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Digital Motors wants to be the Shopify of cars

Buying cars online in the U.S. is broken. This startup wants to help dealers fix it.

Digital Motors wants to be the Shopify of cars

You can't tell from looking at it, but this is a Digital Motors experience.

Image: Digital Motors

If you're planning on buying a new car sometime soon, I'd like you to bring a stopwatch with you.

Even if you know exactly what model, packages and color you're after, even if you don't need to take a test-drive, you're likely going to be spending a few hours at the dealership. No one wants to waste time, but especially during a pandemic, standing around with strangers for several hours waiting for paperwork to be filed is something most people would probably like to avoid if possible.

As retail for almost every possible consumer product has moved online, cars have, for the most part, remained parked in the dealership. Consumers are increasingly comfortable with buying products online, and the lockdowns have only accelerated that transition. Small businesses are also turning to ecommerce like never before, and Digital Motors, a startup that launched its first online store at the end of March, wants to help make buying a car online as painless as buying something off Amazon.

The car-buying process has not really changed much in decades, and part of the reason is that, in the U.S. at least, most states have regulations that require cars to be bought through local dealerships. Dealers can operate showrooms for only one brand or automaker, or several, but at the end of the day, they want to get you into one of their cars. For the most part, dealership websites are primarily designed as vehicles (sorry) to get potential customers to come to the dealership, rather than buy a car online, Andy Hinrichs, Digital Motors' founder and CEO told Protocol. "99% of customers dislike it, and the dealers also dislike this process because it's inefficient for them," Hinrichs said.

"Whether you are on a dealer website, a carmaker's website, or anywhere in between, all you can do is look at vehicles, get vague price indications, and submit your name, email and phone," Hinrichs said. "The entire automotive industry is geared around lead capture."

And Hinrichs should know: He spent well over a decade in the financial services wing of Daimler and Mercedes-Benz. He wanted to take away the struggles associated with car buying, while still working within the system, instead of blowing it up like Tesla has (jumping through endless hoops), or working in the used-car market like Carvana.


How a Digital Motors shop looks across devices. Image: Digital Motors

Digital Motors is meant to appear nonexistent, sitting as an invisible layer between the branding of the car company or dealership's website, and the inventory and sales management software it uses. Customers visiting a dealer that uses Digital Motors would be able to see every car the dealer has available, and importantly, all the financing options they'd be eligible to use to buy the car. "For virtually every car buyer, there is no purchase transaction unless there's a leasing and financing commitment attached to it," Hinrichs said.

Beyond the logistical hurdles of linking an inventory management system to a one-size-fits-all ecommerce solution, building in the ability to tap into a network of financiers is something that no dealership or carmaker has really been able to achieve online at mass scale. "We're not just allowing the customer to find the car that they like within the context of the dealer's online store, but we're immediately presenting these vehicles as monthly lease or finance payments so that it becomes a lot more relevant to the car-buying decision," Hinrichs said. "The customer only cares about, 'What is the car of my desire, and does it fit into my monthly budget?'"

Hinrichs said that Digital Motors has reduced a process that can often take around four hours to less than an hour — and hopes to shorten that even further in the future. But the customers see none of this; they just see that the dealer they know from local TV ads and that giant American flag along the highway has finally found a way for them to buy a car from home, where everyone wants (or least has) to be right now. It's not too different a model from how Shopify has moved to dominate much of the small-business ecommerce landscape.

If you've bought something online from a small business in the last few years and the experience was pretty painless, you were probably buying from a site powered by Shopify. Over the last decade, the Canadian company has gone from offering simple websites and payment solutions for businesses to becoming the backbone of commerce for countless small businesses. It generated $1.6 billion in revenue last year, and that's before the pandemic sent everyone home. What Digital Motors brings is deep knowledge in the highly regulated and complex car-buying industry.

Digital Motors sells its services as a monthly fee to dealers, rather than taking some percentage of sales. "Every automaker is clamoring for this type of service," Hinrichs said, adding that the pandemic "exposed the vulnerability of the auto industry across the board by relying 100% on the physical presence." Last month, Jaguar Land Rover announced that it had made Digital Motors a "preferred online sales platform" for its U.S. dealers, and the company works with dealerships from most major automakers, including Honda, Chrysler and Volkswagen.

Longer-term, the goal for Digital Motors is to sell more holistically, whether that's an entire automaker's national inventory, or even as a marketplace for all the cars across all the dealerships it supports. It's a similar strategy Shopify has started to take with its new Shop app, but that took years of building out the company and gaining the trust of local businesses. For Digital Motors, the goal right now is to keep supporting the individual dealerships, because that's how the overwhelming majority of people still buy their new cars, and that's not going to change anytime soon.

"If you look at the U.S. market, it's a strong franchise system well protected by laws and regulations, so the franchise dealer is not going to go away," Hinrichs said. "So the solution is to augment the brick-and-mortar world with a conducive digital storefront that provides a Tesla or Carvana-like experience, but still allows the dealer to control the transaction."

Microsoft wants to replace artists with AI

Better Zoom calls, simpler email attachments, smart iPhone cases and other patents from Big Tech.

Turning your stories into images.

Image: USPTO/Microsoft

Hello and welcome to 2021! The Big Tech patent roundup is back, after a short vacation and … all the things … that happened between the start of the year and now. It seems the tradition of tech companies filing weird and wonderful patents has carried into the new year; there are some real gems from the last few weeks. Microsoft is trying to outsource all creative endeavors to AI; Apple wants to make seat belts less annoying; and Amazon wants to cut down on some of the recyclable waste that its own success has inevitably created.

