Is E-Commerce The Aftermarket’s Holy Grail?

E-commerce, which virtually exploded onto the market in the early ’90s, is expected to reach $11 billion this year and grow to almost $50 billion by 2020, according to a report by OC&C Strategy Consultants. Successfully embraced by mainstream e-tailers like Amazon and eBay, e-commerce is just now taking hold in the automotive aftermarket as jobbers begin to explore the potential of this burgeoning medium.
“E-commerce has aided us in managing our growth here,” says Randy Klassen of Grandwest Enterprises Inc., of Saskatoon, Saskatchewan. “It’s just another way for customers to get in touch with us. We do a lot of our business over the phone and we get fax orders in as well, and this is just another way for customers to check stock, get pricing, and place their orders.”
Grandwest Enterprises is the largest wholesale distributor of automotive and truck accessories in Canada, and has been growing its business for over 30 years. It uses the Rinax X4 database management system, and added Rinax’s e-commerce solution about a year and a half ago. “One of the nice things about the system is the fact that the backbone to our system is Rinax X4, so when we added the e-commerce component it was all integrated, making the system efficient and seamless,” explains Klassen.
The OC&C study estimated the value of the online retail export market by analyzing 2011 to 2013 search volumes from across the world for retailers based in six of the biggest e-commerce markets. These markets, including the U.K., U.S., Germany, the Nordics, the Netherlands, and France, make up half of current global e-commerce volumes. The study determined that the retail sector is becoming increasingly global and interconnected as trade between countries grows exponentially.
“We believe that we have parts here that could be of interest to people in other parts of the world, and the e-store gives us the opportunity to market to them,” explains Joe Elias of Norpine Auto Supply, in La Crete, Alberta. Norpine Auto Supply is currently using the Rinax X4 management software system.
The latest research also revealed that international consumers have a growing appetite for foreign goods and consistently use search tools to learn more about international brands. More specifically, OC&C’s analysis found that international customers are turning to North America for entertainment, electronics, fashion, and general merchandise. Brazil has demonstrated the most growth in international searches for North American retailers at 42%, followed by Australia (39%), Mexico (38%), and Italy (37%).
Leading online retailers such as eBay and Amazon have had significant e-commerce market share across the largest international markets over the last several years, and reported that more than 50% of their sales are already coming from overseas.
“I think it’s crazy for any retailer to not consider the online market,” says Guy Tortalano of Uducat.com Corporation, an e-store development company based in Montreal. “The costs are considerably better when compared to hiring an employee. There is no way it’s going to cost you an employee salary to put up a website.”
“I think there is a great deal of opportunity for the automotive aftermarket for sales to other countries. When you stop and take a look at all the American-made car clubs all over the world and the current difficulties they experience getting parts, there is a great deal of potential for someone to tap into this market with an automotive e-commerce site,” adds Tortalano. “I don’t think anybody has gone after this market yet because of the size of it, or maybe it’s a question of, is there an audience that would use it? But there is an old saying, ‘Build it and they will come,” and I think that applies here.”
An estimated $3.7 billion in automotive parts and related products were sold via e-commerce in 2012, and online sales to consumers are expected to grow at a 15% compounded annual rate through 2018, according to a study commissioned by the Automotive Aftermarket Suppliers Association (AASA).
Internet-enabled (e-commerce) transactions are growing at exponential rates because of the convenience and efficiency of online ordering, and the wealth of information available for consumers.
“With Rinax e-commerce, our customers can easily view pictures of products, instantly get detailed specifications and product information, and easily place orders online,” notes Klassen.
Rinax offers two e-commerce solutions depending upon the market that you serve. For wholesale and retail distributors serving a variety of vertical markets, Rinax offers a comprehensive, feature-rich e-commerce front-end application, fully integrated with Rinax X4 point-of-sale, including advanced product search, order confirmation, session summary, wholesale (charge to account) and/or retail (credit card) transactions, shopper’s order status, save shopping cart, administrative site management, and more.
