The big box revolution has irrevocably altered the retail landscape. Carvana's success has dealers wondering whether auto retail could be next. Will auto retail "superstores" put you out of business? There is no easy answer, but we can make informed predictions with the information we have on hand.

Why the Experts Are Concerned

At NADA's annual convention, I listened to Brian Benstock, general manager of Paragon Honda and Acura in Queens, N.Y., discuss his thoughts on Amazon and the threat they pose. Brian is a top-notch GM in a store that sells over 1,000 units a month — the highest-volume dealer to take home both the Precision Team Award for Acura and the President's Award Elite for Honda. He knows a lot about the car business and how to succeed.

At NADA, he was speaking on the threat Amazon poses to the automotive industry. He said simply: "Amazon wants it all, from A to Z" and "Bezos is coming!" Amazon is a very powerful, well-organized company. Benstock is right to be concerned — and he's not alone.

But I'd like to share something that might help us all breathe a little easier.

The Dry Cleaning Lesson

In the 1980s, we saw the arrival of the superstore. These giant organizations seized on an opportunity to be super-efficient and dominate smaller competitors. In the grocery business, the little mom-and-pop stores were purchased or driven out of business by bigger organizations. Kroger, Publix, and Safeway achieved dominance through efficiency and leverage across a broader base of rooftops.

The world of office supplies offers a parallel example. Locally owned suppliers bit the dust in large part because of Staples and Office Depot. Thomas Stemberg, Staples' founder, recognized after graduating from Harvard Business School that the same philosophies driving grocery superstores could be applied to office supplies. He was right — until Amazon arrived.

But here's where the story gets instructive: Staples once tried to replicate their methodology in a different market — dry cleaning. They failed miserably. Why? In the office supply business, you simply buy a product. Dry cleaning is deeply personal. Your clothing involves discussions about care, allergies to chemicals, hours, delivery speed, button repair, and dozens of other personal choices. The centralized warehouse model didn't have the same utility.

This is the fundamental reason I'm not particularly concerned about Amazon — yet.

"Carvana sells a service. The car is a byproduct. Customers can get a car anywhere, but Carvana offers an experience some people just prefer."

Do You Sell a Product or a Service?

Carvana surprised a lot of people when they entered the list of top pre-owned units sold. People doubted them when their prices were higher than most dealers and their F&I products could be purchased online. This would be a death sentence if they were selling a product — but they're not.

Carvana sells a service. The car is a byproduct. Customers can get a car anywhere, but Carvana offers an experience some people just prefer.

For most people, buying a car is a very personalized experience. They need to touch, feel, smell, drive, and experience their vehicle beforehand. Others need a relationship and the security of knowing they can return to the dealership if there's a problem. These are amenities that Amazon doesn't offer — yet.

Your concerns should be less about Amazon and more about the current big-box retailers in the automotive business. To compete effectively — and not join the mom-and-pop grocery and office supply stores — you will need to adapt. This means making the process incredibly simple, giving information easily, and providing the ability to complete most of the transaction from home.

When Transparency Leads to Profit

Back to Benstock. One key takeaway from his speech: "Our product has wheels. It's easy to get it in front of the customer." This is a paramount advantage over Amazon. Amazon cannot compete when it comes to personal service. That's why Benstock's salespeople often go to the customer for test drives.

Today, we're seeing the emergence of companies bridging the information gap. One example is Intice Inc., led by founder and CEO David Farmer. His newest product allows the customer to do almost everything from home — desk their own deal, appraise their trade, and menu themselves on F&I products. When they're done, their information is pushed into your CRM and your Dealertrack or RouteOne portal. When the customer does come in, they're already closed on price, payments, and F&I products.

Surprisingly, when given time to consider coverage and payments in a less stressful environment, customers tend to buy more products than you'd expect.

Consider this: 59% of Apple customers choose AppleCare protection on purchases made directly from Apple. According to NADA data, that's 12% higher than the record 46% that F&I departments are currently generating. This doesn't come from a slick menu presentation or overcoming objections — quite the opposite. It comes from complete transparency.

By percentage of MSRP, AppleCare is 11 times more expensive to purchase compared with adding a vehicle service contract to a Ford F-150. Yet the truck is 38 times more expensive, has far more systems, and is fed by over 100 million lines of code. Yet the simpler, more expensive product sells at a higher penetration rate — because Apple leads with trust, not tactics.

What We Do Next Matters More Than Amazon

Amazon doesn't currently have the infrastructure to provide the kind of personal service dealerships do. They only sell products. And even if they come in with a lower price, as the Carvana model demonstrates, many customers will still opt for the personal experience, security, and relationship that dealers provide over price.

For more than two decades, dealers have feared the idea of Walmart entering the car business. After 20 years of discussion, they recently decided to partner with a few dealers — because direct-to-customer transactions simply aren't a viable option for them either.

We must trade in our fears for a focus on our customer's future experience. The threat isn't Amazon. The threat is doing nothing while the market changes around you. Adapt now, and what looks like a disruption becomes an opportunity.