SEMA News—October 2013
By Kristin DeBates
Tips for Aftermarket Suppliers and Retailers Before Gearing Up for e-Commerce
The online retail market for automotive aftermarket parts industry and accessories continues to emerge as a tremendous growth opportunity for the aftermarket parts industry. While estimated sales volumes of the online parts industry vary, assessments range from $2 billion to $4 billion annually.
The “2013 SEMA Annual Market Report” found that 46.2% of consumers cited “chain auto parts stores” and “specialty parts stores” as their primary outlets for purchasing automotive parts and accessories. “Online retail” was the next highest at 25.6%, up 1.1% from 2012. Online retailers ranged from online auction sites and chain auto parts online stores to online-only retailers.
It is clear that the popularity and potential for online retailing of automotive parts can be a benefit to the industry. While the idea of changing business models to include e-commerce might seem daunting to some, the benefits can be reduced costs, increased sales, improved customer service and, ultimately, loyalty.
Before You Accelerate Toward e-Commerce
Making the decision to engage in e-commerce is one thing, but it’s important to understand all of the factors that will influence this decision before moving forward. Embracing e-commerce is much more than putting up an online storefront. It’s changing your business and sales model, your channel relationships, your supply chain, and quite possibly your company vision and culture. Consider these important factors as you explore the e-commerce option for your business:
Adopting e-commerce is likely to have significant impacts on your channel strategy as well as your relationships with existing channel partners. Manufacturers should map out what their channel strategy looks like today and how it will change when factoring in e-commerce. There are best practices for taking advantage of e-commerce while still keeping distributor and retailer networks happy. Should you move less profitable customers online? Do you offer a different brand for your online customers? What additional e-commerce sites will you leverage to drive sales? Early and constant communication of these strategies with valuable distribution partners will go a long way in maintaining relationships while developing an e-commerce channel.
Inventory management was considered a difficult task long before companies were adding e-commerce to their business models, and it only becomes more challenging with the addition of this new sales channel. Decisions such as where to store inventory and how much inventory should be kept on hand to fulfill e-commerce customer expectations of faster order turn-around are hard to make without a detailed picture of what your new sales channels and levels of demand will look like. You should first take stock of what current customer expectations are and how potential competitors are serving the market today. This information can assist in developing your fulfillment model to meet or exceed customer expectations.
Adding a new and unfamiliar channel to your supply chain can cause unpredictable variables to increase exponentially. Will e-commerce increase the amount of inventory and warehouse space you need or decrease it? Will it change your customer base and therefore require changes to your distribution network? Your offering will now be visible to overseas markets, but are you ready to export? These are just a few of the many questions to ask and answer to make digital commerce work for both you and your customers. If you’re not sure where to start when it comes to addressing these questions, consider partnering with a demand-planning or supply-chain expert as you adopt an e-commerce platform.
The Customer Experience
Never before has the notion of the customer experience been more important than it is today. Customers are driving the supply chain, and the companies that provide the best experience are more likely to benefit from repeat business. In the future, UPS will share findings from its 2013 study that included automotive parts and accessories online shoppers. The survey—conducted by comScore and commissioned by UPS—found that one of the most important factors driving today’s online shoppers is the customer experience. Key to the e-commerce experience was the ability for customers to pick from a range of delivery options, take advantage of hassle-free return processes and have online visibility of their shipments. Sellers who best meet and manage their online experience may have a more meaningful advantage.
Before you do anything, it’s important to conduct an in-depth analysis of your business, your sales channels and your supply chain as a whole to ensure that you are set up to capitalize on e-commerce adoption. Some third-party logistics providers can help you with these discussions, especially providers with expertise in the automotive aftermarket. Engaging professionals not only will help you to get started on the right foot, but can reduce the risk of negative customer experiences that could damage your brand. Perhaps most importantly, they can help you begin to take advantage of this key growth market sooner rather than later.
To learn more, visit here for e-commerce logistics insights or stop by UPS booth #30221 during the 2013 SEMA Show.
Kristin DeBates is the automotive marketing manager for UPS.