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The Amazon Takeover

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According to a 2015 report by digital marketing agency Hedges & Company, Amazon is the single largest online retailer for the automotive aftermarket. The report forecasts that auto parts e-commerce will do $7.4 billion in automotive parts sales in 2016 and continue to grow at a steady rate, reaching over $10 billion in 2019. 

Online retailers are changing the landscape of how parts are purchased and delivered to customers. Amazon’s car parts are not only being purchased by the do-it-yourselfers or enthusiasts—quite the opposite. In fact, a study conducted in 2014 by the Auto Care Association said that professionals in the industry made up $3.3 billion of the $6 billion in replacement parts sold online that year, and that this demographic will be the main source of growth over the next 10 years, says Behzad Rassuli, vice president of strategy and market intelligence for the Auto Care Association.

According to Rassuli, based on the results of the Auto Care Association study, there is a demand that is not being met in the industry, and whether that demand is filled by traditional suppliers or “e-tailers,” shop owners will win.

 

Industry Impact

Pete Rudloff, owner of Pete’s Garage in Newark, Del., and member of the Automotive Service Association’s mechanical division operations committee, says that in his experience, shop owners he’s spoken to haven’t had any objections to Amazon, but the retail giant may present some obstacles for parts suppliers. Rudloff adds that he doesn’t think that Amazon is necessarily trying to take over the automotive industry, just seizing an opportunity. In his opinion, the fact that traditional parts suppliers can deliver quicker and provide expertise will continue to make them a necessity. However, Rudloff adds that the lower pricing that Amazon provides will make it difficult for many brick-and-mortar companies to compete. 

“Parts companies with online operations will study what Amazon gets right,” Rassuli says. “But they will also find opportunities to fill any voids that they see.” 

Rassuli suggests that parts companies without an online presence should not just consider what their relationships with their customers look like in the near future, but also how their customers’ expectations might be changing as e-tailers present alternatives to traditional retail.

 

Traditional vs. Online 

E-tailers are bringing shop owners greater access to alternative parts and more pricing options, Rassuli explains. However, there is an area where traditional suppliers have the edge: shipping time. 

The decision to change an established relationship, like shop owner and parts supplier, is not something that is done lightly, Rassuli explains. Saving a few dollars is not reason enough for a shop owner to start purchasing everything through Amazon. The most important thing to shop owners is the satisfaction of their customers.

“Shop owners will not risk telling a customer a repair will take a few days longer to get there due to shipping because they wanted to save a few dollars,” Rassuli says. 

Rudloff is an example of this. Rudloff says that he purchases parts through Amazon two to three times per week, but he’ll always check with his traditional parts suppliers first because the parts get to the shop much quicker.  

“With our regular parts supplier, I’ll order a part and within 15 minutes it’s on my doorstep,” Rudloff says. “Even though Amazon is cheaper, I’ll usually pay more for the distributor that provides quicker shipping because it ends up costing me more to have a car sitting in a bay.” 

Until the e-tailers figure out how to do same-day shipping, Rassuli says the traditional distribution chain will be hard to displace. However, Amazon’s winning formula of robust product description, transparency on warranties and returns, variety, and aggressive pricing have created an attractive option for many shop owners, Rassuli adds. 

 

Customer-First Mentality

Amazon has been in the automotive parts and accessories business since 2006. The company’s goal is to be a customer-centric marketplace where customers can find anything they want to buy and purchase it online, says Lori Richter, spokesperson for Amazon. Richter adds that shop owners benefit from the knowledge that they will receive a high level of customer care and transparency when they order through Amazon. 

“We are laser-focused on serving customers,” Richter says. “We work hard to offer the widest selection of products that are available at the lowest price.” 

Rassuli says that in order for traditional suppliers to compete, those companies need to stay in tune with the expectation and needs of their customers. 

    

Selling on Amazon 

Mike DeMoss, business manager of Fenders Cycle in Des Moines, Iowa, sold motorcycle parts on Amazon and got a behind-the-scenes look of what selling parts for Amazon looks like. He says that although all of the parts for sale are required to have a description and be sold by a licensed business, he still thinks it would be very easy for someone to set up shop and sell out of his or her garage. Customers purchasing parts have to be cautious of the vendors they choose. 

 

Overnight Takeover?

The parts that end up in shops require customer confidence, a proven track record of delivery, and the ability to get there in hours—not days. Rassuli says that Amazon and other e-tailers have worked hard to compete, but for the time being, the traditional method still has a place in the industry.  

“I presume the industry will continue to evolve, including Amazon,” Rassuli says. “But I don’t think the supply landscape will be changing overnight.”

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