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Commerce and connectivity: Overcoming availability challenges

Thursday, October 26, 2017 - 07:00
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There are more than one million products needed to keep the vast nationwide vehicle fleet rolling. The aftermarket distribution network has evolved to get almost any part, anywhere in a single day – often in less than one hour.

But visibility and transactional access to that network of products has been under invested and is currently a weakness of the aftermarket that online retailers would like to exploit.

Which leads me to Amazon. Groan. So much has been written about the behemoth who will gobble up the parts business and drive down the stock value of leading parts retailers that it’s hard to think of something that hasn’t already been said.

Is there a magical moat around the parts business filled with millions of SKU’s and lightning fast delivery requirements that will protect our way of life? Is it possible to out-service the recognized champion of online service and dissuade Amazon from buying a top-three auto parts retailer for something close to the $13.7 billion they spent on Whole Foods? I believe there is.

The answer may lie in an auto parts industry report compiled by Credit Suisse with the revealing title: E-commerce Deep Dive; Store Centricity Battling Online Price & Availability Challenges. Like so many other Wall Street reports, this study aims to understand if the incumbent brick and mortar auto parts retailers really deserved to get their stocks knocked down 20 percent to 40 percent on news that Amazon was buying major brands direct. The Credit Suisse report used a combination of a 750-household consumer survey as well as a hypothetical shopping cart of 400 typical replacement parts for popular Toyota and Ford models six to eight years old.

I’ll skip to the end and share the conclusion: “We do not see online disrupting Auto Parts like it has other categories, as our analysis points to some clear barriers including a heavy service component and same day requirements. However, we show that "omni-channel" is becoming more important, and there are some gaps in brick & mortar retailers' online inventory availability and pricing based on our analysis, that may require some changes.”

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