Equipment buyers and sellers are heading to the Web, with surprising results
Across the industry, the launch of Internet-based truck auctions and sales has been observed with hope and dread. Will it collapse traditional distribution channels overnight? Destroy personal service? Signal the final, awful triumph of price-only purchase decisions? Or will it create new efficiencies and opportunities for everyone?
While web-based vehicle auctions and sales are relatively new (many startups have yet to sell their first truck), the initial response is positive indeed. From fleets to dealers and dot-coms, there is a growing optimism about the electronic marketplace, which seems to have plenty of room for traditional industry suppliers, as well as Internet-born and bred newcomers to trucking.
One perhaps unexpected survivor of the e-commerce revolution will be the relationship-style selling that has always been at the heart of the trucking industry. "Strong partnerships exist in the trucking industry," says Rod Georgiu, president and CEO of Autovia, an online auto parts marketer. "The relationships between dealers and distributors and their customers are truly symbiotic. They exist for very valid business reasons.
"Sales and support has to rest with the most competent entity for the job, and in the trucking industry that's the dealer," adds Todd Bloom, vp-business development and marketing - commercial vehicles for American Isuzu Motors. "Automotive dealers will definitely be impacted by Internet sales. Truck dealers much less so. It requires more expertise to spec a truck for sale and more ongoing support once a vehicle is in service."
Dan Mueller, vp-sales for Vendquest, an Internet-based company founded last year to automate the industrial purchasing process, agrees. "Certainly in some industries middle people who don't bring value will go away," he says. "In industries like trucking and construction, however, dealers and distributors add enormous value. Our approach is not to disrupt but to enhance the traditional distribution channels."
Volvo Trucks North America recently launched its own Internet-based configurator (truck specification software) to enable customers to spec new trucks online. "This is not about going around the dealers at all. Customers will still be working with their dealers to complete sales transactions, take delivery, and handle warranty and service," explains Susan Alt, vp-e-business for Volvo. "The barrier is not technology," she adds. "You could technically complete an entire truck sales transaction online, but with commercial trucks you need to have an ongoing relationship with someone, and that's the dealer."
Dealers, in fact, are among the most active and progressive participants in the Internet marketplace. Hundreds of dealers already have sophisticated web sites offering everything from the ability to search used-truck inventories to online credit checks and financing.
"We're currently redesigning our site so that customers will literally find a virtual dealership when they enter," says David Orf, senior vice president of Rush Enterprises, the largest network of Peterbilt dealers in North America. "Customers will be able to 'walk' down a hallway and open any door in the dealership from finance to parts and service. They will be able to spec and order trucks online, from the credit check process right through delivery of the trucks to their businesses. They can even make payments online if they choose.
"The industry is a long way from using the Internet as the primary means of buying and selling equipment, but we want to be there; we want to be one of the first," says Orf. "We hope to open our new online store within 12 months. Some things are already unrolling now."
Like other visionaries, Orf sees the Internet not as a replacement for personal service, but as a way to enhance that service and take it to new levels. "One of our primary goals is to build a customer database unlike any other in the industry," he offers. "Our Internet capabilities will enable us to automatically capture an enormous amount of information about our customers - both individually and collectively. Then we will be able to 'mine' that data for information that can help the customer, the manufacturer and the dealership. In other words, we'll all share the benefits of the system.
"For example, we'll be able to optimize truck specs for particular applications based on a fleet's real vehicle history," he illustrates, "or predict the replacement point for certain components and pre-schedule service work for the customer to minimize downtime. It's coming. You'll see more and more dependence on the web for a variety of things. With few exceptions, companies that don't use the Internet to collect data and use that data for the benefit of the customer won't last."
Alt agrees. "With our online configurator, we plan to follow mouse clicks on a page to learn more about a customer's interests and wants," she says. "Then we can personalize our contacts with that customer. We can also track trends and changes. Is there something everyone suddenly wants? Or are there customers in certain places or in certain applications that are spec'ing the same things? The Internet enables us to learn about individual customers, all customers, or categories of customers.
