An article last month from the Wall Street Journal covered how electric vehicle startup Fisker would be transitioning from a direct-to-consumer distribution model to signing up 50 dealers this year. Handling the selling process itselfs ended up being “too expensive,” according to the report and less than half of the 10,000 SUVs Fisker made last year actually ended up with customers.
“The automaker’s decision is a major strategic about-face for a startup that once believed dealerships would be a hurdle to its success,” the report says.
Another hurdle Fisker encountered should come as no surprise: without the ability to let customers sit in and drive its vehicles before pulling the trigger, the company had a harder time selling them. In fact, for the entire U.S., Fisker only had 2 physical stores (in Los Angeles and New York City) where customers could actually sit in their cars.
It’s impossible to deny that consumer purchasing tastes are trending more than ever toward the internet. In another blog last month, I covered how Hyundai will be selling its cars on Amazon. The current plan has those Hyundai cars being picked up at dealerships (though Amazon is “working on delivering the vehicles”), and I doubt they will sell many through Amazon unless consumers can visit their local dealerships to actually sit in these cars first.
But the most interesting part of the Fisker article to me was this portion at the end, a quote from Fisker’s CEO Henrik Fisker: “This is where we think we have to go as a company, if we want to be a high-volume company.”
I think “high-volume” is the important distinction here. It is technically possible to go direct-to-consumer in both the EV and the rural lifestyle markets, and while it has obvious limitations, it can logistically function as a business.
But for companies that want to be real players in their industry — achieve a high volume of sales and gain a respectable slice of the market share pie — dealers are the path to sustainable growth. Thankfully, it seems that in our industry, this is still well understood by the majority of manufacturers.
I think it’s fascinating that the rise of EVs and how they reach consumers has sparked a new discussion about distribution models. And I think it’s even more fascinating that the conclusion generally returns to a need for physical stores, customer interaction and hands-on testing. Even Tesla, as an EV industry leader, has physical stores, though they are company-owned (a topic for another time).
How do you see the presence of direct-to-consumer distribution in the future of the rural lifestyle equipment industry? Do you see a way it might become a real threat one day? Let me know at bthorpe@lesspub.com.
