Auto Service World
Feature   November 1, 2014   by Steve Pawlett

Riding The E-tailing Wave

This Low Risk Sales Opportunity Is Exploding

Back in the conventional days of aftermarket auto parts retailing, if a jobber wanted to expand sales he had to either expand his existing store or add additional stores. However, both of these options come with considerable investment and considerable risk. Fast-forward to today’s retail world, and jobbers now have the option of expanding sales through e-tailing, which offers a lower risk opportunity to increase sales targets without over-leveraging the company’s assets.
The rapidly expanding e-tailing market in North America is currently estimated to be worth $11 billion and is expected to grow to $50 billion by 2020. Some 85% of consumers surveyed in a recent study commissioned by the Auto Care Association now use the Internet to conduct research specific to automotive replacement parts. Of those, almost 40% conduct online research either “always” or “frequently” when purchasing automotive replacement parts.
According to the research data, approximately 82% of these consumers research automotive replacement parts online, but purchase the parts somewhere other than the Internet. The reverse is true of younger respondents, however: they are more likely to conduct in-store research and then purchase online, perhaps through a mobile device. In short, it appears that online consumers are using the Internet to determine the best available price or fair prices for replacement parts.
“Today, e-tailing offers a lower-risk opportunity to increase sales targets without over-leveraging the assets of the company,” explains Al Neal, vice-president of sales, MAM Software Inc. “There are several tools available for a jobber to profitably grow their company without the expense or limitations of brick and mortar. The first step is understanding the marketplace and what options are available.
“Offering a consumer website was once out of reach for most jobbers, as the investment could be in the six-figure range to develop and manage a site. Even worse would be a low-budget site that does more harm than good by making the ordering process cumbersome and costing the jobber goodwill. Today, leading software companies offer a consumer website option to lower the cost of going to market and provide the jobber with the tools to be successful. [However,] when selecting a software provider to partner with, make sure you perform proper due diligence, as not all solutions are created equal. A poorly developed solution would waste your opportunity and severely underperform,” advises Neal.
“Today’s POS/management systems are very mature, as most quality systems have been around in small businesses (under $50 million in revenue) for over 30 years. The personnel in these businesses are also a more sophisticated group. They’ve found new ways to manipulate their data, utilizing spreadsheets created with data feeds to enhance their POS/management system even more. Then, along comes the Internet. Now they can share product info, sales data, and administrative functions and information with hundreds or thousands of customers and businesses instantly,” says Jim Franco, CEO Autologue Computer Systems Inc.
“For example, our e-PartConnection is a fast and easy-to-use online ordering tool for jobber wholesale and retail customers, featuring automotive year-make-and-model parts lookup, stock check and stock order capabilities, and favourite parts lists. It connects directly to your POS/Management system, in real time, to provide quantity and pricing information, then prints an invoice directly through your system. Our e-PaperlessOffice gives the customer the ability to view invoices, statements, credits received, and signatures that have been captured, as well as current balances and the ability to reconcile invoices to their statement. It even gives your customers the ability to pay their bill online. With our e-DeliveryManagement, jobbers can monitor delivery drivers’ activity and keep them accountable. Additionally, your customers can view the time an order was placed, the time it was sent out for delivery and the time it was delivered. The drivers can use hand-held 7″ tablets to capture the customers’ signatures. This proof of delivery goes directly to e-PaperlessOffice,” explains Franco.
“B2C e-tailing is indeed growing at a rapid rate, particularly in certain categories such as filters, ignition, ride control, wipers, and brakes. But it’s important for jobbers to remember that, while this opportunity is indeed promising, a much larger percentage of online sales growth is coming through the traditional channels – from the professional service provider, who is most likely sourcing parts through their shop management system and a complementary solution like the Epicor Parts Network (formerly Internet AutoParts) or WHI,” explains Scott Thompson, vice-president, automotive, retail distribution group, Epicor.
“My advice to jobbers is not to think of e-tailing as being limited only to consumers, because if you’re not connected electronically to your shop accounts, you’re putting yourself at a significant competitive disadvantage. Once you establish this capability with high-volume service providers, it’s then time to start thinking about your B2C e-tailing strategy. The good news is that both the time and expense requirements of creating a transactional B2C website have dropped dramatically. Becoming an eBay Motors and/or Amazon reseller has never been easier, thanks to automated solutions like Epicor ListingExpert. And if you want to develop your own custom branded e-commerce website, we can work with you to launch a template site with full transactional capability and e-cataloguing in a matter of weeks,” adds Thompson.
The Auto Care Association e-tailing study confirms that the largest portion of the e-tailing market for replacement parts is the professional installer segment. This is due to the overall size of the professional installer market compared to the smaller consumer/DIY portion. In addition, professional installers purchase a slightly different mix of products, which results in a higher average price/cost per part, and therefore a higher dollar volume.
“Jobbers need to understand the tools that end users are utilizing today, and whatever they are using, the jobber has to be able to accept those feeds to bring the buyer and seller together. The jobber’s number-one goal has to be selecting technology providers that can give them the broadest connectivity across the board to platforms the end users are using,” explains DST, Inc. president Stan Gowisnock.