"We can also pass this information upstream to the truck plants and suppliers," Alt adds. "For instance, our goal is to get to a 21-day truck by utilizing the Internet configurator coupled with the dealers' Intranet order entry process to trigger automatic order validation, create build papers for the plants, and order materials from suppliers on a daily basis. This also gives the suppliers the opportunity to advise us of any problems or shortages," Alt notes, "and it gives suppliers and dealers information to help in planning for aftermarket parts support, as well.
"In other words, Volvo's online configurator is a new bridge between the upstream and the downstream aspects of our business," she explains. "It's the face to the customer, offering enhanced levels of service, and it's the entry into the upstream or production side of the process. Now the customers, the dealers, the OEM, and the component suppliers can all have access to the same information. We can share it together to do things better. When you're talking about trucks, you're talking about someone's business, their livelihood," Alt points out. "That's something that just doesn't go down to zeroes and ones in a computer code."
The potential reduction of everything to a numbers-only matter is perhaps the deepest fear sellers and buyers have about the impact of e-commerce. Suppliers worry about profit margins evaporating in an all-out, web-based pricing war; buyers worry about quality and service becoming things of the past as suppliers cut corners to compete.
According to Forrester Research, neither issue should be a cause for concern. "In offline transactions buyers make implicit trade-offs among multiple product attributes - often rejecting low-priced suppliers in favor of higher quality or more reliable vendors. This holistic approach won't be abandoned on the Net," writes Steven Kafka in his May 2000 report, B2B Auctions Go Beyond Price.
Kafka even encourages market makers to take the lead in educating online buyers about how to work successfully in the new venue. "To leverage multi-attribute bidding, buyers will uncover the elements of their purchases," he notes. "Instead of waiting for characteristics to appear, suppliers should take an active role in helping their customers define these important attributes. Why? Because the right set of criteria will help sellers rise to the top."
Vendquest's Mueller agrees. "Price has gotten a lot of press, especially in the business-to-consumer market," he says. "And there are those who think price is it on the Internet; I don't think that's the case. Other factors matter in purchases made through traditional channels and they still matter on the Internet. The real question for Internet sellers is, 'How can I make buyers more confident about their online purchase decisions?' "
When it comes to buying and selling used trucks on the Internet, building confidence typically comes down to the problem of inspections, of finding a way to kick the tires. Hookup.com launched its online, weekly equipment auctions July 11. In the first nine auction days, 11,974 different visitors reviewed the 1,026 trucks and trailers listed for sale; 118 vehicles received 401 bids; and 12 trucks were sold, according to the company.
"We have proven that Class 8 trucks can be sold online," says Kurt DeRuy, vice president of national sales and marketing. He credits Hookup's "click the tires" approach with part of its success. The company helps to boost buyer confidence by providing photos and detailed information about the vehicles, by offering the opportunity to inspect trucks or trailers within three business days of the sale, and by giving buyers the chance to view complete bid histories and ask questions of sellers. Buyers can even check out a seller's auction performance record, according to DeRuy.
The next step for Hookup will be to add an "Inspection Area" where potential buyers can request to see the results of a third-party vehicle inspection before bidding on a particular truck. "The Inspection Area will add value," says William Nye, COO. "We feel that we can eventually give online buyers more confidence than if they inspected the truck themselves."
TrucksWholesale.com is also addressing the issue of how to build buyer confidence, according to president and CEO Troy Bradbury. The company, recently acquired by International Trade Bureau, is focusing on dealer-to-dealer and retail sales of trucks, trailers and parts to the export market, he says. This means conducting actual inspections can be even more problematical for buyers and sellers who are separated by language and long distances.
"For starters, we have multi-listing software that can post vehicle information in multiple languages," Bradbury explains. "We're also implementing some very sophisticated inspection processes. These will include streaming video and a proprietary virtual inspection system that will enable buyers to conduct their own inspections online. They will be able to walk around a truck, look under the hood, and check out the cab interior, for instance. We expect to have the new inspection process in place within the next 60 days."
Another online truck auctioneer and wholesaler, Truck Remarketing Services, actually came to Internet sales from the inspection business, according to George Barnett, president. "We've been an independent provider of truck inspection services for about three years," he explains. "We began our own online auction because we wanted to branch out and this just made sense. Conducting auctions online means that sellers don't have to move their trucks to an auction site and buyers don't have to travel somewhere to participate in the bidding."
