Article

Dealer Adds Retail Establishments To Online Sales

August 2006, Auto Dealer Today - WebXclusive

by Harlene Doane - Also by this author

What do a 1965 T-Bird, a 2000 Geo Tracker, Grecian sponges, XM satellite radios and Mr. Clean all have in common?

They are all items sold online by V-Trade Motors. Sound a little unusual? V-Trade Motors hasn’t exactly followed the typical pattern of a dealership. Most dealers open a retail establishment then decide to sell vehicles online. V-Trade Motors decided to do it the other way around.

Larry Barbieri, president and owner of V-Trade Motors in Noblesville, In., had been wholesaling vehicles for more than 15 years when he decided to try his hand at retailing vehicles. Barbieri decided to start by listing the vehicles on eBay when they were just starting their automotive division. Barbieri will tell you “I’m technology challenged” but it didn’t stop him.

“I already had an employee, Myra Dean, who had been helping with my wholesale business. She now takes my photos and lists my vehicles and products for me,” he said. His son-in-law, David Adams, is not only his partner and the co-founder of V-Trade Motors; he is also the resident computer whiz who developed the software that they use in the dealership and assists with much of the behind-the-scenes work.
The appeal of online sales is the diversity of the market. “I can purchase a two-wheel drive vehicle that won’t sell here but someone in Texas will purchase it. Convertibles would typically be horrible vehicles for November and December in Indiana, but would still sell to someone in the south,” he said.

More than 76 percent of V-Trade's sales are to individuals outside of Indiana. Take a look at the map that hangs in their office to see just how many deliveries are outside of Indiana. One unusual purchase was by a lady from Walla Walla, Wa. who drove in with her husband in a Dodge Neon to purchase a Honda Civic. Some are a little farther away yet. Just how far away? The 1965 T-Bird convertible was purchased by a gentleman from England, who flew to Indianapolis then drove the vehicle to New York to ship it back to England. “I was a nervous wreck about the gentleman driving it to New York, it was a 1965 vehicle. The buyer wasn’t at all fazed over it and was very happy with his purchase. He called me from New York to tell me it was just as I had described it to him,” said Barbieri. Another buyer purchased a 2000 Geo Tracker and had it shipped to Moscow. Even after paying over $3,500 for shipping the buyer claimed it was a several thousand dollar savings. The only thing that matters: do you have the vehicle they want?

Barbieri has learned a lot over the years with eBay. He knows which days to end his auctions (Monday, Tuesday and Wednesday), and what time to end his auctions (after 8 pm) but what he hasn’t figured out is exactly which vehicles will sell when. “What sells today may not sell tomorrow or vice versa,” said Barbieri, “you just can’t predict which buyers will be online at any time.” He also doesn’t believe it’s a requirement to have a specific niche on eBay. “I know some dealers that only deal in muscle cars, or only sell Mustangs but I’ve had success with all types of vehicles.”

Feedback is such an important part of the eBay model and V-Trade has managed to maintain a 98.7 percent positive feedback rating. Considering only about 50 percent of buyers will ever leave feedback that’s a pretty strong statement about how V-Trade conducts business. V-Trade follows up with buyers a couple of times to encourage them to leave feedback, but accepts the fact that some just never will.

V-Trade will work with bidders who have zero or low feedback. “It’s a matter of educating them on your process and on eBay policies. We have a three day payment policy with the only acceptable form of payment being cashiers checks and wires. Making sure the bidder understands that they have to have their financing arranged before the auction ends to comply with payment terms is extremely important. There are many individuals who will only purchase a few things on eBay, so you can’t exclude them as bidders.”

V-Trade will list 10 to 20 vehicles at a time depending on the time of year, while stocking 40-50 vehicles in inventory. Advertising cost for online sales runs about $100 per unit, which is much lower than industry averages for conventional sales. Even if a vehicle has to be listed more than once the advertising cost is still reasonable. If it doesn’t sell, V-Trade wholesales out of it within 45 days.

In addition to vehicles, V-Trade is an XM satellite radio distributor so they list those products online along with assorted other products. Barbieri is still amazed at the items that shoppers will purchase that they could just as easily pick up at the local Wal-Mart. “We had all of these items available so we listed them and they sold. We include shipping in our prices, and some buyers just prefer to have their Grecian sponges, Mr. Clean or Armor Products delivered to their door,” he said.

There are a few scams to be aware of when selling online - such as there are non paying bidders, - and V-Trade's business is no different than any other business. You minimize your risk and use common sense in all transactions.

After almost four years V-Trade was running out of space. At one point they were selling 60-70 units per month and the storage unit they were using to hold their inventory wasn’t working well anymore. That’s when Barbieri (and Adams) decided they needed a retail location.

After finding a location and upgrading the building, V-Trade Motors' retail location was opened in September of 2004. It has been tough to get things going. “We didn’t exactly open at the most opportune time of the year but we are confident that we have the keys in place to get us to the next level,” said Barbien.

One key component of V-Trade Motors' business plan is to be diverse and work on volume. Online vehicle sales, accessories, cleaning and maintenance products, extended warranties, consignments and On-Lane Auction participation are all part of the plan. They added consignments after several individuals approached Barbieri about selling their vehicles. “The customers wanted to be in control of the sale but not bothered by the calls and tire-kickers, so it was a natural fit for us," he said. We answer the inquiries and show the vehicle when necessary the consignor has the ultimate say in selling it or not after an offer is made.”

Most of V-Trade's vehicles are certified and carry an extended warranty. They will even sell an extended warranty to anyone within 100 miles of the dealership. The owner must take the vehicle to an appointed service facility for an initial inspection before the warranty can be put in place. “Where as most dealerships sell warranties for more than double the cost to the dealer, we offer the consumer a significant cost savings on the same coverage. It’s just bonus business for us,” said Barbieri.

Another key according to Barbieri is joining a Twenty Group and seeking outside assistance. V-Trade Motors became a member of a Leedom and Associates Twenty Group in October of 2004. “I’ve been to one meeting as a member and I can’t wait until the next one. The insight from other dealers and the assistance from the moderator are invaluable to my operation. I’m confident that 2005 will be our best year yet because of it,” said Barbieri.

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