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Is Amazon auto parts a friend or foe to the aftermarket?

Friday, April 21, 2017 - 07:00
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An article in the New York Post by Josh Cosman reported how Jeff Bezos and Amazon plan to become an even more significant player in the do-it-yourself auto parts and accessory market. With total revenue of $128 billion in the 12 months ending September 30, analysts project Amazon’s goal is to grow its auto parts business by 50 percent this year to $5 billion. Those numbers are why Amazon is the gorilla in the room when any industry discusses e-commerce and online retailing.

No single topic fuels more passionate debate from boardrooms to classrooms and spilling over into cocktail receptions – where some of the most insightful observations can be heard. Yet, with all this energy being invested in the discussion of a competitor, little consensus has been reached on whether selling to or through Amazon is a good business strategy or a short path to certain doom.

Can you find successful automotive businesses that are convinced Amazon is a strategic friend? Yes. And, are there equally successful automotive businesses that recoil at the thought of partnering with Amazon in any fashion? Certainly.

I am fortunate to have enjoyed a long career in the automotive parts and accessories business. I attended my first AWDA conference in the early 80’s. In those years, the store count for chains like AutoZone, Advance Auto Parts and O’Reilly were measured in the hundreds. But, the fear and suspicion with which these operators were viewed was off the chart. There was certainly discussion about how to limit their involvement and participation in industry events and association governance.

As recently as this decade, a collaborative point-of-sale data sharing program was undone by the suspicion of the traditional parts channel participants that the retailers were going to gain assortment insights and become more successful at the expense of the wholesalers. “If we share this data, then they’ll use it to take share from us. Therefore, we’re pulling out of the program” … ensuring that no one can benefit from an industry-wide category management pool.

Today’s Amazon is yesterday’s AutoZone. They don’t feel an obligation to do things the way they’ve always been done. And they are constantly innovating to hone in on those things that customers value the most (reviews and ease of shopping) and eliminate the things that are not valued (shipping charges). After all, if you are still requiring that your customer pay for services and expenses that they don’t value, they will find someone else. But, if there is value in those services, you’ve got to remind them of what’s built into your price. It’s called marketing.

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