The size of the total U.S. online market has grown to $453 billion, and the widespread perception that the automotive products e-commerce market is on a similar tear, taking more and more market share from brick and mortar. But, through NPD Checkout E-commerce Tracking, a service that tracks sales at the receipt level, we’ve uncovered some interesting trends in this industry that may indicate otherwise.
This view into sales, which provides an entirely new way to analyze the industry, shows online penetration for automotive parts and accessories is only between 12 to 14 percent. NPD’s Checkout e-commerce data show that, while Amazon has an estimated 38 percent share of e-commerce retail, automotive products represent only 1 percent of its business. In total, the size of the automotive products e-commerce segment was $4.6 billion in 2017. For the purposes of this analysis, we’re focused on the $3.3 billion online segment of the market that excludes tires and wheels, both of which have their own market nuances. We found there is much more to this space than expected and the perceived disruptors aren’t disrupting as much as one might think, leaving opportunity on the table for today’s top players.
Sizing Up The Three Types of Online Players
We’ve been comparing three different types of automotive product retailers. First are traditional players that have an online presence along with their well-established brick-and-mortar stores – Advance Auto Parts, AutoZone, O’Reilly and Walmart fit into this category. We call this first group of retailers “click-and-mortar.” Next are general e-commerce retailers, such as Amazon and similar marketplaces that sell everything. Pureplay retailers. like RockAuto.com, that are e-commerce only and sell only automotive products are the third group.
The data show that consumers seem to be much more attracted to the traditional retailer websites than to either of the e-commerce retailer types. The Auto Care Association’s estimated overall industry size of $381 billion in 2017 dwarfs the projected $4.6 billion e-commerce market size, and annual click-and-mortar purchase frequency is double that of general e-commerce retailers such as Amazon. However, purchase frequencies for the pureplays, such as RockAuto, are similar to those of traditional stores.
Why Click-and-Mortar Still Shines?
Beyond the same gripes of shipping costs and return hassles that all consumers have about online shopping, when a car is broken, the online auto parts buyer needs to fix it now. What Advance, AutoZone, and O’Reilly have that Amazon and RockAuto don’t is a buy online, pick up in store component. We do see higher online sales in categories where there may be less of an immediate need, but categories that are more focused on maintenance – batteries, starters, belts and other “need it now” parts – seem to have low e-commerce penetration. That said, categories like motor oil, which has only 3 percent penetration but grew by 20 percent from 2016 to 2017, show great promise. As Amazon’s Prime Now and same-day shipping programs expand, we expect this trend to shift in favor of general online retailers throughout the industry – Amazon’s same-day reach is currently 44 percent among the U.S. population.
Click-and-mortar’s relative success is further boosted by the ability of buyers to bring in the broken part for a side by side comparison, ensuring they are getting the right part for their make, model and year of car. Certain categories have been shifting to e-commerce versus brick-and-mortar at a much faster rate – notably interior and exterior accessories and automotive lighting. This may be due to the “endless aisle” of available assortment e-commerce consumers can access, which also could contribute to click-and-mortar success for a retailer with warehoused stock and multiple pick-up location options.
Who Buys Automotive Products, And How Much?
The Checkout e-commerce data allow us to see patterns with heavy, medium and light buyers. In 2017, our data showed that heavy buyers – those who made five or more online purchases annually – made up 15 percent of the sample, but accounted for 48 percent of industry dollar sales. These heavy buyers, 73 percent of whom are male, are more likely to shop click-and-mortar, and we extrapolate that they skew toward DIYers who do heavy repairs on their own cars. They are more likely to buy repair parts – starters, alternators, brakes, suspension – and consumers who are heavy buyers are more likely to buy motor oil online than those who are light buyers.
However, light buyers, who make one online automotive product purchase on average per year, represent the majority of consumers (50 percent). They are evenly split between men and women and are more likely to shop and price compare online. These light buyers are most likely to be shopping for car accessories and one-offs, such as batteries.
It’s also interesting to note where they’re shopping. Comparing light and heavy pureplay buyers, Amazon has the majority share for both. While there is more diversification among other retailers behind Amazon for the light buyers, RockAuto ranks No. 2 for heavy buyers.
What Many Automotive Products Retailers Should Know
In our comparison of automotive products retailers, we’ve noticed that click-only retailers seem to be trending upward; purchase frequency and spend per buyer is higher at auto specific retailers; and, in an interesting twist, private label products seem to be doing well among heavy auto buyers at the top auto specific retailers.
Understanding consumer purchase behaviors revealed in the data can help retailers make a successful move to online integration, or even help them to make better stocking and distribution decisions. Our data show, for example, that purchases of alternators and engine kits have seen a big uptick at general and pureplay online retailers. The biggest challenge for parts dealers is having exactly the right product at exactly the time the consumer needs it. This is not as much of a challenge for Amazon.
For most of the automotive industry, e-commerce is a big unknown, and data are what can make or break success by answering looming questions. But, as we can see from the online penetration numbers and Amazon’s relative absence from the category, the good news for retailers with a loyal customer base – and any online presence at all – is that there’s a whole lot of room for growth.