The Importance of Context Within Auto Portals

By: Jeff Nolan | September 17, 2018 | Marketplaces

Last week, my colleague Charles wrote a post on reducing friction in automotive marketplaces. I am a serial car buyer and have a lot of experience buying cars. The purchases often happen in states outside of where I live. This means that discovery, evaluation, negotiation, purchasing, and shipping–all essential parts of purchasing an automobile–all happen remotely.

Charles wrote about reducing friction in the traditional walk-into-a-dealer customer journey, the friction has largely been reduced to selection and financing paperwork. In the new world of buying vehicles sight unseen, the friction is very real and frustrating.

In the universe of online marketplaces, the marketplace operator is aware of the buyer’s location, but that’s not essential to the transaction. What is essential is the fact that the marketplace operator provides sellers with information on the buyer’s time zone. This helps prevent 6:00 am phone calls from eager sellers (yes, that has happened).

Accurate and timely communications

Let’s put aside timeliness for a minute and focus on a more important aspect of communication. Accuracy. I recently went through the auto purchasing experience, placing a number of inquiries via online tools built into CarGurus and Autotrader, and the results were pretty shocking.

The inquiry forms within marketplaces are embedded into the individual listing page the buyer is on when they are sending the inquiry. This information is transmitted with contact information to clearly identify what you are inquiring about, yet it was startling how often a dealer sent me the wrong vehicle information.

This part of the customer journey is crucial because it is the equivalent of a first impression. If the seller does not promptly respond to your inquiry or is confused about what you are inquiring about, trust is lost.

Can you imagine walking into a dealership, pulling up a chair, and waiting two days before someone helps you? Of course not. That would be absurd, but in the online space, it’s common for days to elapse before a response is sent to inquiries.

Image quality is a major factor in determining whether a buyer will purchase a vehicle remotely. Most sellers don’t upload detailed images of a vehicle because they believe a buyer will come into the dealership for an in-person inspection.

Accurate information on the vehicle options is, surprisingly, challenging to get. I struggled with sellers who were unable to give me an accurate inventory of options on specific cars.


Charles wrote about bringing context to pricing, and this is one of the areas that marketplaces can create significant value for both buyers and sellers. Pricing for pre-owned automobiles is not arbitrary. Vehicle pricing maps to a regional and national average based on make, model, mileage, options, and additional factors such as certified pre-owned status and prior accidents or title issues (usually involving a salvage title).

Another condition that significantly impacts vehicle pricing is the number of days the seller has listed the vehicle. Most dealers will wholesale their pre-owned cars when they have been in inventory beyond a specific number of days– for example 150 days. This process entails sending them to auction, where not ironically, the market pricing becomes another factor that impacts retail pricing.

For buyers, marketplaces will provide insights on the listing pricing, whether it is on market, above, below, and by how much. This is invaluable for vehicle buyers, but it’s also useful for sellers who often struggle with setting the right price to quickly move their inventory. Time is the enemy in online marketplaces, not the price. The longer something is listed, the less likely it will sell.

Shipping, taxes and fees

A subset of the market purchases vehicles far enough from their location to require shipping them, but national searches are not uncommon and the cost to ship a vehicle coast-to-coast is around $2,000. The interesting thing to consider is that a car marketplace knows where I am and knows where the vehicle listed is located.

This information provides precise information necessary to calculate shipping, along with the presumption that a certified shipper will be required. Marketplaces don’t do this today and it is a big opportunity.

Taxes and fees for vehicles vary by state, and (I believe) 31 states offer a tax credit for taxes paid on a vehicle that is traded in. Marketplaces are in a position to calculate taxes and fees, which can add significant cost to a vehicle purchase.

Bringing it all together

Kahuna has pioneered the Three Laws of Marketplaces that, to summarize, state three core tenets of successful marketplaces. These include:

  • Disparate buyers and sellers
  • Trust being the product
  • Creation of autonomous value

It is these three laws which I find useful for evaluating my experiences with online marketplaces. Many buyers and sellers is obvious and in the car marketplaces it is not uncommon to find large dealers offering multiple vehicle listings. The auto industry remains dominated by a regional dealer strategy, and opening up the market to national searches increases both buyers and sellers providing the second law is adhered to.’

Trust is essential in these markets and the fact remains that most buyers will insist on seeing, driving, and experiencing a pre-owned automobile. Many, like me, do not. I want complete information, high quality images and prompt communication. Anything less is frustrating and leads to diminished trust.

Lastly, there is a lot the goes on with buying a vehicle and online marketplaces have a tremendous opportunity to provide services that streamline the process for both buyers and sellers. In addition to services, financing is a major factor in vehicle purchases.

The opportunity for online marketplaces to transform the buying and selling of pre-owned vehicles is significant. The average purchaser will likely continue to focus on regional sellers because the see-before-I-buy instinct is strong, but with certification, buyer/seller tools, and additional services for shipping and fee processing, it is foreseeable that location and proximity will become less of an obstacle.
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Author: Jeff Nolan

Jeff Nolan is a proven Bay Area based marketing executive with a track record of transforming marketing teams and strategy in enterprise software growth companies. Jeff leads the marketing team at Kahuna, which includes the four corners of successful marketing teams: content, product marketing, demand, and brand.

With extensive experience in security technology and CRM companies, and a founding partner at SAP Ventures, the venture capital affiliate of SAP AG, Jeff is well-equipped to manage the complex tactical and strategic marketing challenges facing companies today.

Fun fact:

Bay Area native, Jeff lives with his family on the mid-Peninsula where he has transformed his home into an urban farm featuring gardens, orchards, chickens, and a thriving beekeeping operation.

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