumers to have more negotiation power when purchasing a car.
Consumers were happy due to the fact that autobytel offered a business model that gave them more options and an array of different options in dealerships, services (insurance, financing, loyalty program); however, on the other hand dealers were not too satisfied with Autobytel because now they had to share their revenue with a third party ( they had to pay a membership fee to be a Autobytel participant as well as a percentage of the car sold) Also, by having consumers more educated in the car buying process, it was a hassle and more difficult for the car dealers to “full” the consumers that walked into their stores with the purpose to purchase a car. That led many dealers to terminate its relationship with Ain 1998.
Autobytel was the first mover in the car industry to offer such services online, and since its operation was 100% done online, they were able enjoy 100% of it’s grow margin. However, the company extremely high operation expenses...