eCommerce Creates Power Shift In Auto Industry, Analyst Says

Autoparts Report, April 17, 2000

Less obvious than the new sales, procurement, and communication channels created by the infusion of eCommerce within the automotive industry is the dramatic shift in power the Internet is rapidly creating.

A major, and perhaps underestimated effect of eCommerce on the auto industry is the transition of control from the manufacturer to consumer. According to Andersen Consulting's John Cunningham, partner, Automotive, Industrial & Transportation, an "information transparency" has been formed, opening access to once-unavailable information to consumers and industry players.

"The larger the amount of information in hand, the better equipped consumers and industry players will be; information is power," said Cunningham. "Power is pouring down at an accelerated rate from suppliers to assemblers and from assemblers to consumers."

Cunningham adds that, utilizing the eCommerce catalyst, retailers are in a race to deliver to consumers in a convenient format. The direct result is better customer relationship management; the indirect result is the creation of better-informed consumers. Ultimately, the power is harnessed by the consumer at the end of the chain.

"One of the goals of eCommerce is to motivate suppliers to drive costs down and, of course, continue the flow of cost-savings to the assembler," said Cunningham. "It is still necessary for assemblers and suppliers alike to recognize and exploit the eCommerce trend: first-to-market definitely applies. It is imperative that players enter the game early and strategically to create a competitive advantage."