Yesterday, during the 2015 Automotive Aftermarket Suppliers Association (AASA) Technology Conference, Bill Hanvey, senior vice president of AASA, held an open discussion during the meeting’s breakout sessions. Continuing the discussion of disruptive technologies, he focused his thoughts on e-tailing. “What I’m going to do is light the fuse, I hope, and have a frank discussion between the supplier community and channel partner community about e-tailing,” said Hanvey.
One of the key topics throughout the day had been the growing presence of e-retailing and how shops needed to have a foot in this world, for a variety of different reasons. One of the most prominent influencers in this realm has been Amazon, which has changed expectations and the outlook on what selling to an online community can be. However, while many communities have thrived in this arena, the automotive aftermarket has been slower to adapt to the trend.
“Channel conflict has been exacerbated with e-tailing because many of us feel like there is a lack of control, but there are opportunities to control your brand and your products, and manage all of that information,” noted Hanvey.
As a point of comparison, AASA sent out a survey asking what the channel partners felt was impacting their businesses the most. In 2014, the largest factors were extended payment or terms of sale and aftermarket demand drivers; in 2015, it was the lack of pricing power and weak sales, as well as threat from overseas competition.
The grand question, of course, is: Will all parts eventually be purchased online? Despite the growing prominence of e-tailing and online sales, Hanvey believes there will always be a place for the shop and the real personal interaction that comes with it. The discussion targeted the ways the online databases have begun to change the market – price transparency, margins and the way the consumer thinks about purchasing in-store are impacted by the ease in which any consumer or competitors can check prices or information at any given moment. It leads to a better-educated customer who is increasingly looking for the element of convenience.
“Right now, we see the [e-tailing] at around 3.5 to 5 percent, and we see it going to around 15 percent by 2025, and we all know why that is. We all know that, in the shop, the shop needs the part immediately and in a half hour the majority of their purchases are on a need base and they need it quick. Until Amazon and the supply community can deliver in a half hour, they’re not going to replace the traditional distribution system. It’s a supplement, but it’s certainly not going to replace it.”
He also commented that, in the end, the shop has benefited from these changes. “Parts delivery expectation is now less than an hour. It used to be that I get every day delivery. Then it was delivery in the morning and in the afternoon. Now I can get delivery in half an hour and I can get that delivery from four different sources.”
One of the other high points of the discussion was centered around marketing and branding: Asking why are you going to buy this product, and how does it solve my problem? Often times, product descriptions on the website don’t necessarily remain consistent with the business data that shopkeepers would be looking at. It wasn’t necessarily incorrect, but highlighting things that didn’t differentiate the brand, but seemingly catered toward consumers. Due to the different presentation of online retailer sites and catalogs, some deemed the different language as a necessary element of the marketing, while others said the online marketing should remain more closely in line with what shopkeepers see in their catalogs.
It was also emphasized that it is increasingly important to maintain your branding. Consumers are looking for products to have pictures that match up with expectations – sometimes with 360-degree views or multiple angle shots. They are also expecting recognition in branding, and looking for quality in the items that they recognize.
That said, it is far from a bleak turn in the developing aftermarket, according to Hanvey. “E-tailing is a tremendous opportunity to build your brand. It gives opportunities with the shop and the consumer.