Thursday, July 7, 2011

AutoMD Negotiator

We have been following the rise of third-party repair sites (AutoMD, Driverside, RepairPal) with interest over the last couple of years. Looking at recent web traffic statistics, it appears that AutoMD is poised to unseat RepairPal as the leader in this space. According to Alexa, AutoMD’s web reach is up 7% in the last three months, while RepairPal’s is down 49% (perhaps they are running out of money for paid search advertising?). We also discussed a key leadership change within RepairPal in an earlier blog.

Recently has been actively promoting a new tool: the Negotiator. AutoMD claims that this service is the solution to consumers’ price shopping quandary: “We call shops and negotiate for you, so you won’t overpay for auto repair.” How the Negotiator works in a nutshell: The user enters his vehicle and repair information, receives quotes to his inbox, selects one and schedules an appointment – all without picking up the phone.

To find out more, we submitted a wheel bearing replacement for a 2000 Hyundai Sonata. In a few hours, we received three quotes for the repair in our inbox, all from independent shops or chains, ranging from $450 to $611:

For more data points, we entered three more repairs. After receiving more quotes back from the Negotiator, we decided to call the shops directly for quotes to see how they would compare. The table below tabulates the rather interesting results:

Three out of the eight quotes we received from the Negotiator were roughly equivalent to the quotes we received when we called the shops directly. The other five…weren’t. Below is a summary of our conversation with each shop:

We were unable to obtain quotes from three of the places we called; one seemed to be out of business, and the other two immediately informed us that they didn’t do the type of repair that we requested. For two more places, the price we received when we called was nowhere near the Negotiator quote. How do you get a quote for $850 when the part alone costs $1610? (we think the Negotiator requested a gasoline injector, not a diesel).

It appears that sometimes the Negotiator actually called the service provider directly (in the case of the chain franchise), but they never revealed that they were calling on behalf of AutoMD. Other times, it seems that they didn’t call at all, because surely they would have been told, as were we, that the shop didn’t perform those types of repairs. In those cases, the Negotiator may have used generic repair quotes from books and tables.

Confused by the results, we called up AutoMD pretending to be a shop. We asked how we could sign up to be considered for the Negotiator. As it turns out, there are no fees or surcharges for service providers that want to be listed on AutoMD. This means AutoMD (or US Auto Parts who really runs the show) is funding this tool themselves. This also means there is a call center somewhere scheduling repairs that is full of people who know nothing about cars. Furthermore, there are no requirements for service providers who wish to be listed. Shops are asked to provide basic information but there is no certification process, at least according to the person we spoke with.

When using the Negotiator, there are no selection criteria besides price – and sometimes the cheapest is the cheapest for a reason. When entering a repair request, the Negotiator doesn’t allow the user to restrict his search to certified providers or specify whether he would like genuine parts. There is no option to filter for providers that offer loaner vehicles or other conveniences, which are critical for those of us who only have one vehicle or who need Wi-Fi to check email when waiting for our vehicle during a workday.

The Negotiator claims to save users time and money, but the results of our phone calls suggest a need for caution. Without a robust process for collecting service provider information, how can the user be assured that the service provider selected by the Negotiator is a legitimate business? Based on our phone calls, the Negotiator also missed the boat on some crucial information; imagine a user’s frustration if he showed up to an appointment scheduled through the Negotiator, only to find that the selected service provider can’t perform the needed repair. Or, if the user’s repair was performed by someone who is unqualified and/or puts a junk part in his car. At the end of the day, finding the lowest price is not the same as finding the best value, but it seems the Negotiator is not programmed to understand this distinction.

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