The Dealer Behind Dealers United
By Matt Buchanan
For those who know my family’s history in the automotive space, you know that we’ve seen this business from two distinct sides: first, as a good-sized group that enjoyed preferred terms and pricing from vendors; and now as a tiny Private Dealer with just three stores struggling to keep costs in line, while having virtually no negotiating power with even the smallest of providers.
I can tell you it was a whole lot easier to manage expenses when we were bigger.
During my years in the industry, I’ve become more than a bit opinionated when it comes to the snake-oil salesmen and shiny-object chasers in our business. Neither provides any real service; and whether by accident or through some sinister planning, both of these groups seem determined to separate me and my fellow dealers from our hard-earned money.
I despise the snake-oil salesmen, and pity the shiny-object chasers. Neither of them deserves a place at your dealership or a piece of your spend. Unfortunately, the reality for most of my fellow dealers is that it’s darn hard to tell the difference between these guys and those who truly intend to help you advance your business.
Of course, if you’re running an AutoNation or Van Tuyl store, for example, you have a corporate staff that helps you navigate the vendor vetting process. This not only greatly reduces the chance that your sales managers will trade your prized cow for some magic beans; it also reduces your store’s overall cost for any products or services you do buy. This is called “economies of scale,” and it’s one of the primary reasons many large dealer groups were formed in the first place.
For the small, Private Dealer, most of us not only lack the scale necessary to negotiate a low cost for products and services, but also the expertise to separate the criminals from the true vendor-partners – especially when it comes to digital marketing.
That is, we lacked these… until now.
Not Just a Better Mousetrap… The Finest Mousetrap Ever Assembled
I’m going to announce right from the start that I’m a little bit biased here.
While it’s true that Dealers United was my idea, I firmly believe that it will revolutionize automotive retail for Private Dealers like me. That’s why it was easy to convince my friend and former HomeNet CEO Jesse Biter to help me make Dealers United a reality. Make no mistake: the name Dealers United is going to be on the lips of every dealer and vendor in our industry. Most praising the name; a few cursing it.
Before I tell you what this service is, let me first tell you what it is not. Dealers United is not a vendor, nor a community, nor a blog, nor a patchwork-one-stop-solution-selling-shop. (We already have enough of all of those in automotive digital today.) Dealers United is basically a no-cost (to dealers) corporate ecommerce department. When a dealer joins this service (which is 100% free), they are gaining a scale greater than AutoNation; and all of the perks that go along with that scale.
Why did I want to launch Dealers United? I determined the Private Dealers needed a service like this after I saw my own negotiating power go away as my family sold off dealerships when my father exited the business. It was crazy what vendors were willing to do when we approached them with a proposition to take on twenty stores. The discounts and red carpet treatment were great. Today, whenever I try to negotiate group pricing for our three stores, they just look at me and shake their heads.
More Than Just Group Pricing
What I really love about what Dealers United will provide is that it is not just about helping dealers get the lowest price – that’s just one of the many perks, in my opinion. What makes the DU service a must have in every dealership is the unbiased, expert analysis we will provide on each and every product/service we eventually recommend (or not recommend).
A problem that exists in many dealerships and some corporate ecommerce departments is that some people in control of a dealer’s or group’s digital marketing budget will often make decisions based on which vendor takes them golfing or pays for the most expensive dinners. Some vendors, in turn, expect favorable treatment when they wine and dine their customers.
With a service like Dealers United, the vetting process and the contract negotiations with vendors occurs away from the dealership; so a dealer principal no longer has to worry if his or her managers are making prudent business decisions or just buying from their favorite rep. Additionally, because we will deliver more rooftops to any given vendor than even AutoNation, stores that decide to accept one of these pre-negotiated deals can expect to enjoy terms and conditions (including pricing) equal to or better than any MegaDealer Group.
Plus, every deal we negotiate is optional and stand-alone – dealers can pick and choose which deals they want to take advantage of, if any. This means if Dealer A really loves the work that Vendor X is doing for them with regards to their social media marketing, they can stay with Vendor X and not sign onto the deal that we cut with Vendor Y. Moreover, if Dealer A wants to try to negotiate better terms and conditions with Vendor X, they can recommend that Dealers United include them in our vendor selection process; and if the our experts determine that the products/services provided by Vendor X are of high enough quality and if Vendor X is willing to negotiate group pricing/terms with the us, then they’re included. (Most vendors, I assume, will be knocking each other over to gladly provide services to our member-dealers at terms and conditions more favorable than any dealer can negotiate on their own.)
