Custom Website Development for Dealership Connection

In the current dealership atmosphere it would be almost impossible to compete with the current dominate 3rd party players.

Competing against established dealership service providers (like Dealer eProcess, Dealer Spike, DX1, etc.) and becoming a recommended OEM developer presents whole set of challenges.

I’m not even sure it could be done!

You would first have to win over dealerships with superior tools! 

1. Challenges in Competing with Existing Providers

• Market Saturation:
  The dealership technology space is crowded, with incumbents offering integrated solutions for websites, inventory management, and customer relationship tools. Displacing them would require superior technology, pricing, or unique features (e.g., AI-driven analytics or hybrid eCommerce models).
• Dealer Consolidation:
  Large dealership groups (e.g., Lithia Motors, AutoNation) dominate the market, often favoring established partners. For example, the top 10 dealership groups control ~9% of U.S. franchised dealerships. Breaking into those networks would require proven reliability and scalability.
• OEM Program Requirements:
  Becoming a recommended OEM developer demands compliance with strict standards for integration, security, and brand alignment. Many OEMs already partner with providers like RevolutionParts for turnkey solutions, raising the barrier to entry.
• Resource Intensity:
  Developing competitive software requires significant R&D investment. For example, RevolutionParts highlights that building custom eCommerce programs internally can take 1–3 years, while startups may lack the capital or expertise.
• Incumbent strengths: Companies like Dealer Spike and Dealer eProcess have:
• Long-term relationships with thousands of dealerships.
• Deep integrations with OEM systems (e.g., Honda, Ford), dealer management systems (DMS), and third-party tools (e.g., Reynolds & Reynolds).
• Specialized expertise in dealership workflows (inventory, CRM, digital retailing).
• Market saturation: The space is crowded with niche players, but few dominate at scale. Differentiation is critical.
• High switching costs: Dealerships are locked into multi-year contracts with existing providers. Convincing them to switch requires:
  • Cost savings: Undercutting competitors on pricing (e.g., subscription models).
  • Superior technology: Offering AI-driven tools, better UX, or unique features (e.g., integrated video marketing, predictive inventory analytics).
  • Proven ROI: Demonstrating measurable improvements in lead generation, sales, or operational efficiency.
• Niche focus: Target underserved segments (e.g., small independent dealers, or some kind of Vehicle specialists).
• OEM approval is gatekept: Automakers (e.g., Toyota, GM) have strict certification processes for recommended vendors. Requirements include:
  • Compliance with OEM standards (e.g., data security, API integrations).
  • Proven track record of reliability and scalability.
  • Partnerships with dealer associations (e.g., NADA, AutoSuccess).
• Long sales cycles: OEMs move slowly; becoming a recommended vendor could take 2–5 years of lobbying, pilot programs, and trust-building.

2.. Opportunities for Differentiation

To compete, you’d have to focus on unmet needs in the dealership tech stack:

• AI/ML tools: Predictive inventory sourcing, personalized customer chatbots, or dynamic pricing.
• Unified platforms: Combine website design, CRM, digital retailing, and service tools into one dashboard (reducing vendor fragmentation).
• Transparent pricing: Subscription models instead of opaque, tiered pricing.
• Social commerce: Integrate TikTok/Instagram shoppable inventories or virtual test drives.

1. Niche eCommerce Solutions:
   Focus on gaps in dealer-OEM collaboration, such as parts eCommerce. Over 50% of dealers report insufficient OEM support for online sales. A hybrid Tier 1/Tier 3 model (combining national OEM platforms with dealer-specific stores) could attract both dealers and manufacturers

• Leverage Emerging Technologies:
  Integrate AI for personalized marketing or blockchain for supply-chain transparency. For example, RevolutionParts uses AI to drive an 8.75X return on ad spend for dealers.
• Target Smaller Dealerships:
  While large groups are consolidating, smaller dealers may lack access to affordable, modern tools. A cost-effective, modular platform could capture this segment.
• Hybrid Partnerships:
  Collaborate with OEMs to co-develop solutions. For instance, RevolutionParts partners with manufacturers to launch dealer eCommerce programs in months rather than years.

