Online Selling Overview and Vendor Guidance: What Exactly Are Online Sales and What Should

Dealers Consider When Engaging Vendors?

Brad MillerDirector, Legal and Regulatory Affairs and Senior Counsel, Digital AffairsNADAbmiller@nada.org

Stefan DrechselFounderDealerTech Nerdstefan@dealertechnerd.com

These presentation materials are provided as guidance only and are not intended as legal advice. Dealers should consult their lawyers and professional advisors for details about state or local laws and their specific situation, and must make their own independent business decisions. The presentation of this information is not intended to encourage concerted action among competitors or any other action on the part of dealers that would in any manner fix or stabilize the price or any element of the price of any good or service.

Topics Covered in Today’s Presentation

• What Exactly Is An Online Sale?

• What Should I Consider When Hiring A Vendor to Assist?

• What Vendors Do I Need to Hire To Assist Me?

• Questions

NOTE: Legal and Regulatory Issues with Online Sales

https://www.nada.org/Legal-and-Regulatory-Implications-Online-Sales-Form/

Why Now?• Currently more than 22 states with some form of restriction

on in-person sales• About 16 states with “online” sales only• About 6 with showrooms open by appointment only• Hundreds of additional local restrictions• Check with your state and metro association• Work with attorney and local law enforcement/health

officials to ensure your practices are permitted

What Exactly Are “Online Sales?”

• Terminology and Practice Vary– “Digital Retailing” - includes much more– “Remote Sales”

• Bottom Line – performing “virtually” what you currently perform in person in your dealership

• “Pure” online sale – all steps in sales process completed online with only physical interaction being delivery, which is completed away from the dealership location.

Extended Digital Dealer Experience

DigitalRetailing

DigitalShowroom(SRP/VDP)

Digital Advertising

DigitalMerchandising

Digital Retail Levels

Digital = paperlessretail in-store experience

Hybrid digital online andin-store experience

End-to-end onlinecontracting/delivery

Lead Super Lead PO/DeliveryQualifying Closing

Guided Self-Service

20-25% 5-10%-50% F&I Penetration

Lead Form

DealJacket

Sale

s Pr

oces

sCu

stom

er

Expe

rienc

eO

nlin

e De

liver

able

Dealership Retail Experience (Pre-COVID)

Contract-ing

F&I &Compliance

DealBuilding

VehicleSearch DeliveryShow

room

Sales Associate Sales Manager F&I Manager

F&I Menu /Compliance

Digital / e Contracting Reg/Titling

…

CRM Desking

Contract-ing

F&I &Compliance

DealBuilding

VehicleSearch DeliveryShow

room

Sales Associate Sales Manager F&I Manager …

VehicleSearchOnline Deal

Building

Internet BDC Manager

Dealership Retail Experience (Pre-COVID)

SRP/VDP

F&I Menu /Compliance

Digital / e Contracting Reg/TitlingCRM Desking

Contract-ing

F&I &Compliance

DealBuilding

VehicleSearch Delivery

Sales Associate Sales Manager F&I Manager …

VehicleSearchOnline

Dealership Retail Experience (COVID)

Digital RetailingSRP/VDP

Contr-act-ing

F&I &Compliance

DealBuilding

?Internet BDC Manager

Showroom

F&I Menu /Compliance

Digital / e Contracting Reg/TitlingCRM Desking

Dealership Retail Experience (Future)

Contract-ing

F&I &Compliance

DealBuilding

VehicleSearch

HomeDeliveryOnline

Contract-ing

F&I &Compliance

DealBuilding

VehicleSearch DeliveryShow

room

Omni-Channel Retailing

Components of an “Online Sale”

Exploring Digital Retailing

OnlineMarketplace

NeedsAssessment

VehicleConfiguration

VirtualWalk-Around

OnlineQuote (MSRP)

OnlineDesking

Online DealData

Trade-inOffer

Online Credit& Lender

ID Verification& Compliance

OnlineAftermarket

OnlineCheckout (DC)

Econtracting Digital DealDelivery

(Assisted)Remote Sign

Local FileUpload

Test Drive VehicleDelivery

Registration & Titling

First ServiceAppointment

Veh Search

Deal Building

Contracting

Delivery

F&I & Compliance

Online Desking Vendor• Software that includes all relevant variables to provide payment and

deal terms– Incentives, taxes, fees– Integration w/CRM, DMS, etc.

• Could include many different features/products, e.g.– Online Payoff Quotes– Online Menu Presentation – PPP Presentation

• Crucial part of online retailing – critical to get this right– Compliance and customer trust

Online Trade Evaluation Platform

• Trade in evaluation is very difficult dealer issue with remote sales – especially in current environment

• Will involve important and difficult business decisions

• Technology vendors may be able to help– gather most relevant pictures, videos and other data from

trade, integrate with used vehicle valuation software, and provide a concrete trade value

• Equity is a key variable that must be considered

Online Credit Application/Decisioning

• Secure method for obtaining and running credit online– FCRA considerations are important here

• Offers shopper the ability to submit a credit application and potentially receive a credit decision or preapproval online– Understand difference between “pre-qualification” and an actual

credit check

• Follow same rules for running credit in person– Need a “permissible purpose”

Online ID Verification Tools

• ID theft threats are heightened with online sales

• Can be more difficult to verify identity of a credit applicant or vehicle purchaser

• Consider technology tools

• Coordinate with finance sources– Recourse risk!

E-Contracting Vendor

• Vendor to take the fully negotiated terms from the desking tool and put it in a compliant contract– Many compliance issues– Must be acceptable to your finance sources

• Signing and approving documents online to replace traditional paper financing documents.

