Using Online Estimate Bidding Services
Consumers use the Internet for everything, especially when it comes to auto repair. They search online for shops, reviews and ratings. And as of late, they’ve been looking for repair estimates, too, by asking shops to compete for their work through online bidding platforms. It’s a trend that will have debated impact on the industry—some professionals say it’s a cause for concern, while others see it as a solid marketing concept.
A new online service called Repair Jungle launched in January for consumers and repair shops in the Washington, D.C., Virginia and Maryland markets. It’s a Web-based service that allows shops to compete for jobs submitted by consumers through a bidding process. Consumers upload photos or descriptions of vehicle repair or maintenance needs, local shops submit bids for the job, and consumers select the best shop.
“The goal is to drive down prices and drive up customer satisfaction by creating a competitive marketplace for automotive repair,” says Fred Yu, founder of Repair Jungle. The intention is to help consumers find the most cost-effective provider of repair services, while helping shops acquire higher work volume.
The service has quickly gained popularity and engrained itself within the East Coast repair industry. Within seven months after its launch, Repair Jungle signed up 70 repair shops and generated roughly 1,000 consumer estimates. Although it’s the newest, Repair Jungle isn’t the first of its kind. Organizations such as FixCarBids.com and Mechanicbid.com offer similar services on a national scale.
But services like this don’t come without debate. Some industry professionals believe the concept could have negative consequences on repair businesses long term. They say estimate-bidding systems only attract price-shoppers, not customers who will become loyal clients, and it can lower repair orders. And many believe it’s not a good idea to capture jobs by offering the lowest price.
Dan Gilley, director of training for RLO Training, fears that services like this cheapen the profession because it quickly becomes “a race to the bottom.” There is cause for concern because the concept could turn auto repair into a commodity, he says.
Gilley says you can ask three different shops how they repair a timing belt, and they will do it three different ways. One will automatically replace tensioners and seals, another will always replace the water pump, and another will perform an inspection to see what parts need replacement. They all have valid reasons for performing the process one particular way, and the jobs are naturally priced differently.
“Auto repairs just aren’t a commodity, and I don’t know how you can treat it like one. Auto repair is a service,” Gilley says. “This just makes shops see who can get as low and cheap as possible.”
But Jacob Schneider, owner of Jacob’s Autorama in Rockville, Md., doesn’t see it that way. Now that estimate-bidding services are part of the industry, he believes shops can benefit from a marketing and branding perspective because it’s an inexpensive way to get noticed and broaden your customer base.
Schneider signed up with Repair Jungle last winter and has reported positive results. He bids on about 12 jobs every month—everything from engine repair, to exhaust systems, to brakes. The estimates take about five minutes to produce, and he pays a nominal fee to Repair Jungle only on bids that he wins. Schneider typically wins two bids a month, which to date have generated repair orders between $700 and $1,200, equating to a monthly revenue increase of $1,400–$2,400.
“These are customers who didn’t know about me to begin with, and without bidding, ones who I wouldn’t have landed otherwise,” Schneider says. “It’s a low-cost marketing concept that benefits both shops and consumers.”
Although the price quote is a big factor in the consumer’s decision, there is no rule forcing shops to low-ball their prices, Schneider says. Every job still has to make financial sense for your business.
Schneider sets certain prices that he won’t fall below for various jobs, and refuses to undercut his own standards. Not once has he sacrificed well-deserved revenue in exchange for work volume. He submits bids that compensate his shop fairly and leaves the decision up to the consumer.
“If I’m not going to make any money, I’m not going to take the job. It’s that simple,” Schneider says.
And that, he says, is the key to making bidding systems successful. High volume doesn’t mean you’ll be profitable, so you can’t treat bidding systems like an auction and do whatever it takes to win the job.
“Identify your price points and the lowest you can charge for various services to maintain profitability to make it worth the effort,” Schneider says. “Let the job go if customers want a lower price.”
Still, Gilley says shop operators should give this idea careful thought before jumping in. Shops need to determine who their target customers are when deciding whether to participate. This could work for shops that want price-conscious customers who look for the cheapest repairs, he says. It’s a business decision.