Vanarama - April 2021

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Expands Tech Tools to Grow Vehicle Leasing Sales DIGITAL REPORT 2021







Vanarama Founder and CEO Andy Alderson charts the company’s growth from an online leasing broker into a fully fledged e-commerce retailer


ndy Alderson’s online journey started back in 2003, when he spotted an opportunity to sell a stock of Citroen C5s at half price. By quickly setting up a domain, freephone number and taking out advertising, he managed to sell the entire stock in six weeks. Almost exclusively, he didn’t see a single customer – and that was when he realised his future lay in online sales. Fast forward 18 years, and the Founder and CEO of Vanarama is firmly in the digital driving seat. “We started as an online leasing broker in 2007, then became a fintech business – and in the last two years, we’ve become more of an automotive e-tailer,” he said. He expects to sell 25,000-30,000 vehicles online this year, fully e-commerce, and is targeting 100,000 within three years. That optimism looks at odds with the unending challenges facing the automotive industry, what with the transition to electric, digital transformation and decline in car ownership. He says dealers need to inherently re-examine their businesses and not simply repackage themselves for the digital age. “Click and collect isn’t digital retailing – we were doing that in 2003,” he said. “If solutions were good enough across the board, online would make up 50 percent of sales, but there’s not enough instances where they are good enough. Up to 50 percent of dealerships could go as part of the transformation by 2025, he predicts. 4

Andy Alderson, Vanarama



Andy Alderson from Vanarama talks about online car leasing

“ The challenge for dealers is if they just use a website to do more of what they currently do, and see it as a sales channel or lead generation, they will make the same mistake as Blockbusters did” ANDY ALDERSON FOUNDER & CEO, VANARAMA


AutoTrader, Car Gurus, and Whatcar? are already reporting that up to 60% of customers would consider buying online today, if solutions were good enough. “The example I use is the BlockbustersNetflix moment. They were in the same business, renting DVDs online, but Netflix could see the move towards streaming. The challenge for dealers is if they just use a website to do more of what they currently do, and see it as a sales channel or lead generation, they will make the same mistake as Blockbusters did. They’ve got to look at everything digital first – removing friction, being transparent with pricing – and if they do that, they’ll get more offline too.” The warnings stem from his approach to managing risk. One of his favourite books is Only The Paranoid Survive, by Andy Grove, the former Intel President and CEO. “You have to imagine the worst all the time, even when




LOCATION: UNITED KINGDOM Since joining the motor trade in 1992, Andy Alderson has seen some radical changes in how the industry operates. The most important change has been the rise of the internet and its evolution into a place customer can not only find vehicles deals, but carry out detailed research on the vehicles themselves. Now, Andy believes the industry is facing new challenges, including the transition to electric cars & commercial vehicles, the ongoing digital transformation, financial challenges such as Benefit-in-Kind (BIK) taxes which hit

company car users hard, and the move to usership rather than ownership. We used to consider ourselves a ‘clicks and bricks’ business, but the reality now is you can retail from clicks alone, but you can’t retail from bricks alone.



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things are going well. One of our core values is ‘even if it’s brilliant, make it better’,” he said. As with most businesses, the 95 percent revenue drop in the first lockdown was akin to a “flock of black swans” although his outlook meant he was better prepared than most. “What we saw with COVID was the acceleration of pre-existing trends – people already wanted to buy online, they were dissatisfied with the current process of buying a vehicle and didn’t want the grind of trawling 10

“ By the time customers pick up the phone to enquire or order from us, they know more about the vehicle than we do” ANDY ALDERSON FOUNDER & CEO, VANARAMA


around showrooms,” he said. “95% of our customers have never driven the vehicle they buy from us until the day we deliver it to them” “We sat down three days into lockdown and realised we had a golden opportunity to use the time to move forward, and we were in the final year of three-year digital transformation into a full e-commerce business. So we launched full e-commerce nine months earlier than planned, and started to develop more automation, AI and ML.”


RISING EV LEASING OPPORTUNITIES The leasing model gives consumers a chance keep pace with change more easily, he believes, and even if drivers are on a PCP, 90 percent swap it for a new model within three years, which mirrors leasing behaviour. “People are much more interested in user-ship rather than ownership,” he says. “When we talk to consumers now in context of EV, they will be happy to upgrade their vehicle every few years as technology and charging infrastructure improves.” He expects more manufacturers to follow Volvo’s recent move and start selling EVs completely online by 2030. “I don’t think it will be the death of the showroom as you’ll need service centers and delivery outlets, but we may see dealerships become distribution hubs and manufacturers do more internet-only franchises.” Most website searches are for SUVs and 90 percent search under budget. He says popular models include Mercedes-Benz, BMW, Tesla, Ford, Vauxhall, Renault and Nissan.






Vanarama has three key partners which are driving its market and e-commerce profiles. Flashtalking is an independent ad serving, measuring and technology company, and Reply, a leader in e-commerce and omnichannel solutions. “Flashtalking has helped us target audience and whatever asset you want to deploy, on any platform, while Reply enabled us to bring in new techniques for the delivery of e-commerce solutions,” he says. Mina Energy shows customers how much electric they are consuming when charging and it sits on top of your normal energy supplier, and rates can be combined under one bill. Customers receive three months free EV home charging when they take up a subscription alongside the Vanarama lease. Vanarama uses atomic web design, which means it can design in code, and allows you to see various components of the UX to work and interact with each other, before you actually build the site, and calls on the services of dev-ops engineers globally.

He says at some time in the next six months, it will launch a voicebot, and integrate it with Alexa. “We’re just deploying the first version of it now, that’s the core technology that underpins the omnichannel solution. Integrating marketing and sales data is key, so you know not only who you’re targeting but how you will reach that audience, and then we find the best price through our smart panel of lenders. “The technology means we’re getting more customers to the site, we’re converting more, and talking to them in different channels and giving them a better experience. Customers can choose to interact or deal with a person,


“You have to imagine the worst all the time, even when things are going well. One of our core values is ‘even if it’s brilliant, make it better” ANDY ALDERSON


but we find most are happy to integrate with a bot if it means getting a quicker response. If you want to add insurance, for example, the voicebot will be able to do it for you.” The ingrained nature of digital is best illustrated when he says they sold 1,200 vehicles through Facebook Messenger alone, completely end-to-end. “By the time customers pick up the phone to enquire or order from us, they know more about the vehicle than we do,” he says. “People are watching videos, talking to peers, getting recommendations and reading reviews, and are much better informed and comfortable online, because they’re spending an average

of 14 hours researching the vehicle online. But because of the amount of data we have, and capability to identify consumers we want to market to, we know what kind of customers will buy a certain type of vehicle.” He foresees three camps emerging as the digital transformation accelerates. “The people who don’t want to change and don’t think they need to; those that know they have to change but don’t have the investment or ability; and those that know what they need to do and get on with it.”



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