According to Barnett, the company sends its own technicians out to inspect all the vehicles that will be offered for sale. "We send an inspector out to take pictures and to examine the trucks," he says. "Then we fax information about the vehicles to about 1,000 potential bidders. I will even personally call 20 or 30 top prospects. We believe we go a little bit farther to build buyer confidence in our service."
Throughout the new online marketplace, companies like Barnett's are working toward the same goal - building Internet-based services that truck buyers and sellers feel comfortable and confident about using. While not every new enterprise will succeed, it's clear that the Internet will play an increasingly important role in the vehicle sales process.
And instead of disrupting the relationships historically so important to the trucking industry, online auctions and sales appear poised to create new opportunities for just about everyone - not only to enhance efficiency, but to actually enrich business partnerships. More than ever before, it seems we're all in this thing together.
The best way to get a feel for the online world of truck buying and selling is to knock on a few electronic doors. Here's a partial list of Internet-based auctions, truck sellers, equipment search services, dealers and others to get you started:
* American Trucker/Trucker.com (www.americantrucker.com). Offers a searchable database of trucks and trailers for sale; gives users the ability to post "want-to-buy" ads.
* Computrucks.com (www.computrucks.com). Provides a searchable database of new and used trucks for sale; recently launched online truck auction site with partner, assets2auction.com.
* EquipmentSearch.com (www.trucksearch.com). Offers access to a network of dealers and their inventory of new and used trucks, parts and service; includes opportunity to preapprove financing.
* Hookup.com (www.hookup.com): Offers weekly online truck and equipment auctions, including escrow service through Taylor & Martin.
* International Truck and Engine Corp. (www.navistar. com). Offers a used truck locator that enables searches by manufacturer, make, model cab style, sleeper type, engine and several other factors. Ongoing auctions are hosted by bid4assets.com.
* Karmak Inc. (www.truckfind.com). Hosts a searchable database of new and used trucks and trailers for sale, including maps and directions to all locations.
* Lease2save.com (www.lease2save.com). Provides online equipment leasing services, designed to allow users to create their own lease proposals with custom payment schedules, which lenders nationwide may then bid for the right to fund.
* PACCAR Inc. (www.usedtrucklocator.com). Provides access to used-truck inventories at Kenworth and Peterbilt dealers.
* Salvage Bid Network (www.salvagebid.com). Offers the opportunity to bid on trucks that have been determined to be "total losses" by insurance carriers.
* Sapp Brothers Leasing (www.rigfinder.com). Gives buyers the opportunity to search a database of vehicles for sale and submitbids.
* SelecTrucks, an affiliate of Freightliner Corp. (www.selectrucks.com). Provides searchable access to SelecTrucks used truck inventory. Company's global locator function enables searches by make, model, year and a variety of other factors.
* SOARR (sold on arrival) (www.soarr.com). Supplies the Truck Sales and Management System software many truck dealers use to run their online truck sales activities. Truck Dealership Web Sites directory has over 100 hot links to dealers and other equipment sales sites.
* TradeOut (www.tradeout.com). Hosts an online marketplace for buying and selling excess assets, including trucks.
* Transportation.com, LLC (www.transportation.com). Hosts public and private auctions. "Category Watch" feature is designed to send daily e-mail to participants concerning the availability of favorite equipment.
* TruckCenter.com (www.truckcenter.com). Provides various e-commerce capabilities, including the opportunity to buy, sell, or trade-in trucks through fixed sales, open bids or auctions.
* Truckers B2B.com (www.truckersco-op.com). Offers members pre-negotiated discounts and rebates via aggregated buying. Vehicle offerings currently limited to Strick trailers, but plans are to add tractors.
* Truck Remarketing Services (TRS) (www.truck-remark. com). Hosts an auction of vehicles all personally inspected by TRS technicians.
* Truck Trader (www.trucktraderonline.com). Posts online classified advertising for trucks, trailers.
* TrucksWholesale.com (www.truckswholesale.com). Offers online classified advertising plus equipment auctions organized by category, including tractors, straight trucks, trailers, truck bodies, etc.
* UsedTrucks.com (www.usedtrucks.com). Provides database of used equipment for sale, searchable by state.
* Volvo Trucks North America (www.volvotrucks.com). Enables customers to spec new truck models and get retail list price quote online or search dealers' inventories for used trucks.