The Autobytel Story

Autobytel (www.autobytel.com) customers accounted for 1 in every 20 dollars spent on new cars last year. The company even turned a profit. If you think car dealers are a pain, try working with car buyers. If buyers see the stereotypical dealer as a hustler who is partial to false promises and esoteric pricing, the dealer sees the typical customer as a grouchy opportunist who will dicker for an entire afternoon, then take a quote down the street to see if a rival dealer can beat it. A service that aims to please both of these groups might seem like a dubious business model. But Autobytel, a seven-year-old online car-buying referral service, has mastered the balancing act. Generating roughly $17 billion in car sales annually – or 5 percent of total U.S. volume – Autobytel’s network embraces 8,800 dealers, 10 million customers, and four Web sites: Autobytel.com, Autosite.com, Autoweb.com, and CarSmart.com. It is nearly twice as large as its nearest rival, Microsoft’s Carpoint.com. Autobytel’s secret to success it that it makes life easier for dealers rather than trying to replace them. Customers who want an Autobytel referral must disclose their names, addresses, and payment method; in return, they get a price quote from a local dealer. To separate tire-kickers from serious buyers, Autobytel’s proprietary 26-step screening process verifies everything from area codes to the age of each potential buyer. Historically, dealers close about 12 to 15 percent of the leads they receive from Autobytel, as opposed to a 10 percent rate from other online referral services. It is important for Autobytel to keep dealers happy, since they are the ones who pay Autobytel. What’s in it for car buyers? Autobytel promises that a dealer will submit quotes on desired models within 24 hours. Autobytel also provides information about wholesale costs, so buyers can judge the fairness of any offers. Car buyers save money, too. A survey shows that Autobytel buyers save an average of 2.2 percent – or approximately $500 on a $22,000 car – compared with other car shoppers. In Autobytel’s case, everyone wins.

Chapter 9- e-commerce