Ted Fellowes is the founder of Fellowes Research Group, a service parts solutions consultancy based in Cleveland, Ohio. He played a key role in the development of electronic parts catalog technology at Bell & Howell (now Snap-on Business Systems), and helped launch OEConnection.
What is driving interest in e-commerce solutions at dealerships?
At the most basic level, sellers of parts are driven by customer behavior. So either customers or prospective customers are shifting behaviors. It's really only been in the last few years that buyers of parts have been driven into e-commerce.
But there are different reasons in different sectors, and there are several distinct parts markets for dealers. In the case of the collision sector, you have three things that are driven from the buy side that are forcing dealers into e-commerce and into multiple e-commerce platforms. The big automakers are offering price matching so suppliers can get OE parts new for the exact same price as the aftermarket. Second, several of the big MSOs have adopted buy-side e-commerce. That does a number of things for the buyer in terms of ensuring and forcing down prices, and making sure every shop in the MSO is getting the same deal. And insurance companies in the U.S. and Canada, and around the world, are beginning to say, 'We're paying for all of this. We want more information, we want more control, and we want more alternatives.'
On the retail side, you have the younger generation buying accessories, merchandise, and even service parts. Even though DIY is not a very big part of the market, you have a huge amount of activity where the buyer has shifted over to doing research and often actually making purchases online. That occurs in two different contexts. One is in marketplaces like eBay and Amazon. On the e-store side, you have people putting up very good catalogs.
What are the most effective tools or solutions dealers are using to ramp up their e-commerce offerings?
On the retail side and on eBay, the biggest challenge for parts from dealers was getting the listings accurate, getting them complete, and then getting them to link to illustrations. The company that made the breakthrough in that area was WHI, which was the first company to automate that listing process. Otherwise, a dealer listing 50,000 SKUs – can you imagine the pain and effort to get there?
There are now at least half a dozen companies with solutions, or that have licensed the WHI software.
In terms of tools for e-stores, there's nothing to it. The suppliers provide you the catalog and e-store, and the only thing that's left is the online marketing. There are an emerging number of companies that specialize in that marketing piece.
On wholesale side, you have large vendors with complete solutions that are typically portals. But there are two things you have to be concerned about. First, making sure you can integrate sufficiently to the DMS, at the very least have the ability to pull the inventories out nightly.
You also have to find a vendor who either already has the shops enrolled, or that can help you go out and convince your customers to go through the process of enrolling in the system.
The tools are in place and they've gotten less expensive, but it's not like going out and selecting a DMS where you just pick one product from four or five options. You have to pick several products, and you have to have a roadmap that is continually modified based on your experience. And there are a lot of vendors out there, and they all claim they can do everything for you.
What would you say is the biggest challenge facing dealerships parts departments that are trying to deploy these solutions?
The dealerships that have succeeded have put a dedicated person in charge of handling the online retail side of the business. You have to convince the staff that online orders are just as urgent, if not more urgent, than every other kind of order they have to complete.
The original vision up until a few years ago was that these systems would eliminate the human element. But that's wrong. You want the e-commerce tool to make the communication denser, richer and more effective, but people are still involved. You can cut out 70 percent of the time it would take to complete these orders, but you make the communication better by combining the digital and human elements.
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