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The Amazon effect: Shoppers fuel up on automotive accessories

Friday, November 10, 2017 - 09:00
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The U.S. automotive market experienced a record year in 2016 with 17.55 million vehicles sold, putting an end to the decade of uncertainty and low sales. Even with all these new cars on the road, the average vehicle age in the U.S. is at an all-time high of 11.5 years old and there are over 14 million cars on the road over the age of 25.

With so many aging vehicles, the automotive aftermarket is thriving and has become one of the fastest-growing segment in online sales.

Enter Amazon. The eCommerce juggernaut is not new to automotive sales, having originally introduced auto parts to the platform back in 2006. Last year Amazon expanded its automotive arsenal by launching its own car research site and a parts marketplace, which allows shoppers to punch in their make and model to search for the correct parts. This and other conveniences reveal that the automotive aftermarket is not escaping Amazon's notice and the impact of Amazon on the market is already disruptive.

The numbers

In 2017 so far, specialty auto parts companies such as O'Reilly Automotive, AutoZone and Advanced Auto Parts have underperformed in the stock market, according to Canton Rep, despite expectations to the contrary. This has caused many investors to reassess the market and look elsewhere for disruptors. After long overlooking its ability to compete in the automotive aftermarket, industry analysts are finally starting to recognize Amazon as a serious player.

Two major trends in automotive aftermarket sales are that owners of older cars exhibit desirable maintenance behaviors, while new car owners tend to invest in appearance products. With the fleet of vehicles on the road aging rapidly in the U.S., more and more car owners are turning to Amazon for their replacement parts, with underhood and undercar replacement parts generating nearly $300M in sales during the first two quarters of 2017 alone, a growth of 20 percent year over year.

Beating out both replacement parts categories is truck accessories with $185M. Sales are driven by towing accessories, making up over a third of the total category sales and responsible for the two top items: an electronic brake control from Tekonsha and a 9,500-pound capacity winch from Smittybilt. Growth in truck accessories is low; however, with most gains in the product group coming from appearance products such as wheel & tire accessories (55 percent) and appearance chemicals (30 percent).

Key findings

The automotive industry is flooded with incumbents. Compared to many other product groups, Amazon is going up against many well-established retailers in their efforts to disrupt the automotive aftermarket sector.

Judging by the first two quarters of 2017, Amazon is making some serious inroads, and the business opportunity for brands selling through the eCommerce platform is looking more attractive than ever. The key markets – aging vehicle maintenance, DIY mechanics, and a wave of new car sales driven by the recovered economy – are experiencing significant growth on Amazon and brands are taking note.

For more information visit www.oneclickretail.com or email Nathan at nathan@oneclickretail.com.

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