Amazon wants to sell you a car

June 13, 2017

Retail behemoth Amazon has conquered much of its brick-and-mortar competition. Bookstores are dead or dying; big box stores aren't too far behind; and even where physical shops survive, it's not hard to find consumers paused in the aisles, checking the prices of comparable products on Amazon.

But now, Amazon and its CEO, Jeff Bezos, are marching into new territory: the company is about to add cars to its virtual shelves of e-books, knitting needles, and fidget spinners. 

The revelation comes after Amazon ran a successful pilot program in Italy that was limited to three Fiat models. Reports say that the company now aims to launch a similar program in the U.K., and although Amazon has neither confirmed nor denied those rumors, just the thought was enough to send shares in retailers like Auto Trader tumbling.

Will it work?

Amazon is a highly trusted brand. If any retailer could make the leap from selling canning supplies to cars, it's probably Amazon. 

However, consumers have plenty of preconceptions about automobiles and how car sales should work. That could put several obstacles in Amazon's way.

First, there's the issue of Amazon's sprawling website. Most of us have now become so accustomed to big-box shopping (whether in real life or online) that we don't think much about buying toothpaste, comforters, and rice cakes from the same store. 

However, a recent poll suggests that car buyers want a degree of focus and expertise from the place where they do business. Consumers were more than twice as likely to consider purchasing a vehicle from the website of an automaker, dealership, or third-party car vendor than from an internet giant like Amazon. (Interestingly, though, brick-and-mortar big-box shops like Walmart fared even worse in the poll, and tech companies like Google were least attractive to shoppers.)

Second, there's the question of test drives. While a growing number of consumers seem comfortable with the idea of skipping the test drive, the majority want to take their prospective ride for a spin before signing on the dotted line. Given the price of new cars these days, that's not especially surprising. 

In fairness, Amazon could likely overcome those two problems with enough time, marketing money, and innovative options for test drives and returns. 

The same can't be said of Amazon's third problem: the looming shift away from private car ownership. In the not-so-distant future, self-driving cars will dramatically reduce consumers' need to shell out for vehicles of their own. The rise of ride-sharing services like Lyft will reduce that need even further--in fact, they're already having an effect.

Combined, those developments are causing a serious crisis in the auto industry. Some analysts think that today's auto market will have collapsed by 2050, others believe that things could shift much sooner. But either way, we know that change is a-coming. 

Given that, why would Amazon want to enter the auto market now? That's anyone's guess. Does Amazon have a trick up its sleeve? We don't know, but given the company's long string of successes, we're not ready to bet against it just yet.

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