And remember: The big tech companies file all kinds of crazy patents for things, and though most never amount to anything, some end up defining the future.

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Mike Murphy

Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.

People

Poshmark made ecommerce social. Wall Street is on board.

"When we go social, we're not going back," says co-founder Tracy Sun.

Tracy Sun is Poshmark's co-founder and SVP of new markets.

Photo: Poshmark/Ken Jay

Investors were keen to buy into Poshmark's vision for the future of retail — one that is social, online and secondhand. The company's stock price more than doubled within a few minutes of its Nasdaq debut this morning, rising from $42 to $103.

Poshmark is anything but an overnight success. The California-based company, founded in 2011, has steadily attracted a community of 31.7 million active users to its marketplace for secondhand apparel, accessories, footwear, home and beauty products. In 2019, these users spent an average of 27 minutes per day on the platform, placing it in the same realm as some of the most popular social media services. This is likely why Poshmark points out in its S-1 that it isn't just an ecommerce platform, but a "social marketplace." Users can like, comment, share and follow other buyers and sellers on the platform.

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Hirsh Chitkara
Hirsh Chitkara (@ChitkaraHirsh) is a researcher at Protocol, based out of New York City. Before joining Protocol, he worked for Business Insider Intelligence, where he wrote about Big Tech, telecoms, workplace privacy, smart cities, and geopolitics. He also worked on the Strategy & Analytics team at the Cleveland Indians.
Reinvention of Spending

Extend thinks warranties will be the next major point-of-sale trend

Extend wants to make warranties accessible to small and mid-sized retailers — but to make it worth their while, it needs to restore consumer trust.

Extend is looking to capitalize on the pandemic shifting everyone onto ecommerce.

Photo: Fiordaliso/Getty Images

One bad experience is often enough to taint a consumer's perception of product warranties forever: Maybe you broke a $600 blender, only to learn that the $50 warranty plan just covers manufacturer defects. Or perhaps in an attempt to repair a broken smartphone screen, you were told your device had water damage and wouldn't be covered. And that TV you bought five years ago because "'Shrek' needs to be watched in 4K to be fully appreciated"? Yeah, you'll need to find the receipt if you want it repaired.

Extend, a nearly 2-year-old startup, is aware of these pitfalls and wants to rehabilitate the perception of warranties. It aims to do for warranties what Affirm did for consumer point-of-sale financing. That entails making APIs accessible and convenient for smaller retailers, which have historically been locked out of the warranty market. Just as Affirm and other "buy now, pay later" companies have benefited from pandemic tailwinds, Extend aims to capitalize on the shift to online shopping at a time when consumers are looking for ways to stretch their budgets. But to do that, Extend needs to convince customers that it isn't the same old warranty business hiding behind shiny APIs.

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Hirsh Chitkara
Hirsh Chitkara (@ChitkaraHirsh) is a researcher at Protocol, based out of New York City. Before joining Protocol, he worked for Business Insider Intelligence, where he wrote about Big Tech, telecoms, workplace privacy, smart cities, and geopolitics. He also worked on the Strategy & Analytics team at the Cleveland Indians.
People

Building your own site is cool again, and it's changing the whole internet

Writers, creators and businesses of all kinds are looking to set up their own space online again. To do that, companies are trying to figure out how to deal with two very different internets.

Stuck at home, everyone's had to figure out how to both run their business online and be part of the way the internet works now.

Photo: John Schnobrich/Unsplash

Websites are back. After years of being sucked into the vortexes of Facebook and Yelp pages, devoting their time to amassing Twitter followers and Instagram likes, creators and businesses alike have seen the benefits of hanging up their own shingle again. Legions of writers are setting up Substack newsletters. Millions of people and businesses are setting up shop for the first time online using Squarespace or WordPress. Wix reported 7.8 million new users in the last quarter alone, and more than 29% revenue growth.

The driving force behind all that growth? Thanks to a pandemic closing stores, keeping people at home and leaving a lot of people without jobs, the only way to move forward is to figure out the internet. "Everyone describes the pandemic as an accelerant," said Squarespace CEO Anthony Casalena. "For a lot of people that meant accelerating getting online, adapting their business model." He said he's seen restaurants, for example, start Squarespace sites to host their menu and contact information, then start to think about selling a cookbook through their site, or maybe mail-order cocktails.

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David Pierce

David Pierce ( @pierce) is Protocol's editor at large. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

The Retail Resurgence

The sales rep and show floor are unavailable. Meet their digital stand-in.

How Amazon is thinking about Alexa Shopping in the middle of a pandemic.

When you can't get to the store, or know exactly what you want, Amazon wants to make sure Alexa is there to help.

Amazon

Your hands are probably a bit more full than they were this time last year. Perhaps you're trying to squeeze in emptying the dishwasher between work Zoom calls, or make dinner while keeping your kids focused on their remote learning.

Going to the store is now a more frightening prospect than it used to be, and the pandemic has pushed many more consumers into the world of ecommerce. But that means far more than just going to a website these days. Amazon has been pushing new ways of buying, getting deeper into your daily routine with its Alexa assistant. That could mean automatically reordering your detergent because it knows you usually reorder around this time each month or talking you through which new exercise weights to buy because you just bought a new Peloton (like everyone else on the internet).

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Mike Murphy

Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.

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