Digital Transformation in the Automotive Industry

Manufacturers and Digital Commerce Planning Workshops

In February of 2022, GCommerce was fortunate to participate in a gathering of the Dana Aftermarket Team for a Digital Transformation Workshop designed to help their team better understand the digital transformation and eCommerce trends in the auto parts aftermarket, so they could confidently engage customers and facilitate growth. Digital transformation is happening in the automotive industry now. Understanding and making the necessary moves it takes to stay current with the auto industry’s digital direction is paramount for continued growth and success.

Online Sales Growth Chart for Auto Parts - CAGR

According to Data from the Auto Care Association and AASA, Digital Commerce in the Auto Parts Aftermarket has been growing at a 19.24% Compound Annual Growth Rate (CAGR) since 2013, while brick and mortar business has been growing at a 2.54% CAGR over the same period.  Digital Commerce now represents 12% of total aftermarket sales, and studies show that 70%+ of end users are using digital channels to research prior to purchase.  Learning to navigate this changing and growing channel is imperative for auto parts manufacturers and distributors alike.

Benefits of Digital Commerce to Brand Owners include:

  • Improved Brand Equity through
    direct control of Online Product Content
  • Direct Influence over resale
    price; versus trying to police Minimum Advertised Price (MAP)
  • Infinite Aisles of Aftermarket
    Automotive Product for Customers; visibility to Distribution and Manufacturing
    Inventory
  • New Product Introduction for parts
    not yet stocked by Brick and Mortar outlets, which also provides proven sales
    history to promote stocking within the Supply Chain.
  • Direct feedback from Customers,
    which eliminates lag time and allows for better decisions.
  • Increased sales for Distribution
    partners through tools provided by Brand Owners

Internal speakers from Dana covered topics such as lead generation, Google, benchmarking, and digital diagnostics at the Digital Transformation Workshop.  Guest speakers covered Digital Trends in Industrial segments, Aftermarket Automotive Digital Commerce, product content, drop shipping/fulfillment, change management, and customer experience.  Digital Commerce touches many different operations within a manufacturer, and it is important to include them all.

Dana Digital Transformation Workshop Venn Diagram

Through this format, participants were able to provide valuable feedback so the strategy and tactics could be refined to best suit customer needs, and participants were given new tools to help them guide customers to success.  GCommerce was honored to be able to participate and provide input to the Dana team on automotive eCommerce trends, auto parts order fulfillment processes, and the role technology companies play in connecting manufacturers to buyers.

Digital Commerce is growing and changing, so it’s important to have a strategy and continue to refine that strategy.  Dana’s Digital Transformation Workshop did exactly that.  Kudos to the leadership of Dana!

The winds and waves are always on the side of the ablest navigators.  Every participant in the Dana Digital Transformation Workshop left as a more able navigator.

If you would like to organize an Automotive Digital Transformation Workshop like this for your company, and want to learn more about what Dana did, you may reach out to Beth Mooney, Senior Manager: Ecommerce & Marketing, beth.mooney@dana.com. If your company does decide to have such a workshop, GCommerce would like to contribute.  Please feel free to contact Rick Main, Chief Revenue Officer, rmain@gcommerceinc.com.

How Do You Sell Auto Parts on Walmart Marketplace?

How Do You Sell Auto Parts on Walmart Marketplace?

Learn How to Increase Revenue Selling Products Through Major Channels

Walmart logo used for marketplace

Walmart Marketplace and the Automotive Aftermarket: A Winning Combination

Walmart is a powerhouse in the retail market. Finding someone that’s never heard of Walmart, especially in the U.S., would be a difficult task, to say the least. Aftermarket auto parts is very much a growth industry and online auto parts stores are booming. In fact, we estimate that the aftermarket auto parts marketplaces will exceed $38 billion in revenue in 2022. Now if you could leverage the popularity of Walmart as well as the current growth of the aftermarket to sell your auto parts online, imagine the potential upside for your business. Learning how to sell auto parts on Walmart Marketplace is your first step.

In this blog, we will explain the advantages of selling auto parts on Walmart Marketplace and how it all works. We will be answering the below questions.

Why is Walmart an Important Retailer?

Walmart is the largest retailer in the world with 140 million unique visitors every week, to the 4,000+ store locations in the US. 90% of Americans live within 10 miles of a Walmart store. 19% of all spending was online in 2021. Their website is regarded as the front door to their stores and in the fiscal year, 2021 Walmart enjoyed 79% eCommerce growth.

What is Walmart Marketplace? What Does Walmart Market Place Do?