• Customers can review and sign documents on their computer– Ensure that any tool is compliant in all formats (mobile, size, etc.)

E-Contracting Vendor

• An area where a vendor will likely be indispensable

• If none yet – exercise caution in choosing – trust but verify• ESIGN and Reg Z compliance (discussed below)• System must address any state/local issues• GLB Service Provider / safeguarding provisions• Mobile applications? Meet disclosure/other requirements?

• Coordination / approval from finance sources

NOTE: Some Documents Still Need Wet Signatures

• Nearly all states still require wet (original ink) signatures for title transfers and vehicle registrations. E.g., – New York requires that signatures on the Certificate of Sale (the MV-50)

must be written in ink or indelible pencil.

– California requires wet signatures on certain DMV forms such as Reg 262 and Reports of Sale.

• Notary, Power of Attorney, other possible wet signatures required

• Federal Odometer Disclosure statement – up to the states

Remote Signing Portal

• ESIGN compliant way to obtain signatures from the customer (for all forms that can be ESIGNed)

• May be part of E-Contracting platform, but must be secure– Digital signatures (encrypted keys)– Similar to some state E-Notary concepts

• Should conform to industry standard protocols

Secure Document Vendor

• Software to securely send, receive, and store sensitive customer documents and information – Including for obtaining stips, verifying ID documents, etc.

• DO NOT SEND SENSITIVE INFORMATION VIA EMAIL– Generally not secure

• Several well-recognized tools (OAuth, etc.)

• Where are documents stored? How can you/customer access?

• Who is responsible for security and in event of breach?

What Should I Consider When Hiring A Vendor to Assist?

Vendor Considerations• Compliance - TRUST BUT VERIFY!!• No specific requirement to outsource

– But practical realities may dictate

• If you choose to engage:– Likely access to sensitive data– Privacy Rule and Safeguards Rule implications

• Must agree not to share/use data• Must agree to protect data

• Must get vendor to agree to certain contract provisions– See www.nada.org/dealerdata for service provider template

Vendor Considerations (cont.)• Ensure Vendor Complies with Regulatory Requirements

– ESIGN– TILA/Reg Z– Fair Credit Reporting Act (FCRA)– Safeguards Rule– Telemarketing Rules

• Other issues– Remote employee access– Consumer access (mobile/otherwise)– Audit rights– Integration issues

Digital Retailing Offerings

DR ExtensionsJourney Orchestrator OEM Solutions Consumer Marketplaces

• OEM-specific ecommerce platform

• See Journey Orchestrators

• Existing bolt-on (e.g. desk, web, chat, F&I)

• Extension to current DealerTech offering

• Deep functionality of in-store & digital module

• Partnership integrations

• Consumer-facing ecommerce platform

• Digital-first retail experience (in-store?)

• Shared customer relationship between dealer and marketplace

• DME competition• Modular approach?• Handover w/in-store

DealerTech (DMS,…)?

• Competing OEM offerings for groups?

• End-to-end approach?• Flexibility of UX and

workflow?

• Dealer control over journey (pricing, F&I penetration, trade,…)?

• Dealer-branded ecommerce platform

• Focus on UX: workflow & omni-channel

• Flexible digital & in-store retail experience

• Conversion-approach: lead => PO/delivery

Digital Retail Vendor QuestionsModular versusend-to-end approach

Digital Retail Customization

Increase conversionand throughput

Omni-ChannelExperience

• What stages are covered: vehicle search w/test drive, deal build w/trade-in, F&I/Compliance, econtracting, delivery?

• Do we buy the e2e process or solution modules?

• Can we create an electronic deal jacket w/esign?

• What 3rd parties or can use our partners (e.g. F&I)?

• What integrations w/our dealership system stack (DMS, CRM, Desking, F&I, Dig. Contracting,…)?

• Can we adapt to our dealership processes (e.g. when present F&I/access., capture lead, run credit)?

• What DR elements to customize (e.g. MSRP vs. MAP vs. Dealer price; what deposits to put down,…)?

• Can we build deal based on our existing inventory (SRP/VDP) or on OEM config.?

• How to evaluate trade: VIN, pics, qualifiers, 3rd parties?

• How calculate trade-equity?• How to onboard/train DR?

• How to increase conversion (e.g. educational elements in F&I/trade-in section)?

• How is handover from OEM website to our VDP/DR?

• Do you send alerts if users bounce in the process?

• Do you offer remote interaction/intervention (chat, cobrowsing, video,…)?

• When to run credit?• Request benchmarks for e2e

journey (lead capturing, credit app, F&I penetration, Accessory sales,…).

• Where is the CX: dealer web, subdomain, DR app/lp?

• Desktop vs. mobile?• How do users save search

history/results, deals,…?• How to guarantee “omni-

channel” UX (in-store/web)?• What are in-store sales

capabilities (e.g. iPad tool)?• How to push & process

consumer data (data safeguards, meta data, duplicate leads,…)?

• How do we measure/control remote selling/road to sale?

Digital Retailing Bottom-Up Approach

Price/Service: modernize the dealership experience

Strategy: build a mobility strategy around the consumer

Promotion: branding, data, photo, video, CTA

People: coach personal & digital engagers

Vision: dealership experience & value propositions

Processes: simplify in-store & online process

End-to-end digital purchase with Home Delivery

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Online Selling Overview and Vendor Guidance: What Exactly Are Online Sales and What Should

Dealers Consider When Engaging Vendors?

Brad MillerDirector, Legal and Regulatory Affairs and Senior Counsel, Digital AffairsNADAbmiller@nada.org

Stefan DrechselFounderDealerTech Nerdstefan@dealertechnerd.com