E-commerce growth in the aftermarket is lapping brick-and-mortar growth. According to an April 2014 Hedges & Co. report, online sales of auto parts grew nearly 16 percent between 2012 and 2013, from $3.8 billion to $4.4 billion, and online sales (excluding auctions) are projected to pass the $5 billion mark in 2014. Brick-and-mortar stores actually showed a sales decrease of 1.5 percent in 2013, according to U.S. Census Bureau data.
"Our industry’s dramatic transition from brick and mortar to online continues to be one of the important automotive aftermarket industry trends to watch," the Hedges report states.
As e-commerce grows in importance, the way parts are sold throughout the multi-tiered aftermarket supply chain is changing. Manufacturers and distributors that used to sell to a limited number of channel partners now find themselves selling to distributors, jobbers, retailers, vehicle owners, and repairers through a variety of online connections.
Earlier this year, Epicor officially launched a new service for jobbers through its Parts Network offering that helps them create low-cost e-commerce storefronts to help meet this demand for online information.
According to Scott Thompson, vice president and general manager of Epicor's e-commerce business, the e-commerce service was targeted at stores and warehouses that have traditionally built their own business-to-consumer (B2C) Web storefronts from the ground up. "It's quite expensive and it takes a long time," Thompson says. "We serve many independent stores that don't have the technical skills, the funds, or the time to embark on that kind of major initiative. This cuts the time it takes to get online and the amount of funding it takes."
Epicor launched the Epicor eCommerce Store Development Service at the beginning of 2014, and has worked on more than a half-dozen sites so far. "The feedback has been good so far," Thompson says. "It reduces the time to market and helps them get a better view of their customers."
These storefronts enabled by the Development Service are an increasingly important part of doing business. "People go online and almost always check the store address, check to see if you are a real business, and check on your ratings," Thompson says. "Having this kind of Web presence is just a cost of doing business now."
In roughly two weeks, jobbers can launch a site with images and other content that provides real-time parts availability and pricing for multiple selling locations. The sites also have a shopping cart that accepts credit card payments via PayPal or Authorize.net.
A B2C web presence will be increasingly important for all sectors of the aftermarket, Thompson says, because of increased competition from eBay, Amazon and other Web-based companies that have rapidly gained market share.
According to Hedges & Co., Amazon showed a 25 percent growth rate in auto parts and accessories in 2013. eBay Motors is moving an estimated 550,000 to 575,000 auto parts and accessories each week.
"Amazon is now our industry’s biggest online retailer and many of our industry’s other online retailers have realized Amazon is the one to watch," the Hedges report says. "These online retailers are continuing to push for better websites to compete with Amazon and are getting aggressive with auto parts SEO and PPC marketing."
"Whether you view those companies as partners or competitors, you are going to need a technology solution to help you succeed at this level," Thompson says. "We've been helping distributors at the warehouse level list their parts on eBay for a number of years. They look at it as a new channel, and present their full inventory like another storefront. Other companies see this is as a way to move dead stock."
Different needs for different stakeholders
The e-commerce needs and challenges in the aftermarket are different based on each company's position in the supply chain. Distributors have been involved in e-commerce longer than other segments in the aftermarket, and their emerging needs tend to center around expanding their marketing breadths, reaching out to installers and customers directly, and addressing technology needs beyond what they require to serve their stores.
"For jobbers, their priority e-commerce initiative is to connect buyers," Thompson says. "They are looking for a cost effective way to connect all of their installers so they can give them a better experience obtaining parts."
B2C initiatives are also emerging for jobbers. "B2C tools and Web listing tools are becoming more important to jobbers as they present their inventory more segments of the market," Thompson says.
Installers, meanwhile, need everyone upstream of their location to be online and trading electronically so they can use a single operational model to source parts.
Last year, Epicor also launched a dealership product focused on solving the needs of dealer service departments that want to purchase aftermarket parts.
"Aftermarket repair facilities are used to thinking about multi-supplier models, and multiple grades of parts, but dealerships are not," Thompson says. "Dealerships want a tighter view of what they are looking at. We're trying to help them look at that inventory availability in a way they are used to seeing it. In that case, they are typically pulling inventory out of their own four walls."
As more and more entities within the aftermarket have become connected, the next big challenge centers on content. "If you don't have content, then customers aren't going to be able to find what they are looking for," Thompson says. "It has to be there, and be complete, current and available."
The way content is packaged also has to be more intelligent, since less skilled consumers (vehicle owners) are shopping for more complex parts. "So we have to start with graphics, intelligent navigation, asking the right questions about the vehicle, and guiding the consumer to the acquisition of the right solution," Thompson says.
As a technology provider, Epicor sees its biggest challenge in managing ever-growing data sets. "As you might expect, with the emergence of electronic processing, there is more and more frequent publishing of data and more frequent changes to that data," Thompson says.
The ability to work with Big Data by marrying the various inputs from both ends of the supply chain will be increasingly important. "There's a great challenge and opportunity in bringing together, in an integrated fashion, all of this data in a way that lets you solve the needs of a specific customer at a particular time," Thompson says.
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