23. November 2022 By Stefanie Grzenia
Digital commerce in the automotive sector: identifying and implementing visionary digital distribution models
By now, most companies know that you need to innovate or die.
You need to scrutinise your business model from top to bottom and view digitalisation as a permanent as well as a key part of your strategy. If not, the company will be out of business within a matter of years.
The ‘we’ve always done it that way’ mindset no longer cuts it, nor has it for quite some time. The New Work concept has been a reality since the COVID-19 pandemic, if not earlier, or at the very least it is now clear that there’s more to it than just offering free snacks or the option to work from home.
Work at companies increasingly takes place in diverse, interdisciplinary teams. They hold workshops using methods such as design thinking and set up a department that deals exclusively with innovation and the topics of the future.
The changes taking place in the automotive industry are exciting and revolutionary.
Not that long ago, a good way to generate additional sales was to shorten the life cycle of a model. The new model is launched, advertising generates demand and sales begins to flow in. Car manufacturers have evolved to become IT companies and cars to become a computer on wheels. Verticals from the tech sector are increasingly being integrated, including AI software, big data, machine learning, legislative software, you name it.
The stated goals are increased efficiency and sustainability.
Tesla thinks in terms of software updates and installs new features and updates in the vehicle over-the-air roughly once a month to make the vehicle safer and perform better over time. Since the company’s launch, data has been collected in all Teslas since the time of sale and sent to the headquarters for evaluation, with the aim of constantly optimising the software and being able to offer a full self-driving (FSD) option in the near future.
As this demonstrates, to succeed in the digital era, car manufacturers need to reinvent themselves and develop new capabilities. Companies that collect and evaluate data centrally and, above all, know how and where to use it have an important head start.
Trends and future topics in the automotive industry
- Autonomous driving
- Concept cars/interior design
- Predictive maintenance
- Optimised driving
- Car-to-X communication
- In-vehicle commerce
- Used car
- Charging infrastructure
- Optimise logistics
- Traffic management
- Smart insurance
- Mobility as a service (leasing, financing, subscriptions and much more)
- Seamless experience on one platform
- Easy payment
The human factor naturally plays the central role in the trends, and it is the focus of all considerations:
- Cars can already drive by themselves, but are people ready to relinquish control just yet?
- Who is liable in the event of an accident if the sensors were dirty and could not properly monitor the surrounding area?
- Does a smart insurance model make sense for me? Or am I not one to stay within the speeding limit so that my monthly premiums are more like to go up than down?
Cities are becoming increasingly crowded, causing people to rethink mobility. Many urban dwellers question whether they still need to own a car at all because there are many other options available and, moreover, sustainability is extremely important to them.
But what digital business models will come out of this?
Let’s take a closer look at some of the options out there.
Urban mobility and mobility as a service
In addition to public transport, there are many other ways to get from A to B in a city. We install separate apps for car sharing, to hire an e-scooter and other micro-mobiles, to lease an e-bike and for ride-sharing services like MOIA and Uber. Wouldn’t it be great if towns and cities were to offer a mobility platform with all the information you need as well as a payment system, one where I didn’t have to use three apps to plan my route on the way to the airport? And what if all data and applications were interlinked and displayed on a dashboard so that you could optimise time in operation and avoid disruptions by automatically booking service appointments based on data-driven predictions?
This is not a completely new topic in and of itself. The use of modules that are nevertheless highly customisable is an effective and less expensive way to develop features. It also creates a seamless user experience with a single point of contact (platform and/or marketplace). The strategic orientation in one domain – such as a brand – is defined and can be implemented quickly using an agile approach. It is then tested, continuously improved (under the MVP approach) and adapted for use in other domains. Consolidation on a technical platform with a best-of-breed approach provides flexibility, scalability and the freedom to perform customised settings.
A car is sold on average two to three times over its lifetime. Wouldn’t it be great if the manufacturer could make money each time? What if maintenance and resale could take place via certified partners who were also integrated into the platform ecosystem of the car manufacturer?
The idea of making all brands, brand shops, merchandising, services, customer portals, maintenance, insurance, loyalty programmes, spare parts and resales accessible on a single platform not only makes it easier for buyers, but also helps suppliers to know and understand their customers better in order to provide them with the services they really need.
According to the German government, there are currently 220,000 registered e-vehicles and 21,200 public charging points in the country. By 2030, there will be 10 million e-vehicles, creating the need for one million charging points. In the best-case scenario, I would be able to calculate my route before I started my journey – including how much time and energy I will need – and book the charging stations automatically based on this. If I book them at that moment, I can lock in today’s prices and plan with certainty. The energy could then be supplied by the utility, the car manufacturer or a service station operator. The ‘front end’ would ultimately be the charging station, an app or the car itself. Payment details are simply transmitted to the payment service.
Sure, I can shop on my mobile device while sitting in my car. While it might be a bit of stretch, you could say this is in-vehicle commerce. But do car manufacturers really want to leave the opportunity to generate significant additional revenue to other providers? In older models, many drivers simply use Amazon Echo. With new cars, too, potential buyers carefully consider whether they really need an expensive system from the manufacturer. This means incentives are needed at this point, which combine internal and external services that are geo-tracked and personalised. Drivers could then get quick access to relevant offers while on the road (such as discounts for restaurants) or when they arrive at their destination (like a free bottle of wine sent to their hotel room). Inquiries and bookings are all done via a single speech-enabled system, meaning that the mobility provider is involved in every transaction while all the time collecting valuable data and insights.
How do we actually pass the time in self-driving cars?
This field also offers enormous potential. We consume entertainment, work, study, shop, relax, practise personal wellness or simply sleep. Concept cars will no longer look like the cars we know now – and they don’t have to. If no one is driving, there is no need to sit in your seat and stare at the road ahead.
So what is the key takeaway? We are in the midst of massive change. There are no limits on what is possible. We can and should rethink and re-examine everything. What are your visions for the future? Where would like to get started?
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