Walmart Marketplace is a live online inventory and ordering platform that puts millions of products and SKUs at the fingertips of 258.3 million adults in the US. It allows Walmart and independent online retailers to easily sell automotive products and other goods to their customers. Walmart.com provides the convenience and time-savings of letting customers choose how and where to shop – in the store, online for pick-up at the store, or free delivery to their front door within 2 days.

Half of the sales are sold by Walmart either from Walmart inventory or drop-shipped by direct suppliers. The other half of sales are sold by third-party resellers on the Walmart marketplace. This allows Walmart to offer the fastest moving products from their owned inventory, mid-velocity items online from Inventory or Drop Ship vendors, and the long tail SKU are sold online by 3P fulfillment partners. Products sold and filled by Walmart are first-party or 1P fulfillment. When products are sold on Marketplace but shipped by a reseller it’s called third party or 3P fulfillment.

warehouse distribution center

How do you sell auto parts on Walmart Marketplace? Are there qualifications you must meet?

It begins with complete product content that complies with the Walmart specification. Anyone selling auto parts is probably familiar with ACES and PIES as being the automotive standard on auto parts fitment and product details and content.

Walmart accepts ACES fitment catalog data files and requires a form of the PIES standard for product content. As a third-party marketplace seller, the seller is the merchant of record, payment is collected by Walmart and distributed to the seller weekly or biweekly. The seller is responsible for maintaining inventory, setting prices, and providing customer service.

How easy is it to connect to Walmart Marketplace?

Walmart supports both EDI messaging and API connectivity. Both EDI and API are the current gold standard of website connectivity between marketplaces and resellers. The requirements vary depending on 1P stocking, 1P drop ship, or 3P. Walmart carefully screens the qualifications of technology solution providers and maintains a list of approved solutions providers on their website, making it easy for new resellers to find multiple choices to connect to the Walmart Marketplace.

How do they manage inventory and products?

Walmart vendors and fulfillment partners send inventory files throughout the day. Files are limited to a 10,000 SKU max and must be separated by ship_from location. Net changes can be provided thru the day after a full refresh is supplied. Inventory data is typically sent via an EDI 846 file. The schedule of inventory updates varies by supplier and product category.

manufaturing illustration

What does Walmart charge? How do you collect payments?

When selling on Walmart Marketplace sellers pay no fees to list their products. A referral fee ranging between 8% and 15% based on the product category is assessed when a sale is made. Credit card bank fees are included in the referral fee. Referral fees are deducted from bi-weekly third-party payments. The Walmart Marketplace does provide an intuitive reporting system that allows you to break out your sales and fees by different date ranges and other value-added metrics.

How do the products get shipped? Who pays shipping charges?

Walmart aims to deliver 80% of orders in 2-days without expedited service. In the case of drop-ship fulfillment and third-party or 3P sales, the shipping charges are paid by Walmart.

How can GCommerce help?

distribution diagram
online ordering process diagram

It is important to have a certified third-party partner who can help navigate the complexities. GCommerce is the only approved Walmart Marketplace service provider that specializes in the automotive aftermarket and we have API and EDI connectivity in production. This will help expedite the setup process because our connections methods are already configured.

We also offer a network of automotive eCommerce fulfillment partners. GCommerce is the subject matter expert for all things eCommerce and operates the industry’s largest network of automotive trading partners, making us your one-stop shop for auto parts marketplace connectivity.

As the leader in aftermarket auto parts order management solutions, we understand how important full visibility is across the entire supply chain for you and your potential clients. Right now, supply chain issues are seriously affecting hundreds of thousands of auto part retailers, distributors, and manufacturers worldwide. With full supply chain visibility, you can see and maintain product availability and inventory levels across all points of that chain. This way if a part is available you will be able to find it for your client. If it isn’t available, you can say with confidence that it isn’t. GCommerce provides so much more than Walmart Marketplace connectivity. We help you connect your clients with the auto parts they need.

Webinar: Aftermarket eCommerce Strategies That Avoid Channel Conflict

Please join us Wednesday, February 16, 2:00 pm Eastern.

Learn about these important eCommerce strategies for manufacturers, brand owners and distributors that help avoid channel conflict. A link for the registration page for this free webinar is here.

Channel conflict tends to be one of the main concerns when a brand owner considers eCommerce and selling direct to consumer (DTC). Nobody wants to disrupt their distribution channels.

Online commerce in the automotive aftermarket is growing rapidly and brand owners don’t need to be left out. Learn how to navigate through channel conflict in this informative webinar scheduled for Wednesday, February 16, 2022 at 2:00 pm Eastern/11:00 am Pacific. There is no charge to register or attend.

Join panelists Rick Main of GCommerce, Johannes Crepon of PDM Automotive, Curt McDowell of NA Williams and moderator Jon Hedges of Hedges & Company on this informative webinar. These industry veterans will discuss strategies and business models that maximize sales from online customers without disrupting established channels of distribution.

