SEATTLE — This week we hear from Steve Frazier, vice vice president of U.S. Hardlines Category Management for Internet retailer Amazon.com. In late 2006, Amazon.com launched its Automotive Parts & Accessories store, offering more than 1 million new, used and remanufactured parts from leading parts and accessories manufacturers. Frazier recently spoke with aftermarketNews about the launch of this new online store and the role the company hopes to play in the aftermarket.

Frazier joined Amazon.co.uk in October 1999. In August 2001, he was appointed vice president of U.S. Hardlines Category Management, where he currently oversees the Automotive retail group. In this role, Frazier has helped suppliers and retailers leverage the power of the Amazon.com e-commerce platform, which added a vast selection of new and used products to the Amazon.com product inventory.

Prior to working at Amazon, Frazier served as the senior vice president of Payless ShoeSource, a $2.6 billion footwear retailer based in Kansas. While there, he led the teams that developed the Payless.com Internet business and opened the retailer’s first international market. Before that, he was a senior engagement manager at McKinsey & Co, a management consulting firm.

Frazier holds a masters of management degree from the Kellogg Graduate School of Management at Northwestern University and an undergraduate degree from the University of Kansas.

In November 2006, Amazon.com launched its Automotive Parts & Accessories store. How long has this idea been in the making and how did it originate? What prompted Amazon to pursue auto parts?

The idea really came about from looking at our corporate mission. [We want] to be the place where people can find anything they want to buy.

Amazon has steadily added categories since its inception 12 years ago. We now have 36 product categories. One of those categories, which we knew was a large category around the globe, is automotive parts and accessories.

If you look at the AAIA numbers, it’s a $40 billion market for DIYers and another $50 billion for DIFM. That’s a big market. We perceived it as a market that was a little slow on the uptake of adoption of online shopping, for a whole bunch of very good reasons. But in our view, categories exist on a spectrum, in terms of when they are going to move online and how quickly their customers will follow.

We thought the auto parts category would definitely move online. We also recognized that there were some unique difficulties, particularly around the need to help customers shop by year, make and model. While we saw the challenges related to data, as a company, we feel that we’ve got pretty deep capabilities in our ability to manage and present data to customers in a logical way. So, we concluded it was a big challenge but one that seemed like a lot of fun to tackle.

The Auto Parts and Accessories Store really allows us to exercise all the muscles we’ve built over the last 10 years. One of the things that we do best is provide a clean and easy to understand shopping portal for our customers. Another thing we do well is handle massive amounts of product information. As you know, the book industry is comprised of millions of items, so when people say to us that auto parts is hard because you could eventually have millions of parts, that doesn’t scare us.

The automotive category is also one of those product categories that has a rich tradition of selling parts in different condition types. At Amazon, our first business was selling new product, but several years ago we moved into selling used products. In our electronics, tools and kitchen businesses for example, we sell remanufactured and refurbished products and we’ve done so for a long time. We looked at automotive and said here’s a category where consumers do buy new aftermarket parts and reman aftermarket parts. There is a very rich market out there for vintage parts, for remanufactured parts and for salvage parts. And, again it’s something we didn’t have to build for our automotive store. It was something the company was building anyway. The biggest challenge was developing the Part Finder.

We recently learned at AAPEX that you work with Activant for your cataloging?

Yes, we do. One of the key things about our relationship with Activant is that we are getting the data from them in the ACES and PIES formats. We had a lot of discussions about how to pull data over from Activant in the ACES and PIES format, which to our knowledge they had not done before. And while they are a terrific partner, they would be the first to say they don’t have every piece of data in the world. Case in point, we were meeting recently with a small vendor – a SEMA kind of vendor. They’ve got a great product line but they are just now trying to figure out how to spell ACES and PIES at this point. They are not sending their data off to these commercial data places. So we told them, there are three or four ways now to get us the data but it’s got to be ACES and PIES compliant.

You mentioned earlier that the aftermarket has been slow in the adoption of technology. Has that been a barrier for you in trying to get new partners?

I wouldn’t really use the word slow. I’d say behind. I’ve worked across different categories at Amazon.com and it seems to me that each industry has gone through a process of waking up. Some did it in 1995, some did it in ‘97 and some did it in 2000. This waking up is the realization that the Internet is going to have a pretty powerful impact on their businesses, either in the way they did business with their partners or in the way that end-consumers thought about their categories.

My perception is that the aftermarket people we deal with are moving ahead at a pretty steady pace, but I wouldn’t call it slow. My calendar on the wall says it’s 2006, but I feel like I’m having very similar conversations to those I had with appliance or consumer electronic companies in 2001. It’s a very similar process of awakening that people go through. People go through this process of thinking people would never buy “X” on the web. Then they give you 10 anecdotes as to why. Then, they think, “Oh, I bought some books on the web, now I get it.” Now, instead of thinking of 10 reasons why people wouldn’t buy something on the web, they start to think of those occasions when people would start to buy something on the web. Then they start asking questions: What does it really require? Don’t you just snap your fingers and make it work? There’s a pretty dirty data management issue at the heart of all this and people really just have to dig in and make it work.

