Mercedes-Benz India unveiled its ‘Retail of the Future’ retail sales approach (ROTF). The company intends to push a ‘direct to customer’ retail approach with this new model in order to create a more customer-centric brand. To put it another way, Mercedes-Benz India will own the complete stock of automobiles, sell them through designated Franchise Partners, invoice the new cars directly to customers, process and fulfill orders. This also implies that the corporation will charge single, transparent pricing throughout India.
The new retail model will only apply to new car sales; other verticals such as customer service, pre-owned cars, and related industries would be unaffected.
Martin Schwenk, MD & CEO of Mercedes-Benz India, commented on the new retail sales model, saying, “By initiating a fundamental transformation in the retail business, this long-term strategic step will improve our client focus. It will also provide a win-win solution for customers and Franchise Partners, highlighting our clear vision for a sustainable, empowering, and digital future. Customers’ goals and requirements have shifted dramatically as a result of the introduction of new sales channels, and as a customer-centric brand, we’ve changed our current business models to match their aspirations and demands.”
Vinkesh Gulati, President, FADA India, commented on Mercedes-Benz India’s new retail strategy, saying, “Mercedes India’s new agency model is an example of the company’s innovative thinking. Even though the strategy has been tested in other countries, India is a unique market where customer behavior is highly different, as they change Dealers and even brands in response to every additional reduction. Even if on the surface, this strategy appears to benefit dealers who deal in high-end brands with little volume, we’ll need to investigate if it can be applied to mass-market brands so that every dealer may benefit.”
For customers, this may not be a significant difference. They will still have to go to the dealership or order the vehicle online, and they will continue to be assisted by franchise personnel. What will change, however, is that they will receive a uniform and transparent pricing, a wider stock selection, and improved customer service, as these will be the dealerships’ primary focus areas. However, things will be very different for franchise partners, or dealers, who will be operating with significantly fewer risks and obligations.
A direct-to-consumer retail approach would eliminate the costs of inventory and stockpile warehousing, which are currently an added cost to dealers.
Dealers, on the other hand, will be unable to provide selective discounts or deals in order to attract buyers and compete with other dealers for higher margins. Instead, in order to compete with other franchise partners, dealers will have to provide better customer service, which will be scored using the CSI rating, as defined by the corporation. In other words, instead of sales margin, dealers will be paid commissions.
Mercedes-Benz India will be in charge of centrally monitoring the selling price of all new Mercedes-Benz vehicles. The company will also be responsible for order processing and fulfillment, as well as owning and managing the full stock of new cars. This indicates that the corporation will no longer provide wholesale shipments to dealers. According to Mercedes-Benz, this new retail model will enable the corporation to better control volume scalability and achieve pricing consistency within segments.
In addition, the organization will benefit from increased market trend forecasts and consumer intelligence, as well as better inventory management. Beginning in the fourth quarter (Q4) of the calendar year 2021, Mercedes-Benz India will introduce its new Retail of the Future sales model.