Elon Musk has few things going on these days. SpaceX is launching the Crew Dragon and Tesla Model 3 price is lowered to 35,000 USD. However, the biggest innovation is that Model 3 can only be bought online.
To achieve these prices while remaining financially sustainable, Tesla is shifting sales worldwide to online only. You can now buy a Tesla in North America via your phone in about 1 minute, and that capability will soon be extended worldwide. We are also making it much easier to try out and return a Tesla, so that a test drive prior to purchase isn’t needed. You can now return a car within 7 days or 1,000 miles for a full refund. Quite literally, you could buy a Tesla, drive several hundred miles for a weekend road trip with friends and then return it for free. With the highest consumer satisfaction score of any car on the road, we are confident you will want to keep your Tesla.
Shifting all sales online, combined with other ongoing cost efficiencies, will enable us to lower all vehicle prices by about 6% on average, allowing us to achieve the $35,000 Model 3 price point earlier than we expected. Over the next few months, we will be winding down many of our stores, with a small number of stores in high-traffic locations remaining as galleries, showcases and Tesla information centers. The important thing for customers in the United States to understand is that, with online sales, anyone in any state can quickly and easily buy a Tesla.
Why is this important?
Silicon Valley model is based on disrupting. Disrupting in essence means doing something much better than competitors so customers switch to you. Easiest thing to disrupt is marketing and sales because they are the most neglected and they can be easily digitized and automated. Silicon Valley model is based on entering any industry which has weak marketing and sales (usually based on retail and one-on-one sales interactions), taking over the customer contact by offering a superior digital service, and then slowly taking over the complete industry. Once the customer is owned, it is only a matter of time when disruption spreads.
As an example, we can compare how we bought two decades ago and how we buy today. Books, hotels, travel, food, fashion, insurance, credits, music, films, and many other products do not include any one-on-one interactions (sales people) and are bought via digital content. Most of the businesses heavily based on one-on-one interactions are retracting and disappearing due to disruption.
Tesla uses the Silicon Valley model. It never allowed third party distributors and now it is going a step further and cancel its own retail points by directing customers online. This is enabled by an extremely strong Tesla brand. Strong brand is built with competitive values and a lot of content, and it does not rely on one-on-one sales interactions. Customers start to trust the brand and not individual sales people. The benefit of a strong brand is lower costs, higher control and higher flexibility.
While there have been many failed attempts to create mainstream sales of expensive and complex products (Alibaba car vending machine), companies like Tesla will never stop trying until eventually all marketing and sales is digitized and automated, and customer trust is switched from individual employees (sales) to brands (fully controlled company assets).
Every sales process can be digitized and automated and all sales people who do not follow this trend might find themselves as Willy Loman.
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