The problem of panic buying in the aftermarket

Jobbers and warehouse distributors have fallen into a pattern where they’re ordering more than they need as supply chain constraints threaten the flow of goods, according to suppliers. But such moves are not needed if the right strategies are taken.

Panic buying has been a common sight since the start of the COVID-19 pandemic in March 2020, primarily on the retail side. Consumers snatched up everything from toilet paper to bottled water out of fear they wouldn’t be able to get their hands on any if they waited.

A similar mentality is playing out in the automotive aftermarket these days where industry retailers are ordering more than they need of certain products, confirmed Eric Ross, director of supply chain at Valvoline.

“I think that we have seen spots where that is occurring. There’s no doubt,” he said during a recent session of the Automotive Aftermarket Suppliers Association’s Supply Chain Webinar Series, Supply Chain Strategies to Meet Customer Meet/Fill Demand Requirements.

Ross was responding to a question asking if people are ordering more than normally out of fear of waiting too long for their next shipment. For example, were they ordering 30 of one item when they normally would order, say, 10?

“We have seen it. We’ve seen it now for several months,” he said. “Typically, it’s panic buying. It’s [a rationalization of], ‘I didn’t get my order on time last week. So I’m going to make sure that I got enough. Something’s coming up, and I feel it and I’m going to order more.’”

The issue is that one customer panic-buying means less for others when they need it, he pointed out.

If a customer is ordering too much of something of which there is plenty of stock, it’s up to the supplier representative to talk to the customer, calm their fears and show there’s no need for panic.

“I think having those discussions — showing them, allowing them to see what you’re able to do, what you’re capable of doing, reassuring them — [and] opening your books to them, showing them ‘Hey, this is what we got. We got enough for you. we’re fine. There’s no reason for you to need 10 this week when you could be ordering two for the next five weeks,’” he said. “I think, once again, being as honest and open with folks, sharing data, sharing that visibility solves a lot of those issues.”

It all comes down to communication, Ross emphasized. “You just you just need to be talking with your trading partners and understanding what the true need is and just execute.”