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Date:         Wed, 22 Jan 1997 13:24:44 -0800
Sender:       Vanagon Mailing List <vanagon@vanagon.com>
From:         Ron Lussier <coyote@zuni.chaco.com>
Subject:      Volkswagen Updating web site

>From http://www.webweek.com/current/markcomm/volkswagen.html

Volkswagen Walks a Fine Line as it Prepares Commerce Site By Bill Roberts

Volkswagen of America will upgrade its Web site by the end of this month, allowing VW enthusiasts to shop, order, and make credit card payments for everything from baseball caps to distributor caps.

Since October, customers have been able to shop--but not pay for--branded caps, jackets, and other stuff at the VW Store. When the payment-enabled site launches, they'll also be able to buy luggage racks, wheel covers, and other accessories. By year's end they'll be able to locate, order, and pay for automotive parts as well.

VW is one of dozens of manufacturers using Web technologies to help phase out expensive legacy systems. Its initiative also shows how manufacturers must juggle a new sales and marketing channel--the Internet--with existing channels, such as dealerships in the case of the auto industry.

It's a delicate balancing act. "Right now you can't tell exactly how it's going to break," said Bill Bluestein, an analyst at Forrester Research. "Will the Internet cannibalize other channels or open up new business? It probably will depend on the product." VW is making every effort to use the Web without cannibalizing the dealer channel.

"The biggest hurdle is assuring dealers that we won't cut them out of the chain," said Jack Shafer, manager of new technology at Auburn Hills, Mich.-based Volkswagen of America. "They're way ahead of us in their fear that manufacturers will try to cut them out. We're not interested in eliminating the dealer." He said that most states bar manufacturers from delivering cars directly to customers, reserving that right for dealers. "Dealers also perform a lot of service for the customer, including the warranty work," he said.

Reassurances for Dealers VW has taken several steps to reassure its 900 VW and 230 Audi dealerships in the U.S. and Canada. When a customer orders from the Web site, fulfillment will be handled by a local dealer, who will be credited with the sale.

An unresolved issue is pricing of items. Dealers are allowed to mark up prices to whatever the local market will bear, but the Web site offers a standard price list.

VW has just begun to offer dealers a one-page home page with its own domain address and links from the VW site at no cost, or a six-page site for $65 a month. Shafer said more than 150 dealers had taken advantage of the program even before the company's recent launch of an aggressive recruitment effort.

Shafer also said VW's field force, as well as area executives who work with dealers every day, support the company's online efforts and have been doing a lot of hand-holding.

Guildford Motors, a VW and Audi dealership outside Vancouver, B.C., was not concerned about losing sales. "If people are interested in the product--which isn't cheap anymore--they certainly want to touch, taste, and feel it before they spend," said Peter Schluter, leasing manager and Webmaster. "With the Web, they can do their homework. By the time they come in, they're not customers anymore, they're prospects." The goal for the parts catalog, which is about to enter a prototype phase, is to enable customers and dealers to locate the part they need, find out which dealership has it, order the item, and pay for it.

"VW has a higher proportion of do-it-yourselfers," explained Shafer, adding that parts is a $400-million-a-year business for Volkswagen of America. "The customer area of the parts catalog will probably be a subset of the Web-based dealer catalog." The Web is part of VW's plan to phase out legacy systems by 1998, including a mainframe and a proprietary communications network for dealers. "Everything will become Net-centric, Web-enabled," said Shafer.

Forrester's Bluestein said that companies that create cross-departmental teams from sales, marketing, IT, and business development to manage Web commerce will fare better on the Internet.

Shafer agreed, noting that "development of our site was done with the coordination of IT, marketing, and a group from the advertising agencies." VW started a Web site in August 1995, and an Audi site was launched a year ago. The VW site gets more than 12,000 visitors a day and Audi about 4,000. Shafer said the company can trace at least 300 car sales to contacts made on the Web site, ranking the Net behind only television for generating sales leads. The site's hardware and commerce capabilities are being upgraded this month.

The site runs on Netscape Suite Spot with an Oracle database. Hardware includes two Sun SPARC servers, two Digital Equipment Alpha servers, and three Intel servers. When the parts application is launched, information will be delivered in Adobe Portable Document Format. The payment system is from CyberCash and will comply with the Secure Electronic Transactions standard.

The car company wants to avoid competing with its dealers.

-- Ron 'Coyote' Lussier /\_/\ ____ Chaco Communications (408) 865-0657 ( ) \ _/__ 10164 Parkwood Drive #8 coyote@chaco.com \ / \X / Cupertino, CA 95014-1533 (1990 VW Westfalia Camper) \_/ \/ http://www.chaco.com/~coyote


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