On the webinar you’ll learn about:

  • The value and need for shop-able product content and media.
  • The need for a connected supply chain to deliver infinite aisles and product assortments.
  • The automation and collaboration needed to ensure fast and accurate eCommerce fulfillment.
  • Strategies for brands to capture online sales in cooperation with distribution, without channel conflict.

Registered attendees will also be able to submit questions in advance to the panelists to ensure an on-target presentation.

To register for this webinar, follow this link.

eCommerce Order Fulfillment in the Automotive Aftermarket

Steve Smith Walks Us Through the Value of the Endless Aisle

My name is Steven Smith and I’m the president, CEO, and board chairman of GCommerce Incorporated. We’ve been in the automotive aftermarket for 21 years and are the EDI connected supply chain solution for the entire North American automotive aftermarket. One of the biggest things that occurred, due to the pandemic, was this entire shift towards e-commerce. This is why it is important to discuss eCommerce order fulfillment in the automotive aftermarket now.

I have been in the industry for 35 years and 20 years ago no one would even be talking about online sales. But during covid, the online channel grew 33% which was an unforeseeable shift in our economy. 10 years from now the online channel will probably be among the largest channels of sales in the entire automotive aftermarket.

Steve Smith, CEO of GCommerce on the Value of Endless Aisles

How Did The Automotive Aftermarket Trend Continue to Grow Online?

We operate in all segments of the automotive aftermarket, including the heavy-duty market, SEMA, the traditional market, tools and equipment, and PBE. We have nearly 3,000 different companies that connect through GCommerce from Mexico to Canada. We’re seeing that eCommerce trend across every geography and every segment of the automotive aftermarket.

One of the biggest things we’ve done for our clients in the last 21 years is to implement what we call purchasing automation. We are removing paper from the transaction process, which is important for reducing back-office costs and improving efficiency. Along the way, we also saw a need for helping people with their inventory of auto parts and by filling in the gaps in the supply chain, we created The Endless Aisle of Inventory. This seemed like the logical next step for our business and yours.

Automated eCommerce Fulfillment is a Reality

We discovered several things we could help clients and partners with, like shipping and automated eCommerce fulfillment functionality. We would get questions all the time on: How do I fill an online order? And what we discovered was that eCommerce requires Distributors and Manufacturers working together to succeed.

In eCommerce you can only list for sale the product that you know is available. So a distributor is limited to the 300,000 parts they have in stock, for example. But if you combine their inventory with that of their manufacturers’ millions of parts, you are getting closer to boasting an endless automotive aftermarket inventory.

Interesting Stats On Endless Aftermarket Inventories

One very interesting statistic we found on an endless aisle inventory; we saw about a 5% increase in sales transactions and a 21% increase in the average value of the order (AOV). That’s largely because consumers can locate hard-to-find items that may not have shown in a distributor’s inventory before the manufacturer integration.

Also, since more expensive products are more visible and available, things like a diesel injector kit, engine rebuild kits, and other types of parts and components that typically a distributor wouldn’t stock due to size or inventory costs, can now be drop-shipped from the manufacturer. This creates a seamless transaction for an end-user/client while you are working with that distributor to fill the order.

The Future of eCommerce Fulfillment Automation is Here

Where is this headed? The entire automotive aftermarket is collaborating so that they can fill the needs of the brick-and-mortar channel as well as the e-commerce and online channels. Large online marketplaces like Amazon and Walmart want to have a direct relationship with the manufacturer. Three things are critical for this to be a success:

  • Great Aftermarket Auto Parts Content: People used to scrape product content from websites but now the marketplaces are where the clients go to research and order aftermarket parts online. Manufacturers need to supply content directly to the marketplaces and control their brand image online with fitment date, product images, 360 images and more.
  • Inventory Visibility: Every available part – millions of SKU – has to be available through a combination of local distributor stock and drop ship fulfillment by manufacturers
  • Nationwide geo-vending: Manufacturers don’t have 100 distribution centers across the country. But their distributors do. By partnering with distribution and backing them up with eCommerce fulfillment orders can be shipped from the closest geo-location, keeping 2-day shipping costs low.
Venn Diagram for Automotive brand owners, distribution, and marketplaces

This is where the puck is going. At GCommerce we provide eCommerce fulfillment solutions for both the brick-and-mortar channel and online automotive aftermarket channel. GCommerce has a connected supply chain for everything from online order management to inventory solutions and an absolute eCommerce order fulfillment software package. By connecting automotive warehouses and distributors to brand owners and retailers we can create an endless aisle for online automotive parts shoppers and alleviate the headaches of the ever-dwindling inventory.

