Aftermarket Business World – Technology Commentary
Author: Scott Luckett, MAAP
Vice President, Industry Strategy for GCommerce, Inc.
If you’ve follow this column for the past several months you might get the idea that everyone is selling to everyone else online ... and those who aren’t are doomed. But, that’s not exactly true. The winners and losers in the age of digital distribution will be distinguished by “what” they sell as much as “how” they sell.
We recently noted the relaunch of the Amazon B2B venture called Amazon Business (https://www.youtube.com/watch?v=uzuLk28OiKY). In this iteration, they claim that “hundreds of millions of products” will be available with free two-day shipping on orders of $49 or more and business features including purchase order management and work flows. With that many products it would be easy to conclude they will be equally successful across all categories. But, not all categories are created equal. And that is the first indication of who in the auto care industry will be most threatened by the emergence of this B2B juggernaut.
Traditional automotive and light truck parts have several unique qualities that amount to defensive castle walls around the current channels of distribution. Same-hour delivery requirements, vast applications parts catalogs and field representation are the required characteristics of automotive product distribution. The most successful parts brands invest in factory sales representation or knowledgeable rep agencies. Further back-up and product support is often available through telephone and online technical call centers. Installation instructions, product marketing collateral and comprehensive application fitment catalogs are all part of the defensive strategies full service suppliers must support to market effectively to the service professional or avid do-it-yourselfer. Annually, distributors and retailers spend millions promoting their brands and creating customer loyalty. Taken together, these programs have served to set apart tradition hard parts and service categories from most other products online.
Amazon, and most pure-play online distributors, are poorly suited to compete in product categories where delivery time is critical, proper application fitment is essential and a depth of technical support and product expertise is valued. Call most traditional parts categories – winners.
When you think about what automotive categories lend themselves to online commerce by a generalist like Amazon or eBay, it’s logical to think of those with lower timeliness of delivery requirements, non-application parts, and less complex products with lower needs for technical support – in short, commodities. Look around an automotive service shop or collision repair center and you’ll see the storeroom is full of consumables, shop supplies, tools and light application products (lighting, fuses, wipers, etc). Products that are consumed daily in hundreds of thousands of locations and replenished at regular intervals amount to low-hanging fruit for online commerce. When was the last time a warranty claim was submitted on a roll of masking tape or box of sandpaper? How much technical support is need for the shop rags or brake fluid? It seems that the paint and body equipment segment (PBES) and many tool and equipment (T&E) categories are vulnerable to have online predators pick-off sales to customers who are looking to save on products that they order every week. Because these distributors may choose to put up resistance, we won’t call them “losers” – but it’s fair to call PBES and T&E – vulnerable.
If you own or distribute a product category where 30-minute delivery is not critical, technical support is not expected and customers can easily identify the product without a phonebook-sized catalog, then you need to mount a defense against the online competition. Whether you have felt it yet or not, your product sales are ripe for picking by those who offer the convenience of online ordering any time of day at prices that are competitive with basic business services like buyer authentication and purchase order management.
How do you defend against online competition that would skim off some of your most lucrative product categories – consumables and commodities? Get online and offer your customers the same convenience in ordering as the etailers and win with better service. There are some very successful examples amongthe leading regional chains in PBES and T&E. Keep a list of the products stocked by your customer online so they can assemble a replenishment order in minutes. Don’t overlook the digital assets and regulatory compliance requirements. Maintain the library of (electronic) Safety Data Sheets and synchronize it with the products your customer has bought from you. And equip your team with complete product knowledge and expertise. Keeping up with new products can be challenging. But services like PBEPRO (www.pbepro.com) have thousands of videos and technical spec sheets to ensure your associates remain a knowledgeable and trusted resource to your customers.
Some product categories are more exposed than others in the age of Google Search and Amazon Business. But a focus on customer needs and solid business principals can mount an effective defense and against those who are experts in no particular category. You are the experts in your chosen categories and your customers would rather buy from you. Meet them online with the ease of shopping and convenience they seek and aftermarket businesses in all categories can be winners.