Auto Service World
Feature   November 25, 2015   by Steve Pawlett

E-tailing A Growing Sales Opportunity For Jobbers


If your company doesn’t have a significant online presence, you’re missing an important growth opportunity. The automotive aftermarket’s fastest growing sales channel, e-tailing, is expanding at such a fast rate that many industry experts are predicting e-tailing revenue will double by 2018.
This online growth is expected to dramatically outperform brick-and-mortar automotive aftermarket sales growth for the foreseeable future. In the general retail space, e-commerce has become very sophisticated since retailers started emphasizing that sales channel in the late 1990s. After experiencing double-digit growth for several years, e-commerce now accounts for 7% of all retail transactions, and is showing no sign of slowing down.
“The pace of growth in the online market for aftermarket auto parts has been strong for several years now, and there is no end in sight,” says Rinax Computer Systems Ltd. president Jerry Fugina. “Our customers have had a lot of success using online ordering. It’s not unusual for them to tell us that 30 to 40% of their wholesale business is done online and is growing.”

Adds Autologue Computer Systems CEO Jim Franco, “In my opinion, B2C is growing more rapidly than B2B. The reason is that online shopping is very popular and online auto parts sales are falling right into that.”
According to Scott Thompson, vice-president, automotive, analytics and content, Epicor Americas, “It’s difficult to quantify the growth of B2C e-commerce due to the sheer number of parts resellers who are now utilizing this channel in one way or another. There’s no question, however, that major players such as Amazon.com and eBay Motors continue to experience robust growth. At the same time, we’re seeing a steady increase in the number of independent wholesalers who have come to us for assistance in establishing custom e-stores.”
The automotive aftermarket’s overall online sales have now caught up with that of general retail. And to some extent, their customers are bringing perceptions from their experience with general online retailing with them. However, research shows that automotive aftermarket customers look for different things in their online experience. These include uniform parts reference; detailed product information: the touch-and-feel dynamic; and a learning component that makes the face-to-face customer experience more significant. It’s these customer expectations that make the online auto parts shopping experience unique, and keep brick-and-mortar stores a relevant part of the buying experience.
“It’s extremely important for jobbers to have an online presence in today’s market,” continues Thompson. “Research shows that even in cases when consumers ultimately purchase from a brick-and-mortar location, they are highly likely to have begun their research on the Web. It’s critical for jobbers to be represented in that process – certainly as important as it was in past years to have your business listed in the phone book. At the very least, it can be a powerful branding tool, but many small and mid-size jobbers have found that it can also drive sales. A fully functional online store is now well within the budget of almost any jobber or distributor.”
Fugina adds, “It’s hard to imagine doing business today in almost any market without an online presence. It could be as simple as having a website. Websites today replace the hardcopy brochures and flyers of yesterday. They’re more up to date, pack more of a punch, reach more people, and can be less costly to produce.
“Taking your website to the next level by having an online ordering tool integrated with it can really make a huge difference for most jobbers. It not only helps keep existing customers happy and enables sales growth with them, but it’s a powerful tool for attracting new customers. More than that, online ordering is great for reducing costs and improving efficiencies. Order processing is significantly streamlined with online ordering tools, reducing the manpower and overhead associated with receiving and processing orders.”
E-commerce continues to accelerate in the automotive aftermarket industry. New research shows that 56% of online automotive parts and accessories shoppers are making their purchases online – an 8% increase over the previous year.
The study also indicates that consumers are combining online and in-store channels for an “omnichannel” shopping experience. Omnichannel is when shoppers seamlessly shift between mobile, online, and in-store resources to research, purchase, pick up, and return their items.
The findings are from the annual What’s Driving The Automotive Parts Online Shopper study, which was conducted for UPS by comScore. The study was administered to U.S. online automotive parts and accessories shoppers to evaluate their habits from pre-purchase through post-delivery.
The UPS study reveals how shoppers have become more sophisticated and mobile while staying connected to their local auto parts retailer. Research suggests consumers want a seamless experience from their local auto parts supplier, whether a large chain or local independent, across websites and apps, email, and physical store locations.
According to this study, online comparison shopping has increased 12% since 2014, with 95% of online automotive aftermarket consumers now comparing products and prices before they buy. A majority (63%) use online coupons, and 52% are more likely to shop with a retailer if they receive email offers with discounts.
Shifts in purchasing behaviour are also reflected in the role of the store. Online shoppers buying auto parts use ship-to-store 55% of the time, which is a 14% increase from the prior year, as part of a growing trend toward increased convenience and no-cost ship-to-store pricing. An additional 10% of consumers (86%) strongly prefer to return items to a store compared to the prior year.
The automotive market is changing quickly, and in order to stay competitive jobbers must develop the ability to provide an excellent e-tailing experience as part of their normal business offering. This includes detailed product descriptions with good photography, shipping options with opportunities to pick up items at a brick-and-mortar store, a calculator that tallies all transactional costs, online package tracking and visibility, and a competitive returns policy.
“Never forget that in the online environment, ‘content is king.’ That means your parts information and, more specifically, the manner in which it is accessible through your website, will play a huge part in delivering a positive customer experience. Make sure your online e-catalogue is truly best-in-class,” advises Thompson.
