CarsDirect.com’s Robert N. Brisco Takes Online Car Dealership on Road to Major Growth Through Exclusive Internet, Brick-and-Mortar Agreements
Pick a car any car. Click a button and bingo, you’ve found yourself some wheels. CarsDirect.com, the Culver City-based automotive retailer, will track down just about any make and model within its network of almost 3,000 dealers.
And that network is getting larger. Last month, CarsDirect.com agreed to acquire competitor Greenlight.com, which has agreements with major brick-and-mortar dealerships. The deal, expected to close this month, will bring United Auto Group/Penske Automotive, Asbury Automotive, Hendrick Automotive Group and Sonic Automotive four of the nation’s largest automotive retailers under one brand.
And that breadth of selection can generate good deals, says Robert N. Brisco, who joined the company in November 1999 as its chief executive. Brisco claims that CarDirect’s prices usually beat what most dealers quote.
But like many online retailers, CarsDirect still hasn’t posted profits. It lost $144 million in the 15 months ended March 31, 2000. It was forced it to reduce its workforce by 12 percent in November. In December, it scrubbed plans for an IPO.
Brisco said the acquisition of Greenlight.com would significantly extend the company’s marketing reach and growth potential through its exclusive relationships with e-commerce giant Amazon.com and Autotrader.com.
Born in Miami, Brisco came to California to attend college at USC and has stayed ever since. He joined CarsDirect.com from Universal Studios Hollywood and CityWalk, where he was president of the theme park and entertainment complex.
Prior to Universal, he was senior vice president of advertising, marketing and new business development for The Los Angeles Times. At the Times, he oversaw all of the newspaper’s new-media operations and directed the launch of LATimes.com.
Question: Just a year ago, there were several independent online auto dealers, including Dreamlot.com and CarOrder.com. Now many of them have failed or are on the brink of failure. What happened to the industry in such a short period of time?
Answer: The online automotive sector is in the middle of a shakeout. The shakeout is similar to what most industries go through when they grow rapidly and too many people enter and only the strongest, best capitalized companies with the best consumer models win. So we are in the process of shaking out the weak companies.
Q: How long do you expect the shakeout to continue?
A: Realistically, I think we have another year or two of consolidation in the industry.
Q: What was so attractive about Greenlight.com?
A: We receive three big benefits from acquiring Greenlight. First, traffic. We are experiencing roughly a 25 percent increase in traffic and sales to the company. A big portion of that is from the relationship with Amazon and Autotrader. Second is dealer-group relationships. Three more of the top dealer groups have joined the company. They are Asbury Automotive, Hendrick Automotive and Sonic Automotive. They join the Penske Automotive Group in the company. That brings us to four of the top six automotive groups in the U.S. that are closely affiliated with CarsDirect.com. Third, we acquired some technology from Greenlight and specifically that technology has to do with customer relationship management systems.
Q: How important was the relationship with Amazon.com in making your decision to purchase Greenlight.com?
A: The Amazon deal is very powerful for us. We have a dedicated home page position that is known as the “car tab.” We also appear throughout the site as their exclusive automotive partner. We also have direct mailing to their huge customer base of 29 million. Already you’ve had one in 10 households in the United States who have actually bought something from Amazon. They are the 800-pound gorilla of the retailing sector, and we are excited about having such a strong relationship with them.
Q: What was the reason for CarsDirect.com to team up with LoJack?
A: We are building a one-stop shopping approach for automotive customers. So consumers are financing our cars with us, they are entering into extended warranty programs with us, and we are offering theft-deterrent products. We are developing an entire portfolio of automotive-related services for our customers.
Q: It seems that Ford, General Motors and other auto manufacturers are entering the online sales business. Is that a threat to your business?
A: We think the Big Three’s entry into the direct car buying business validates the consumer interest. So from the standpoint that manufacturers bring their clout and marketing budget, it will benefit everyone. We also imagine a future where we will be working with (car manufacturers’) sites because we are the largest multi-brand consumer experience in the marketplace. So we think we will be benefited by their active participation on the Internet.
Q: How long do you expect it to take before online car sales increase from today’s 1 percent to at least 5 percent?
A: We agree with the analyst forecasts that call for between 5 and 8 percent of U.S. auto sales to occur online by 2005.
Q: How do you get consumers who use CarsDirect.com to research a particular vehicle to then turn around and buy the car through your Web site?
A: We are the easiest, quickest way to buy a car at a great price. So we communicate that in everything we do that consumer value proposition. People who use our service rave about the service and the pricing of their vehicles. The average person who buys a vehicle with us refers five to six of their friends or family to the company. So a large portion of our growth is word of mouth.
Q: How do you attract the rest of your customer base?
A: We bring new customers to the site by aggressively marketing. We are most active online. We have marketing partnerships with companies like Kelley Blue Book, Auto Web and now, with the Greenlight.com acquisition, we have added Amazon and Autotrader, and there are another 50 sites we are working with.
Q: You took your company’s initial public offering off the table in December because of adverse market conditions. Are you still planning to take CarsDirect public?
A: While we have no immediate plans to go public, at some point in the future, when the capital markets become more buoyant in the tech sector, we do plan to go public.
Q: How does someone go from the Los Angeles Times to overseeing Universal Studios’ CityWalk to selling new cars over the Internet?
A: The strong consistent theme that runs through my career is working in building consumer-facing brands. The Los Angeles Times, Universal Studios and now at CarsDirect it’s all about providing great service to consumers. So in that way, a lot of the fundamental business principles are the same across those three experiences.
Q: The average car sold at CarsDirect goes for about $22,000. What’s the company’s commission from each sale?
A: We are making about $300 a car right now, which is a narrower margin than a traditional dealership would make. We are passing savings along to consumers on both pricing and financing than traditional chains.
Q: The company lost more than $144 million last year. When do you expect CarsDirect to turn a profit?
A: We are on a clear path to profits. We have a focused internal plan to accomplish that goal.
