Amazon, originally envisioned as the “everything store,” is expanding its online shopping platform to include a new category: cars.
In the United States, customers will soon have the option to explore and purchase vehicles from dealers directly on Amazon, starting from the coming year, as announced by the company.
The decision to integrate cars into its offerings is driven by Amazon’s desire to simplify and enhance the online vehicle purchasing experience for customers, according to the company’s leadership.
Initially, the selection will be confined to the Hyundai brand.
While online car sales currently represent a small portion of the overall automotive market, a significant increase in such transactions during the pandemic challenged the assumption that consumers would shy away from making substantial purchases online.
Industry experts anticipate a growing share of car sales to migrate online in the coming years.
Alan Haig, President of Haig Partnership, a Florida-based firm specializing in advising on car dealer mergers and acquisitions, noted a rising segment of the population expressing trust in online retailers like Amazon for major purchases such as vehicles.
The involvement of Amazon, a well-established giant in online shopping, makes this announcement particularly noteworthy. Haig emphasized that Amazon’s ubiquity as a brand and its widespread use as an online shopping platform set it apart, making this development “transcendent.”
Having evolved from an online bookseller in 1994, Amazon has progressively diversified its services into various sectors, including cloud computing, financial services, and healthcare. The company initially ventured into online car sales over two decades ago.
The recent collaboration with Hyundai extends beyond direct vehicle sales. It includes plans for integrating Amazon’s virtual assistant, Alexa, into Hyundai cars starting in 2025. Additionally, Hyundai has entered into a multi-year agreement for Amazon’s cloud services.
Amazon has not disclosed specific details regarding the participation of dealers or the structure of its relationship with them. Shopping for cars on Amazon is expected to commence in the latter part of 2024.
Customers will have the flexibility to search for available vehicles in their region based on preferences such as model, trim, color, and features. The entire transaction, from selecting a car to payment and financing options, can be completed online.
While some dealers may harbor concerns about the potential impact on their business, such as the commission Amazon might require and the perceived distance between the dealer and the customer, there is acknowledgment that the platform could also bring benefits. Dealers stand to gain if Amazon’s involvement streamlines the sales process, making it more frequent, or if it leads to cost savings on advertising.
Following the announcement, shares in online-centric car sellers, including Carvana, experienced a decline, with Carvana ending the day down more than 5%.