We’ve been watching this development for several years and we have tried to be encouraging and help in our own modest way. A member of our team now sits on the AAIA Technology Standards & Solutions Committee. We’re trying to contribute in what ways we can, by pushing the development of these standards along. We don’t by any means pretend that we would ever be the reason why somebody redoes their whole data strategy but if somebody wants to do business with us, converting and thinking about these standards is one more reason to accelerate or prioritize a project. And our bet is people are going to want to do that anyway.

So far, what products and categories have been your biggest sellers? The inventory appears to be mainly performance and accessory items, do you, or do you plan to sell hard parts as well?

Our most popular categories are not too different from what you see out in the consumer market. We started with the stuff that’s easier for the customer to buy online – truck accessories, appearance stuff, non-fit related parts, diagnostic scanners, floor mats, seat covers, car covers, those kinds of things. As the business has developed we’re getting much closer to kind of a standard mix replacement parts, performance parts and performance accessories.

Our stores always start out to be a little unusual and over the very long term end up looking like the market as a whole. For example, six years ago, we sold very few TVs at Amazon in our electronics store. It’s a whole new vendor base. They are hard to ship, hard to source, hard to present well to the customer and now here we are [just out of the 2006 holiday season] and TVs are big sellers for us. You just chip away at it until you’ve lowered the barriers of entry for consumers to find the stuff they would normally buy.

I was assuming that this site is primarily for individual consumers looking to buy parts and accessories for their vehicles, but after hearing you speak for a bit, I’m wondering if you are interested in competing with the WDs and the big box retailers like AutoZone and Advance?

We do think of ourselves as a consumer-oriented website and we definitely have the consumer in mind as we think about selection, pricing, website display, product title, etc. We will almost by accident pick up business from commercial folks but it’s not part of our strategy. From our earliest days when Amazon launched there have been various bookstores that may not like Amazon as a concept and think of us as a competitor but in fact have always come to Amazon to purchase things to help satisfy a customer need in a hurry. It’s definitely conceivable that a commercial outlet somewhere could be strolling through our site to find the odds and ends, but we certainly are not in the market today to fulfill the half-hour turnaround time that the professional installer needs.

In regard to the kinds of parts [we sell], it is true that a lot of the products we have are in the appearance and performance accessory segment, but there are a lot of hard parts on the site as well.

One of the things we’re trying to do on our website [is avoid the segmentation] that you see writ large when you are in Las Vegas [during Automotive Aftermarket Industry Week]. You’ve got SEMA in one part of town and AAPEX in another part of town and NACE in yet another part of town. I’m the only Amazon customer who should have to suffer by taking the shuttle bus between those convention centers. When you come to our site, we just say we’ve got stuff for your car. We don’t say this is a performance part and you need to give us the secret handshake [to buy it] then, when you are done with performance parts you need to go over here and buy this other thing. We’re trying to put out the most relevant parts and accessories, and we do organize it. but we basically try to show you the stuff that fits your vehicle all in one place.

Speaking of the “SEMA side,” a lot of small, mail order start-ups have found success selling automotive performance and personalization accessories, which Amazon also sells. Is there a possibility of individuals being able to set up an account as an independent seller on Amazon.com, much like you currently offer with books and CDs?

Absolutely. You could today as an individual come and list a part for sale at Amazon if you had a used or reman version. Say you took the steering wheel off to buy a custom steering wheel. If we have that [original] steering wheel listed at our site, you could list your used steering wheel against our listing.

But the real thing we’re trying to do, and have done successfully, is for a small merchant or entrepreneur to come to us and become what we call a “Merchants @” partner, meaning, “Merchants @ Amazon.com.” A person can open an account, either as what we call a “pro seller,” which tends to be a smaller business, or as a full-scale Platinum “Merchants @” seller, where they can load literally hundreds of thousands of items. We have that currently on the site. At launch (in Oct.) we had 250 independent partners signed up, but it could eventually grow to quite a large number. We provide them with documentation on how to create product pages at Amazon, which they build. They also build the pricing feed and handle the fulfillment for the customers.

Let’s say you make your own product and have your own line with 100 items in it. We would allow you to actually set those items up at Amazon and become a seller. You would load the content and images and then we manage the website display, we take the order from the customer, we take the money, then you ship and fulfill the order and we pay you for that.

In these situations, are there parameters in place to help protect against copyright infringement, counterfeiting and things of that nature?

Yes. We require those sellers certify to us that they have the license to all the intellectual property of anything that they list. If we hear from any copyright holder that there is an issue, we definitely investigate and take action where necessary.

We’ve had some readers inquire about your shipping and distribution of branded products. Can you tell us a bit about this process? Is Amazon.com essentially serving as a middle-man between the manufacturer or retailer and the customer?

Amazon in North America today has a number of distribution locations, and in those locations we have mixes of product that we distribute to our customers. [We carry] auto parts in a number of those locations, but not all of those distribution centers.

Basically, we buy product from our vendors, then we put those products in our warehouse from which they are shipped out.

We also have arrangements with some distributors, including some WDs, where they are integrated with Amazon. We display their products at Amazon, then we send them the order and they ship directly to the customer.

The third [route through which] products get to customers is through the “Merchants @” program that I was describing earlier. We stock and sell, we do drop ship from distributors and we have our third party program.

If you would like to check out Amazon.com’s Automotive Parts and Accessories store, click here.