A convergence of bricks ‘n’ clicks will eventually be connecting with connected cars and the motorists inside them to ring up aftermarket sales as innovations in electronic commerce establish new avenues of e-retailing.
“Some of this sounds futuristic,” observes Stephen Spivey, describing the various marketing and technological developments that could become commonplace over the coming years.
“Based on the information your car gives you,” ordering parts and facilitating repairs is expected to be accomplished directly through online communications, according to Spivey, who has prepared an extensive Strategic Insight report on tomorrow’s aftermarket trends for Frost & Sullivan.
“I don’t think the traditional distributor will ever go away,” nor will the retail outlet become a relic of the past – but there certainly are some technical and merchandising changes coming down the pike. “The parts store of the future will feel more like an electronics store with a distinctly high-tech feel,” says Spivey, program manager for Frost & Sullivan’s North American Automotive & Transportation division.
Just as today’s DIYers are increasingly shopping and placing orders via the Internet, the DIFM segment will be relying much more on an assortment of e-commerce offerings to get the right part to the right place at the right time.
E-retailing innovations continue to be released at a fast pace. “I don’t think there are any clear winners at this point because they’re all focused on different elements,” Spivey said.
A key challenge for the industry “is figuring out how to evolve these platforms so they can provide the same service that bricks and mortar can provide. It’s starting to take off, but the technology and logistics has not yet come together.”
By 2025 most markets will see a 10 percent to 15 percent e-commerce penetration with a strong emphasis on building an “omnichannel experience.” OEMs and suppliers are likely to use online platforms for direct selling to DIFM purveyors along with the existing DIY marketplace.
“In omnichannel retailing, parts-sellers offer customers the opportunity to purchase products online rather than at the store,” he explains. “Retailers are adapting to the reality that they’ll derive a greater share of their sales from online platforms in the future. In Frost & Sullivan surveys of vehicle owners, four in 10 say they at least look online before buying parts or scheduling service for their vehicles, and 9 percent actually purchase something for their vehicle off the Internet.”
‘Click and fit’
With tires amounting to 20 percent of aftermarket sales, Spivey goes on to note that “tire companies are emerging as industry leaders in omnichannel retailing with a ‘click and fit’ model that allows consumers to choose the tire online, pay for them, then drive to the local service center to have them installed.”
For those who prefer perusing the aisles of an actual store, anticipated enhancements include self-serve kiosks and “virtual assistants” rather than human counterpeople to aid in picking out the correct battery or wiper blade.
“Technologies such as near-field communication tags can transfer information from the product sitting on the retail shelf directly to the shopper’s phone, allowing them to decide if they want to buy it of even to pay for it without ever communicating with a store employee,” he predicts.
Today’s omnipresent truck stop-styled enterprises along highway interchanges will be embracing these new marketing methods. “Pop-up stores, kiosks and even vending machines can be used to introduce consumers to new products or sell common parts such as motor oil and filters at fleet locations.”
The real estate upon which stores sit will see changes as the millennial generation migrates toward residences in the central city. Few if any downtown areas in North America and Europe currently host parts store locations.
“It’s one of the last frontiers of growth in mature regions. You typically see a box-type of auto parts store primarily in suburban areas, so to blend into urban areas retailers will open stores that are smaller, conveniently located and possibly mobile,” Spivey says.
“They can experiment with targeted inventories of maintenance and appearance products, accessories and perhaps even non-automotive products – bike parts, for example – for urban dwellers.”
Connecting with cars
And you can expect these shifts to have global implications. “In emerging growth regions, Asia and Latin America, urbanization is taking place at an accelerated pace,” he reports, “so these regions will skip the era of big-box stores and develop digital concepts that appeal to a younger, more tech-savvy demographic.”
On-the-grow nations with burgeoning car parcs are in position to deliver significant aftermarket opportunities.
“With so many new vehicles being sold in areas that lack distribution, the automotive industry is becoming the test case for how retailers meet the needs of a changing customer base. More and more of them live in regions that lack close proximity to an auto parts store. However, most of them can be reached online, and some can be contacted directly inside their vehicles if the driver has a smartphone and Bluetooth receiver inside the car.”
Connected car technology and all it entails will especially be in the driver’s seat. “You can literally be in your car and get information about your vehicle,” Spivey said. “All of a sudden you get a notification that your brake pads are worn.”
Building on what Tesla is introducing to its customers, as connected retailing becomes commonplace parts and service providers will “create a transmission loop with their customers” to identify desired products along with necessary maintenance and repairs.
“The increased transmission of data between retailer and consumer, and consumer and the vehicle, will emerge as the new standard for parts retailing in the coming years. New types of retail businesses will emerge to provide services to consumers using the data they are generating online,” says Spivey, who conducted a September webinar on the topic.
“In the future retailers will reach consumers inside their vehicles using apps that can tell them what’s wrong with their vehicle and connect them to a parts and service provider. You’ll have device manufacturers, app developers and even telecom providers emerge as new industry stakeholders in the digital aftermarket as it continues to evolve into a digital marketplace.”
Tapping into an already-buzzing social media realm shows no signs of slowing down for retailers and repairers looking to leverage digital gathering places.
“Facebook offers a very strong platform for reaching targeted customers in a virtual store setting. Buyer and seller can chat during the transaction; retailers can issue rewards to people who – quote, unquote – ‘recommend’ them to their friends online,” he suggests.
Such web-based friendships may even assist in footing the bill for cash-strapped drivers faced with a critical vehicular financial hardship. “Crowd-buying will allow several customers to split the cost of major purchases. So if you have a major vehicle repair that’s going to cost $1,000 or more, and the customer may not have the money for it, you may be able to have two or three people pay for that service online collectively.”
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