The U.S. automotive aftermarket sector took hits from a number of different sides in 2017. First, there was the softening of U.S. auto sales, which are projected to contract for the next 18 months, shrinking 3.6 percent in 2017, according to Moody's Investor Service.
Also, increased competition from e-commerce giant, Amazon.com, which dug its heels deeper into the sector in 2017, was rumored to have taken market share from the big three automotive parts retailers this year, adding further uncertainty to the future of the industry.
One thing that is certain is that the industry is undergoing a major transformation. The Amazon effect on the big three retailers points to a greater industry trend that is more and more consumers are skipping brick and mortar stores and are turning to online to make aftermarket purchases. The companies that will win in this space are those that are invested in online, and specifically in an omnichannel e-commerce strategy.
According to market researcher Hedges & Company, ecommerce car parts sales are outpacing brick and mortar and will reach $8.9B in 2017, with growth of 15 percent between 2017-18. Over $4 billion of those sales will be on mobile. And yet, despite this growth, the automotive aftermarket industry has been slow to embrace ecommerce, let alone mobile or omnichannel.
In recent Sana research on the state of B2B e-commerce, nearly 35 percent of automotive companies have either just deployed e-commerce or have had e-commerce in place for under a year. A whopping 37 percent said that a physical store was the most important channel in their sales strategy and fewer than 18 percent placed importance on the mobile channel. That means more than 80 percent are leaving $4 billion on the table.
To recoup this found money, it’s vital for automotive aftermarket companies to implement a mobile strategy. They can start by employing responsive design: making sure their web stores are mobile friendly. Research shows that 40 percent of users will choose a different search result if the first page they go to isn’t mobile friendly. Parts and aftermarket retailers can capture more consumer dollars by giving buyers a quality experience and making it easy for them to purchase parts online: this includes easy navigation, clear product descriptions with engaging images and a simple and secure check-out. Finally, because the majority of consumers find parts online using search, it’s critical for aftermarket retailers to focus their marketing on Google, having an SEO strategy, employing the right keywords and considering how AdWords fits into their marketing mix.
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So what’s driving this huge mobile growth? From a high level, internet habits are changing. Seventy-seven percent of Americans now have access to a smartphone, up from 35 percent in 2011 (according to Pew Internet). Mobile internet use is on the rise, while home broadband adoption has plateaued and an above-average proportion of Hispanics have mobile-only internet access (eMarketer). At the same time, the Auto Care Association said that the DIY market also is growing, from $49 billion in 2014 to $54 billion in 2017. According to Google data, 59 percent of online searches for car batteries started on mobile, as did 61 percent of searches for off-road parts and 57 percent for truck parts. Online parts sales numbers supports this.
While e-commerce and mobile sales in the automotive aftermarket haven’t been adopted at the same rate as other industries, they will be crucial to stay competitive in the future.
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