Don’t Underestimate the Power of Knowledge
As my Dealers United cofounder Jesse Biter said, “It’s bad enough that a family-owned dealership often pays two, three or even four times more for some services, but when you couple that with their lack of product expertise, you create situations where dealers can fall prey to unscrupulous vendors. Small dealers not only lack this expertise, they lack the scale to hire those with the most knowledge and insight. The Asbury Automotive Group could afford to recruit Steve Stauning away from Reynolds Web Solutions – the single-point Chevrolet dealer could not.”
Given the speed of evolution in the digital marketing space and the need to stay abreast of the improvements, it makes sense for dealers to find sources and subject matter experts they can trust. There is just too much change happening way too fast for even some of the large dealer groups. It seems everyone – big and small – is struggling to keep up with the constant barrage of new media products. This, in my opinion, is where a service like this can provide the most value. Not only will we be able to tell dealers which vendor provides the best widget at the best possible price, but also what that widget actually does and whether a dealer even needs that widget in the first place.
Okay, but what about the Vendors?
I think there are some in the industry who believe vendors might boycott anyone trying to organize private dealerships into a large buying group, if you will. Of course, a vendor would be a complete fool to consider such a move. Short of having a lousy product that the DU vetting team would easily identify, every vendor in the industry should recognize the win-win-win results that this service will deliver.
From needing just one salesrep to secure just one contract, and sending just one invoice and receiving just one check when you are talking about hundreds or thousands of dealer-clients; everything about a service like this is a win for honest vendors. I suspect many providers who are successful at surviving the vetting and contract negotiation processes will even designate specific support staff to manage the customer service inquires of the group’s stores. (This is something most vendors do now when they secure an agreement with a MegaDealer Group.)
Given that some dealer groups don’t even have centralized billing or purchasing, vendors often give preferred pricing based on a group’s size without enjoying any of the benefits that should come from dealing with a large group. With a service like this, preferred vendors will enjoy lower selling, marketing, and administrative expenses; and reach a larger group of dealers than any one traditional group could deliver.
So the question on every vendor’s mind seems to have been “When and where can we sign up?” The short answer is you can’t. As Jesse likes to put it: “Don’t call us; we’ll call you. We work for the dealers. The dealers tell us where their biggest pain points are and we work from there.”
In a nutshell, once the Dealers United team receives our marching orders from our members, we’ll create and distribute an RFP to the various providers of a given product or service; and begin the selection process at that point.
Can This Service Become a Reality?
I am grateful to have Jesse Biter as a business partner – he has proven that he can build a successful, ethical and sustainable business. Plus, we’ve surrounded ourselves with a great team and we are building our member-dealer base at an astonishing rate. Additionally, I think having an actual dealer principal on board will help keep the company on track and focused on what’s most important to our dealer-clients.
In many ways I see myself as the protector of the group’s vision. As a working dealer principal, I have a vested interest in ensuring our team does everything to keep that vision alive and well.
While there will certainly be detractors (particularly the snake-oil salesmen whose products would not withstand the selection process), I can honestly write that I’ve never had higher expectations for a new company’s acceptance across the board in automotive. With margins being squeezed from all sides, it is absolutely critical for Private Dealers to lower their costs without sacrificing service. If we don’t, we’ll be out of business.
Haven’t We Heard This Before?
Nope. Not even close.
While there have been organizations/groups/blogs formed with the intention of helping dealers determine the right products/services/vendors to deliver specific solutions, all of those came with inherent flaws – including the easy manipulation by unscrupulous vendors to game product rankings and to guide/influence the group discussions. These are not subject matter experts helping out dealers in need; these are snake-oil salesmen disguised as industry thought leaders with a single focus: how can we separate the dealer from his or her hard-earned money?
Before a service like Dealers United, it was all too easy; as small, Private Dealers lacked the necessary expertise to determine whether a vendor was an asset or not. My goal with Dealers United is that Private Dealers will never have to figure that out for themselves again.
Of course, that’s just my biased opinion. What do my fellow Private Dealers think?