MISSION VIEJO, CA — Help Wanted – Parts Counterman
Requirements: Must be willing to work 365 days per year, 24 hours per day. Understands and has committed to memory a world-class multi-line parts catalog. Always knows correct pricing of each item. Processes parts orders in nanoseconds. Never puts customers on hold. Works for electricity – no salary or extra benefits.
Any bets on how many responses you’ll get to that classified ad? Selling auto parts would be a lot easier and less costly if you could make those kinds of hires. Actually, it turns out that such resources are available today, just not human resources, the kind we would advertise for in the local paper. Instead, we might call them “cyber-employees” – a new species that forms the backbone of e-business and works in the world of browser-based technology on the Internet. These employees meet all the performance criteria in our Help Wanted ad, allowing jobbers and distributors to participate in the rapidly expanding e-business segment. But is our industry keeping pace or falling behind in the rapid expansion of e-business today?
The New York Times reported earlier this week that online sales, excluding travel, grew 34 percent in 2003 to $72 billion. While this still represents just 5.4 percent of total U.S. retail sales, in some categories like computers and software, fully 43 percent of sales are completed online.
No comparable data exists for automotive parts. Still, some industry observers contend that adoption of e-business tools and technology in automotive parts distribution is progressing too slowly. Jim Franco, president of Autologue Computing, points this out in a May 2004 Jobber News article in which he likens the slowness of the market to adopt Internet-based customer connectivity to pushing a rock uphill. “It’s important for jobbers to recognize that if they don’t put newer tools to use, someone else in the market will. The ability to use the appropriate tools for a jobber’s business, tools that enhance, not replace, the personal nature of their market approach, is no longer an option. It is an imperative.”
This is particularly true for jobbers and distributors running older business systems. Often based on decades-old technology, these platforms are simply not “Internet-ready” and lack the customer file management and pricing management capabilities needed to conduct intelligent e-business. The task of upgrading or replacing these systems, sometimes perceived as daunting, is a significant impediment to gaining traction on this issue and seeing efficiency gains across our industry.
“DST Asks” brought this issue into focus with last week’s multi-part question to parts distributors:
a) What percentage of your parts ordering is being done online?
b) If a percentage of your parts ordering business is being done online, what benefits are you realizing?
c) If a percentage of your parts ordering business is being done online, what kind of incentives do you offer to get your customers to use this ordering method?
We know firsthand that our own WD customers moving aggressively into e-business often achieve dramatic results. Using DST TurboParts, recently upgraded to incorporate Activant’s industry-leading PartExpert catalog, one large multi-location distributor achieved startling sales increases. In four months of activity, parts sales to 244 customers increased by 40.3 percent versus a comparable timeframe for the same accounts. Perhaps even more impressive, the economic value of this incremental business projects to nearly $2.5 million annually, at an incremental cost of just $12,000 in TurboParts fees. Where else can you add this kind of volume at selling costs well under 1 percent — all without adding counter sales staff, increasing hours of operation or other fixed overhead?
Another large distributor used TurboParts technology to centralize all ordering activity. The distributor deliberately migrate as many customers as possible from phone-based ordering to online ordering. Fifteen parts counter resources were reduced while sales more than doubled. This distributor mastered the promotion of its own online conversion. How did it get large parts customers to defect from competitors and bring their business to the distributor’s new online connection? The promotion launched as “Dude, you’re getting a Dell” and brilliantly operated at several levels.
By leveraging the well known consumer-based advertising slogan and providing new customers with a new PC, the promotion first solved the problem of prospective customers who didn’t have a PC on which to order parts. Secondly, it offered a high perceived value, highly sought offer – a Dell PC – that few would turn down. Yes, an offer valued at over $500 isn’t pocket change, but when it’s tied to a reliable stream of low-cost incremental revenue, it’s not difficult to calculate a significant and speedy payback. And finally, the promotion helped build an instant, highly valued relationship with these new customers. Too often, online selling is perceived as being impersonal and customers miss out on the “one-to-one” aspect of talking to a counterperson or field sales rep. Caring enough to help customers get connected in the first place works well to initiate a sustainable relationship. Coupled with ongoing, first-rate customer service, these relationships can pay big dividends on an ongoing basis.
What about existing customers? Can they be successfully migrated to online connections without alienating the business relationship and losing sales? The goal here is obvious — costs can be reduced significantly once migration is achieved. But how much business risk is involved?
Again, in our experience, the majority of customers prefer online ordering to other methods. At the recent GAAS forum in Chicago, three of four service dealer panelists addressing a large industry audience said that they order 60 to 80 percent of their parts online. We’ve seen evidence of customers moving their ordering to online tools like TurboParts to take more control over their parts buying. Using well-integrated parts catalogs helps shops identify the right part for their service application, and helps make shops more accountable for their parts selections. This can dramatically reduce ordering errors, duplicate orders and the costly returns that result from these common ordering problems.
Another trend is seen in the time aspect of parts ordering. Online orders can be placed any time, day or night, regardless of the seller’s hours of operation. This is a major benefit to fleets and commercial accounts, which can obviously use this feature to their advantage. Online tools such as TurboParts allow stock order transmission, enabling larger customers like car dealers and fleets to “batch order” their ongoing stock orders electronically – a major convenience to the buyer and a significant cost savings to the seller.
Advanced TurboParts technology allows the connection of multiple “sellers” that can sell from a common inventory. This type of Virtual Inventory Network abolishes the old adage “You can’t sell from an empty shelf” by providing your customers with the item they need even if you don’t stock it.
E-commerce technology can provide the launching pad for distributors and jobbers to embrace and run with business growth, expense cutting initiatives. Working side-by-side with a technology partner such as DST to overcome obstacles, meet challenges, and initiate, facilitate, expedite and help manage the processes that technology so beautifully enhance is an empowering experience. As our industry taps into the power of new technologies, those businesses that adopt and embrace them sooner rather than later will realize new efficiencies and bottom-line improvements while simultaneously setting the revised standards of successful business operation. Those standards will be the benchmarks of competitive advantage that will steer the future of the industry.
We continue to love to get your responses to our weekly questions, hearing your thoughts on the topics that we post, suggestions for additional questions and anything you’d like to share. Send us an email at: [email protected] or give us a shout at 1.800.700.4DST.
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“DST Asks” is written and sponsored by DST Inc. The opinions expressed in “DST Asks” articles appearing on aftermarketNews.com do not necessarily reflect the opinions of AMN or Babcox Publications.
