The Future of Online Car Buying Is Omnichannel — With a 2-Week Test Drive

Of its many disruptions, the pandemic has driven car pricing and buying off a cliff, making room for innovators to create a digital shift.

While players like Carvana and CarMax are right now proving the Newtonian aspects of post-COVID commerce — what goes up fast can come down to earth just as quickly — the idea of buying cars online has a stickiness that’s working for some.

Seez CEO and Co-founder Tarek Kabrit said his business is on the upswing, after starting in 2016 with a simple but powerful mobile app in the United Arab Emirates that’s now gone multinational with aspirations and funding to take on swaths of Europe and beyond.

Seez completed a funding round in February 2020, and Kabrit told PYMNTS’ Karen Webster: “We had a choice to make. We either cut our costs and extend our runway, in startup lingo, or we take a step back and think, ‘How is the world going to change?’”

Dealers needed to digitize, so Seez went for it. In the UAE, it became the No. 3 app behind Tinder and the telcos. The company proved a car could be sold online in as little as 12 minutes start to finish. That resonated with dealers and buyers.

Meanwhile, “the OEMs, the BMWs of the world, were beginning to move into something they call the agency model, where they sell direct to consumers like Tesla, which is also disrupting dealer operations,” he said. Dealers needed to reinvent fast, and Seez had a solution.

Seez’s other big breakthrough was an asset-light model of not owning the inventory, but rather playing online marketplace matchmaker between sellers and buyers. Additionally, Kabrit said, “we felt there was a big opportunity from a SaaS perspective to become a Shopify for car dealers to help them move into the digital age. We’ve shifted our focus to those two products.”

The Lift of an Asset-Light Model

Here in the post-pandemic world, betting on an asset-light business model and a Software-as-a-Service (SaaS) for dealers is paying off as Seez is strategically and successfully expanding throughout Europe.

Acting on one hand as a digital marketplace for dealers, and on the other equipping dealers with an SaaS solution to do it for themselves, Kabrit said, “we take it all the way. You can get financing, buy insurance, and sign digitally. We even do a digital trade-in.”

He conceded that most people still want to see, touch and test drive cars. Seez shuts out the doubt by not owning any inventory, which puts consumers at ease, then by allowing them to drive off and experience the vehicle for two weeks and return it if they don’t want to purchase.

That two-week “kick the tires” test drive concept is turning out to be a major convincer, he said, adding that 83% of shoppers don’t buy on their first visit, but once they’ve decided, “going back to that dealership is a total waste of your time. No one wants to go back and sign papers and sit for an hour drinking bad coffee at a dealership. We are big advocates of the omnichannel experience, being able to move between online and offline.”

Seez has even taken a page from IKEA’s playbook, where car buyers are given a QR code for the car they like at the dealership and if the next day they decide to buy, they scan the QR code with their smartphone and the transaction picks up where it left off, accelerating the deal.

With this digital transformation of the experience, Kabrit said digital car buying, which now sits at about 2% of transactions, is “going to grow an order of magnitude over the coming years. It won’t become 70%, but it should reach 20% to 30% over the next 10 years.”

Optimizing Sales in a $3T Market

Admitting that the auto industry still faces headwinds from chip shortages to gas prices, Kabrit said things are easing, and Seez is seizing the opportunity with a unique expansion strategy.

Especially with the extra demand of former city dwellers who fled to the hinterland and now need a car, the action is good in the Nordic and European markets Seez is selectively entering.

“Cars, unlike other expenses like cinema or restaurants or whatever, you end up delaying, but you don’t end up like canceling,” he said. “At some point, you will need to replace your car. So, you end up with a bunch of pent-up demand that just gets postponed.”

Scandinavia was fertile ground as no one was doing this there, making Seez a first mover in that region. In 2023, Sweden and Italy are being considered.

“The idea is in the Nordics or smaller countries, we will go with the two-phase approach with the marketplace and the SaaS solution,” he said, while in large countries the company starts with SaaS “because it’s very expensive marketing-wise to build a marketplace there,” then introduce the marketplace component.

Partnering with the biggest automotive bank in Europe and the biggest insurance company in Scandinavia is proving an accelerant to growth into SaaS. And dealers shaken by OEMs doing more direct selling, from BMW to Tesla, are driving their digitization agendas. Seez is ready.

Seez is sitting on a mountain of data, and while it is not selling it now per se, Kabrit said, “we’re using a lot of that data for a bunch of AI algorithms, whether it’s for car valuation, for customer segmentations, recommendation engines and stuff like that. Over time … it can be an attractive asset” for the ecosystem.

And while he said he sees “a big opportunity and gap in the market for someone to come with a data-first approach to target conversions, the omnichannel angle shouldn’t be ignored” when optimizing the $3 trillion car market.