How a Retail phenomenon is impacting traditional automotive distribution
Consumers, today, have the technology and the desire to search for goods any time of day and on any one of several platforms. It’s not uncommon for a search to begin as a tweet or text message on a smart phone, followed up on a tablet and completed in a web browser for pick-up in the store. In other words, transactions that used to follow a single channel – on-line or off-line – are now a complex web of all channels of connectivity. Retailers refer to this phenomenon as omnichannel commerce and its importance to all aftermarket retailers and distributors cannot be overstated.
The customer is getting younger (think millennial) and has no loyalty to a brand that does not deliver a consistently rich and fulfilling shopping experience. If you think this doesn’t apply to you, remember that B2B transactions (the life blood of the aftermarket) are those that involve a B2C customer at work. Your customers are bringing their shopping habits from home into the workplace and they expect a similar shopping experience whether placing a replenishment stock order or searching for a single, hard-to-find part. The same drivers of omnichannel commerce in retail are influencing the behavior of commercial customers as well.
The Auto Care Association (www.autocare.org) recently published a first-of-its-kind study of the size and characteristics of eTailing in the traditional aftermarket. The study estimates that eTailing accounts for 6% of aftermarket volume at retail, or $6.1 billion in 2013, and that 55% of that volume was Installerpurchases and 45% was consumer purchases. The research went on to forecast the rate of growth in eTailing at 17% annually for the next several years. At that rate of growth eTailing will account for 20% of aftermarket volume and $28.8 billion within a decade.
Among the many insights found in the pages of this study one jumped out as a potential strategy for retailers and distributors who want to thrive in this disruptive environment. When asked why they purchased from an eTail site in the first place, consumers said price was the number one reason and commercial customers said price was number three, after ease of ordering and availability. One last point about growth: 50% of the commercial customers expect to increase their eTailing purchases (by anaverage of 20%). Only 10% of consumers projected they would increase their eTailing purchases.
That suggests that the largest share of eTailing volume (commercial accounts) expect to grow their online purchases fastest and price is NOT their number one motivator. Retail consumers flocked to the online environment early and quickly but the dramatic growth in eTailing will not be powered by consumers as much as by fleets, shops and other automotive professionals.
An informal survey of web sites of the leading WD’s and program groups found very few that could support an online transaction from anyone other than a commercial account with pre-established credit (login please). Consumers who find those sites by way of search results – no dice. Professionals in search of new sources of supply or product lines – no way. Why is it that the traditional aftermarket only wants to do business with people and companies they already know? Isn’t that a strategy for limiting growth to the rather anemic 3-4% organic that existing customers can deliver?
Meaningful growth can be found in online commerce that adapts to the multiple platforms that new customers may be using to find you. Product information and web pages that look great on your full-sized web site won’t work on a smart phone or tablet. Responsive web design and a well-conceived omnichannel strategy are required. And if commercial accounts are telling you that they plan to increase their eTailing spend and the ease of ordering and availability are the top criteria, it might make sense to redirect some marketing dollars into beefing up the integration between your online presence and the back-end business systems.
We’ll explore various aspects of on-line commerce and the digital aftermarket in future columns.
Scott Luckett, MAAP
Vice President, Industry Strategy