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CSA Live from eTail Boston: CarMax disrupts operations for omnichannel success

The nation’s largest used car retailer is not resting on its laurels as it adapts to today’s customers.

In a morning keynote address at eTail Boston 2019, Jim Lyski, chief marketing officer of CarMax, explained how the used car retailer is actually using its market-leading position to its advantage in executing a major omnichannel disruption strategy.

“Twenty years of success is no guarantee for success tomorrow,” Lyski stated. “It’s hardest to disrupt yourself at the top. But at the top, you have more resources than the disruptors. Play offense.”

To that end, CarMax, which has enjoyed large-scale success since initially being spun off from Circuit City in 1994, initially decided to overhaul itself to become an omnichannel retailer in 2014.

“Consumers were no longer comparing retailers in categories,” said Lyski. “They were comparing the best experiences across all brands. We were being measured against favored brands like Amazon and Apple.”

CarMax realized that for most consumers, purchasing an auto is a considered, non-linear process that may begin online and then start and stop across different channels for weeks or even months. With 90% of CarMax customers initiating their purchase online, the retailer designed an omnichannel innovation model around three key tenets of “build, speed, seamless.”

To build the foundation for innovation, CarMax aligned its organization by taking the senior executive team on a “digital safari” to Silicon Valley, where they met with numerous technology companies. Beyond seeing the companies’ solutions, executives were also able to discover how they are engaging today’s constantly connected, omnipresent customers – with one-to-one personalization enabled by data.

After obtaining buy-in across the organization, CarMax then ensured it could develop with the necessary speed by creating collaborative, cross-functional product teams that were co-located in two warehouses set up as office spaces without cubicle walls.

“If you wait till you perfect your product, you’re behind the innovation curve,” said Lyski. “We use an agile development model where teams are constantly iterating. Most of the experiments they do are designed to fail. You learn a lot more from failure than success.”

As an example, CarMax initially launched a home delivery pilot in North Carolina using a one-hour process involving four employees that the retailer knew it could not effectively scale. However, based on learnings from the pilot, it has been enable to streamline delivery down to a 15-minute process only requiring two employees to drop off the customer’s car. Delivery is now available in several states and the company anticipates having this new buying experience available to the majority of customers by February 2020.

Lyski also urged attendees to be willing to replace legacy systems. CarMax is replatforming for omnichannel operations, removing technology which in some cases has been in place since 1994. Over a period of 18 months, CarMax cleaned up its data and moved it to the cloud. The retailer also deployed a new cloud-based, real-time CRM system based on a customized Salesforce platform and launched an online customer hub that lets customers perform most of their paperwork online before visiting a store.

“Pieced-together platforms will never create a truly seamless experience,” said Lyski. “Don’t be afraid to rebuild.”
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