Path to Becoming a Recommended OEM Developer

Key Risks

• Dealer Loyalty: 42% of top 150 dealership groups fell in rankings in 2023 , indicating volatility, but long-term contracts with incumbents may limit churn.
• OEM Inertia: Manufacturers prefer partners with proven track records. Startups may struggle to meet scalability demands without OEM backing.

3. Steps to Build Relationships with Dealerships

1. Start small: Target independent dealerships or regional chains (lower barriers to entry).
2. Freemium model: Offer basic website/CRM tools for free, then upsell advanced features.
3. Leverage partnerships:
   • Collaborate with DMS providers (e.g., CDK Global) for integrations.
   • Partner with marketing agencies serving auto dealers.
4. Data-driven storytelling: Use case studies to show how your tools increase leads/sales (e.g., "Dealer X saw a 30% boost in conversions").

4. Path to Becoming an OEM-Recommended Developer

• Phase 1: Prove value to dealers
  Build a critical mass of dealership clients (100+), focusing on a specific OEM’s network (e.g., Ford dealers).
• Phase 2: Engage OEMs
  • Attend OEM dealer council meetings and conferences.
  • Participate in OEM developer programs (e.g., Ford Developer Portal, GM’s API Marketplace).
  • Highlight compliance with OEM data standards (e.g., SOC 2, GDPR).
• Phase 3: Pilot programs
  Partner with OEMs to test your platform in a controlled group of dealers. 

7. Monetization and Revenue

• Subscription SaaS: Tiered pricing for website hosting, CRM, and analytics.
• Transaction fees: Charge for digital retailing tools (e.g., online financing approvals).

8. Risks and Barriers

• High upfront costs: Developing enterprise-grade tools requires $1M+ in initial engineering investment.
• Regulatory compliance: Handling sensitive customer data (e.g., credit applications) demands robust cybersecurity.
• Incumbent retaliation: Competitors may undercut pricing or bundle services to retain clients.

9. Strategic Advantages

• Dealer relationships: Once integrated, dealerships are sticky clients. This creates a moat for future expansion (e.g., launching a consumer-facing marketplace).
• OEM alignment: Becoming a recommended vendor locks in long-term revenue and credibility.

Opportunities for Differentiation

1. Niche eCommerce Solutions:
   Focus on gaps in dealer-OEM collaboration, such as parts eCommerce. Over 50% of dealers report insufficient OEM support for online sales. A hybrid Tier 1/Tier 3 model (combining national OEM platforms with dealer-specific stores) could attract both dealers and manufacturers

• Leverage Emerging Technologies:
  Integrate AI for personalized marketing or blockchain for supply-chain transparency. For example, RevolutionParts uses AI to drive an 8.75X return on ad spend for dealers.
• Target Smaller Dealerships:
  While large groups are consolidating, smaller dealers may lack access to affordable, modern tools. A cost-effective, modular platform could capture this segment.
• Hybrid Partnerships:
  Collaborate with OEMs to co-develop solutions. For instance, RevolutionParts partners with manufacturers to launch dealer eCommerce programs in months rather than years. 

Verdict: Hard but Achievable

• Competing with Dealer eProcess/Dealer Spike:
  Difficulty: 7/10 (possible with differentiation and aggressive sales).
• Becoming an OEM-recommended developer:
  Difficulty: 9/10 (requires years of lobbying, flawless execution, and luck).

Thoughts on How to Do It!

1. Start with a niche: Focus on a specific niche or OEM’s network.
2. Clone and improve: Replicate Dealer Spike’s core features but add AI/ML tools or better UX.

Overall Outlook

While entering the market is possible, it demands significant investment in technology, marketing, and relationship-building. To be competitive and become an OEM-recommended developer, your solution must not only match current industry standards but also offer unique value that differentiates it from established players.

Success would hinge on demonstrating technical excellence, reliability, and an innovative approach that meets the evolving needs of both dealers and OEMs.