“E-commerce represents one of the fastest growing sales channels for the automotive parts market, yet many distributors and jobbers don’t know how to get started or believe they don’t have access to the tools needed to compete in this marketplace,” says Scott Thompson, vice-president, automotive e-commerce for Epicor. “Our new, low-cost Epicor e-commerce service helps businesses quickly eliminate the barriers to selling to consumers online by establishing Web-based stores with world-class functionality and parts information tools.”
Epicor’s e-commerce Store Development Service is a turnkey e-commerce website service that helps automotive replacement parts distributors and jobbers sell directly to consumers via the Internet. The new e-commerce service supports wholesalers with the launch of consumer-oriented e-commerce sites – in English, Spanish, or French – in as little as two weeks.
Epicor e-commerce service helps distributors and jobbers compete for consumer sales through functionally rich, custom-branded e-commerce sites that can be integrated with many existing business management software solutions. The new sites are powered by Epicor’s PartExpert electronic catalogue, which can provide real-time part availability and pricing information for multiple selling locations for the parts distributor. Each site features a secure shopping cart that accepts credit card payments via PayPal or Authorize.net. All required technical support is provided by Epicor.
“Users can customize their sites with company logos, photos, and text. The site administrator can also configure their PartExpert electronic catalogue to display available products in preferred order by brand, price, or other variable. The online stores also enable the business to capture and track customer history and key account information. Shipping costs and taxes can be automatically calculated and added to each order, as specified by the site administrator,” adds Thompson.
Epicor Parts Network comprises the Epicor Parts Network B2B eStore (formerly Internet AutoPart), Epicor Integrated Service Estimator (ISE) parts and labour estimating solution, and cloud-based Epicor Parts Network (formerly AConneX) parts trading solution. Together these e-commerce tools connect approximately 26,000 auto parts distributor and jobber locations and more than 170,000 registered aftermarket service provider and dealership users.
Leading online retailers such as eBay and Amazon have had significant e-commerce market share across the largest international markets over the last several years, and reported that more than 50% of their sales are already coming from overseas.
“It’s not surprising that our analysis suggests that the largest, most popular U.S. retailers have a concentrated presence overseas. What is surprising is that for the first time our research reve
als that smaller U.S. online pureplay retailers, such as Etsy and Snapfish, are demonstrating rapid international growth; Etsy has now reached the Top 10 most sought-out U.S. retailers based on international searches,” says Rambaut Fairley at OC&C Strategy Consultants. “This highlights the growing importance of the international opportunity, and in order for North American retailers to keep pace with their competitors they all need to be thinking about growing their international customer base.”
OC&C’s research has determined that U.S. retailers, unlike many of their overseas peers, are leading the way in successfully internationalizing their e-commerce sites. Forty percent of U.S. e-commerce brands have reported reaching more than 50 countries with their goods and services, and another 40% have designed their websites to specifically target Spanish-speaking and other local language customers.
By the end of the decade, North American retailers are expected to see significant volume coming from international sales, and OC&C’s analysis reveals important insights about the growth opportunity for international delivery between countries and the importance of creating a seamless shopping experience. In order for North American brands to take advantage of the global opportunity they must focus on internationalizing their websites with multi-currency shopping, a broader variety of payment options, and multilingual support.
In addition, by 2017, it’s expected that a quarter of all online sales will be made from a mobile device. Fifty-eight percent of adults have said they browse then buy online, and as little as a $5 price cut can influence them to choose a site like Amazon over buying direct from the retailer. And sometimes they don’t even wait to get home, making their mobile purchase right there in the store.
This year, retailers are beginning to see a tipping point where adapting to the competition from online retailers becomes mission-critical, as quick shipping and pricing pressure remove the barrier between in-store and online purchases. Retailers will need to invest more in their mobile apps, but also focus on creating a great in-store experience so customers won’t be tempted to buy elsewhere or online.