“My advice to jobbers is that almost everyone has ordered something online by now. People are getting used to it and are expecting it from the suppliers they do business with; the status quo isn’t going to work anymore. Start with a website and keep it simple and easy to navigate,” advises Fugina. “It should have the basic stuff like contact information, location, business hours, and products carried. Have a good balance of pictures, graphics, and text. Something basic can be done very inexpensively and if need be can be enhanced later.”
“The next step would be to integrate an online ordering tool with your website. The best bang for the buck comes with systems that integrate the online ordering tool with a jobber’s in-house inventory, giving the customer real-time inventory and pricing and allowing a pick-ticket to be generated from the online order in real time. Entry-level, rudimentary systems simply produce an email advice of an order, but require more overhead to process each order, giving up a lot of efficiency and providing less information to the online customer,” adds Fugina.
“We know that most online shoppers want immediate gratification in the form of comprehensive, accurate information that is easily accessible. They are probably not going to give you a second chance if they can’t easily find the right information on your website,” explains Thompson. “In a physical store location, of course, customers will probably ask questions at the counter when, and if, they can’t find the answers on their own. In the online environment, they’ll simply go back to their search engine and try someone else’s online store. So, once again, having an industry leading e-catalogue is your most important selling tool. Many of their questions extend beyond vehicle make, model, and year, so once again the quality of your content – be it product images, technical bulletins, installation instructions, MSDS sheets, warranty details, vehicle specifications, and other information – must be available through your e-catalogue.
“Jobbers need to have a buying website,” adds Franco. “If they want to build their own website, that’s great, but get one that connects to their system and does online ordering. There are several companies like mine that can provide this with an online ordering suite for just a small monthly fee and transaction fee.”
“I also suggest to my jobbers that they not try to compete with the big box stores and auto stores, or anybody selling nationwide. Jobbers should develop a plan to have an online presence for their zone, whether it’s a two- to three-mile radius or a 20- to 30-mile radius.
They should use the concept of ‘Buy from me online and pick up at the store,’ or ‘Look online then come in to the store,’ or ‘Look online and have it delivered to you,’” explains Franco.
“The freight cost is really disruptive to the profit structure and the infrastructure to anybody that wants to think they can be an online provider,” adds Franco. “There’s a lot more cost and expense in just trying to be on the first page of Google Search. Then you’ve got to compete with the pricing that’s online, which is less then you normally sell it for. Then you have to be able to ship it and know where that shipment is and give good service to the customer and be able to take returns. I have seen people go broke trying to do this. If you are brick and mortar, just enhance your brick and mortar by owning your zone and market, and advertise in your area about how wonderful your online website service is, and you will enhance your sales volume.”
According to Fugina, “Traditional online automotive parts sales, especially wholesale, are for shops, installers, and dealerships, and they need real-time pricing, inventory availability, and fast delivery. It’s unlikely that companies like Amazon are going to have an immediate impact on that business. However, Amazon specifically is innovative and is now talking about delivery via drones, so who knows what they have up their sleeve. The lesson for the jobber is not to sit still, but to use the tools that are available now to create or improve their online presence to take advantage of this growing trend.
“Companies like Amazon and Rock Auto may even help promote the use and acceptance of online sales and help move the automotive aftermarket forward technologically, which would be a good thing,” adds Fugina.
“Both Amazon and eBay Motors have become major players in the parts marketplace. Any solution that offers increased choice and convenience will appeal to a certain segment of the buying public,” adds Thompson. “Will consumers start sourcing their own head gaskets, catalytic converters, or oxygen sensors because of these sales channels? Will repair providers allow consumers to purchase more products online and then bring them to their shops for installation? Probably in a very limited number of cases. For that reason, we believe the aftermarket is a much larger, longer-term opportunity in the B2B channel. Consumers will always need to rely on a trusted service provider, and that provider is more likely to source the corresponding parts from a connected wholesaler via an online channel.”
Online sales have been primarily targeted at DIYers or early adopters – people who can do some minor maintenance on their vehicles or are buying accessories for their cars. But the larger vehicle-owning population relies heavily on garages and physical retailers for their maintenance needs. How should jobbers engage these customers digitally?
Emerging business models hint at viable future scenarios. Currently, service aggregators such as Openbay (U.S.), RepairPal (U.S.), and WhoCanFixMyCar (U.K.) work somewhat like an Expedia or TripAdvisor for vehicle service, digitally connecting consumers with garages on the basis of location, needs, and estimated quotes. In the future, one can expect them to enable remote diagnosis of vehicles – as Openbay is piloting with a new app – so that the customer can pay online for service and parts. These websites have the capability of becoming parts aggregators as well with suppliers selling through them. They can become mediators between not only the customer and service centre, but the supplier and service centre as well, setting up their own closed, fully functional distribution channels.
Similarly, OEMs are looking to move their business further downstream. For example, BMW has set up online shops across digital marketplaces such as eBay and TMall. Other OEMs aren’t far behind. General Motors recently rolled out prognostic capabilities through OnStar, and it may not be far from introducing features such as the ability to make maintenance appointments from vehicles and even pay for services while on the go. The next decade will indeed be an exciting era for the aftermarket.