Helping Aftermarket Auto Parts Stores Succeed

Helping online auto parts stores and everyone in the supply chain succeed in the current digital age is our goal. Growth, upgrades in technology, and the improvements in product data make this a very exciting time for the automotive aftermarket.

I’ve been in this industry for 35 years. I grew up around this industry and since I was five years old, there’s no other place I’d rather be than the automotive aftermarket. We aim to support this industry in the best way we know how so we can come out of this pandemic strong.

Change is scary for a lot of companies, so they need to work with someone that they know and trust. GCommerce is a trusted broker that’s been doing business for 21 years. We are a trusted ally of the automotive aftermarket manufacturers, brand owners, distributors, retailers, and buying groups. Everyone who is working with and trading some type of data or eCommerce orders through the GCommerce network knows if they have a problem with eCommerce order fulfillment they need to solve they can contact us at 515-288-5850 and trust us to help bring their vision into focus.

Check Out This Video on Vimeo and Follow Us On Our Vimeo Channel.

Aftermarket Auto Parts Marketplace Revenue Projected to Exceed $18 Billion in 2022

GCommerce estimates aftermarket marketplace revenue of auto parts & accessories at $16.6 billion in 2021 and projects 2022 revenue at more than $18 billion.

These numbers are part of a ground-breaking report released by the Auto Care Association and AASA at the 2021 AAPEX Show. GCommerce is proud to have been a contributor to the report.

Marketplaces are driving significant online revenue of parts & accessories

Third-party (3P) marketplaces, including Amazon, Walmart, eBay, NewEgg and others, are projected to grow to $32 billion in automotive parts & accessories revenue by 2030. This a huge jump even for these

3P marketplaces had a huge 31% year-over-year revenue increase in 2020, directly related to the pandemic. This is similar to other industries, as the pandemic shifted millions of consumers to shopping and buying online. During the pandemic many consumers either bought online for the first time or shifted more purchases from brick and mortar to online.

GCommerce is projecting the important 3P sales channel to grow at 7% to 10% per year for the foreseeable future.

Amazon is an important platform for third-party parts & accessory sales, and passed $6 billion in revenue in 2021. An estimated $3.5 billion in 3P revenue came from eBay Motors, followed by Walmart.com, estimated at $2.1 billion.

Total aftermarket online revenue at $34.7 billion in 2021

Total online parts & accessories revenue is estimated at $34.7 billion for 2021, combining 3P marketplace with first-party (1P) revenue from eCommerce retailers (the “.com” websites). Combined 1P and 3P online revenue is projected to have an 8.6% compounded annual growth rate (CAGR) through 2025.

The penetration rate of eCommerce, or the share of automotive aftermarket sales made using eCommerce as a buying channel, has doubled since 2018. The report says that it has grown from 6.5% to 12.1% in 2021. Even with that adoption rate, and even the recent dramatic growth rate, the aftermarket has a lot of room to catch up to other industries, where the eCommerce adoption rate is much higher.

Everyone now has a digital transformation playbook. What was a planning horizon of years is now months.

David Spitz, CEO, ChannelAdvisor Tweet

An important takeaway from the Auto Care Association/AASA report is the need to develop an eCommerce market strategy. The report states, “As the online channel continues to grow and take share from traditional brick & mortar participants it will become increasingly important for legacy aftermarket players to adapt their market strategy and develop an eCommerce playbook.

The report also identifies the eCommerce channel as, “…one of the fastest growing segments of the automotive aftermarket.”

Takeaways for aftermarket companies

As we see it, there are two significant takeaways for manufacturers, distributors and marketplaces in the aftermarket.

One, if you still don’t have an effective digital transformation strategy, now is certainly the time. Even if you have one it needs to be revisited from time to time to stay on track. With the expected growth in the aftermarket auto parts marketplace channel

Two, if you need an efficient way to sell products online and gain exposure for your brand, GCommerce makes that a simple process. We can help facilitate drop shipping, EDI transmission of inventory levels, sending product data up and down the supply chain, and more. If you need a trusted partner to leverage eCommerce and 3P marketplaces, please give us a call. We’d be happy to discuss your eCommerce plans and give solid recommendations to increase your 2022 revenue.

Aftermarket eCommerce report

Auto Care Association and AASA released this new eCommerce report at the AAPEX Show on November 3, 2021. GCommerce partnered with Jefferies and Hedges & Company to produce these 3P projections as well as first-party (1P) revenue from eCommerce retailers (“.coms”). This valuable report is available to the general public as a 19-page Executive Summary, and to Auto Care Association/AASA members as a 33-page detailed report.