DealerSocket looks to independents with new DMS option

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Following an impressive streak of acquisition activity, DealerSocket says it will focus even deeper on independents in 2016 with the launch of a custom DMS offering for used-car retailers dubbed iDMS.

The move will see the company that built its name with CRM step into yet another arena of automotive retail as it continues to grow into one of the industry’s major software players.

“The goal is to own the desktop in a dealership,” explains Sam Rizek, director of sales and business development for Canada. “Our leadership team has stressed that we want to have to have solutions for every department, front to back.”

Independent DMS or iDMS will be born out of Finance Express (FEX) and Auto Star.

DealerSocket bought both independent DMS companies earlier this year and has set about merging the systems into a single offering.

iDMS is expected to launch in mid-2016 in the U.S. with Canada to follow.

Rizek says the program will combine the “best of both” elements from each offering. That includes the BHPH specialization of Auto Star and the strong technology platform offered by FEX.

Tier one and tier two used-car operations will be likely targets ahead of launch, though it sounds like the basic offering could also add functionality to even the smallest used-car operation.

“The current offering has a basic accounting system for smaller dealers that starts at $150 a month. That will not fly for the major independents that require a lot more functionality, but it allows smaller guys to get off of QuickBooks and Excel,” he says.

“The majority of independents in Canada are retailing 20 to 30 cars a month and they don’t have a DMS. There is huge potential here.”

In addition to another notch in the product suite, iDMS represents a further push into the used-car retailer space for DealerSocket.

Company co-founder and CEO Jonathan Ord says focus on the independent market started roughly two years ago. This past year saw the launch of a light version of its core CRM product marking its first entry in the space.

Roughly 1,500 used-car stores signed up right away leading the company to realize the potential in North America’s independent automotive market.

Talking to Ward’s Auto in December, Ord says he was surprised at the dollar amounts earned from non-franchise stores.

“We were thinking on average we’d have to go with a lower-feature functionality in our CRM, charging $400 to $600 a month. But many independent dealers look more and more like franchised dealers,” he explains.

“Our average billings for independent stores have been $1,300 a month. And they’re using two-and-a-half times the functionality we thought they would.”

Illustrative of the strategy’s potential came in November when, according to Rizek, DealerSocket signed up more independent dealerships than new-car stores.

“We saw the opportunity and aimed to capitalize on it. People thought we were crazy, but the numbers speak for themselves,” he adds.

With due respect to the likes of American Auto Exchange, FEX and Auto Star, the real headline deal for DealerSocket in 2015 was its purchase of Inventory+ from Dealertrack Technologies.

Finalized on Oct. 1, the $55 million transaction offered DealerSocket both a solid product and instant market share in the inventory management space. Its sale also paved the way for final approvals on Cox Automotive’s $4 billion purchase of Dealertrack.

Rizek says that unlike most acquisitions where an entity buys a company, this deal is for a specific product making it a little more complicated.

“We have to untangle the program from Dealertrack’s servers and systems. We were given six months to complete that and we are well on our way to that target,” he explains of the April deadline.

Dealersocket says it will relaunch the program for users once the separation is complete and stability is ensured.

Christian Hamaoka, DealerSocket's executive sales manager for Canada, says for the next six months, they will continue to sell Dealertrack’s legacy product AAX (one of the three building blocks for Inventory+ along with TradeTracker and eCarlist).

There are no plans to change the name from Inventory+ when it relaunches later this year. What will be different will be the push to independents as well as franchise stores with the system.

“Used dealers don’t get vehicles from the factory. They have to go out and find and fight for their inventory,” Rizek says.

“Inventory+ is part of our growing strategy of giving dealers all the tools they need to know when they are going out to acquire used vehicles. This program will be a perfect fit for independents and dovetail nicely with the suite we are creating for that market.”