According to the Report, over two-thirds of professional installers are “highly likely” to use publicly accessible online sources to research replacement parts (brake components, wipers, filters, etc.). This is a much higher percentage than other types of automotive aftermarket products they may purchase, for themselves or their shop (such as accessories, tools and/or shop equipment). Typically installers are using e-tailing sites to research product availability, pricing, warranty information, and product specifications/information.
Approximately 6% of automotive replacement parts are purchased through “publicly accessible online sources” – otherwise known as e-tailing. Based on the $104B in automotive replacement parts sales to consumers and professional installers in 2013, this yields a total e-tail market for automotive replacement parts of approximately $6.0B in end-user/consumer dollars.
“When deploying a retail website, the first consideration should be whether you want to further your company brand or adopt a strategy of anonymity,” explains Neal. “Branding your website with your company name and logo has its benefits. It can give your site credibility, as consumers in the local area will recognize it as a reputable business that they are familiar with. It also allows the option for loc
al consumers to shop online and select ‘store pick-up’ as an option to avoid freight. It may translate into fewer people walking in your door (requiring counterperson service), while maintaining or growing your retail sales. Simply put: more sales without a higher payroll.”
On the other hand, creating a website with a different brand would allow a jobber to sell to the retail customer without his wholesale customers identifying him as the seller. Many shops view retail sales as competition for their services and frown upon jobbers that aggressively pursue that business. “The anonymity of a different brand on the website protects your wholesale trade and opens up a world of possibilities for retail sales within your local market and across the country,” adds Neal.
“The Web allows the shopper to be unaware of whether you are a big or small business. No end user typically knows who you are,” adds Gowisnock. “The problem the jobber has is that, to be on the e-tailing side, on the traditional B to C side, you need to spend a lot of money and time and you need to have dedication if you are going to compete against the big boys.”
DST, Inc. recently announced it has partnered with its sister company, Identifix, to enhance Identifix’s Direct-Hit online diagnostic tool by allowing repair technicians to electronically order parts from their chosen supplier with just a click of a button. With this new integration, Identifix subscribers can now get live visibility into parts warehouses, parts retailers, and distribution centres, and place orders directly into their preferred parts suppliers’ business systems for immediate pick-up and/or delivery.
“Direct-Hit users have always been able to see the original equipment manufacturer equivalent part number within Direct Quote, which is Direct-Hit’s estimating feature. By integrating DST’s Gateway with Direct-Hit, these repair technicians are now able to seamlessly search DST licensed parts suppliers for any parts that work for the repair. Direct-Hit users choose all of the parts suppliers they would like to purchase their parts from, and the new system queries those suppliers in real time, allowing users to find and quickly order the right part best suited for the repair,” explains Gowisnock.
“Everyone has heard the saying, ‘Content is king.’ This is absolutely true in the B2B and B2C e-commerce channels – if you don’t have a high-quality catalogue integrated with your e-commerce solution, you are most likely leaving sales on the table and may in fact be alienating potential long-term customers. The catalogue is the engine that drives e-Commerce growth in the automotive space. That’s why leading national e-commerce sites like eBay and others use content from Epicor,” says Thompson.
“B2C e-tailing is different,” he continues. “We feel it’s important to focus on this business opportunity as a separate and distinct part of your operation, because the online consumer’s needs and expectations are far different from those of professional installers and walk-in DIYers. Growing your B2C e-commerce business will require consistent, sustained attention to what is and isn’t working, and it’s easy to fall into a trap where you’ve dropped your margins simply to gain a sale. There’s also a different service and delivery model in the B2C space that requires you to set aside resources and processes in order to be successful.”
All of the options above require time and money – possibly, more than a jobber would like to devote to them. But compared to the alternative of building new locations, the investment requirements are significantly less and the risk is almost non-existent.
According to the Auto Care survey, not unexpectedly, price and availability frequently drive the decision to purchase via e-tail versus in-store. When asked to rank the top benefit of purchasing parts online, saving money was cited most often, followed by the ability to compare pricing and the availability of a bigger selection. Getting the right part has traditionally been a barrier for e-tailing, but that barrier is eroding due to an influx of new and improved online/mobile apps. Now consumers can use their plate number or VIN to get the right part. This new option has virtually taken the risk out of buying online.
“Jobbers need to decide where they want to play – where can they get the most bang for their buck – and then build a strategy for that effort. Whether it is to invest time and money into a branded website or pursue an opportunity as a fulfilment house to well-known sites, it is best to invest mindshare into the opportunities and make each action deliberate and planned. Throwing a sub-par website on the Internet or listing parts on eBay at less than competitive prices will surely not produce the desired results,” advises Neal.
Jobbers who take the time to understand their marketplace and carefully evaluate all online options available to them are the ones who will be in the best position to successfully ride the e-tailing wave, all the way to the bank.

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