The agency predicts the automotive market will continue its dramatic shift to digital, as online retail sales of auto parts and accessories in 2018 will exceed $10 billion for the first time. Additionally, Hedges & Co. forecasts online sales of auto parts to reach nearly $16 billion in 2021. The forecast did not include used or recycled parts, online auctions such as eBay Motors, or third-party marketplaces.
Ratchet+Wrench spoke with Jon Hedges, president of Hedges & Co., to learn more about the study, and how online retailing will impact the automotive aftermarket in the next several years. He discusses how online retailers can build trust with shops moving forward, and the major trends that may contribute to a major growth in online parts sales.
This forecast predicts a 16.3 percent increase in online retail sales over 2017. Why will there be such a drastic increase?
E-commerce has been growing in the automotive space at about 15–16 percent over the past several years. It wasn’t a huge change, but it was a little bit of a stronger sales growth than what we have seen.
It was a bit of a stronger year for online auto parts retailers. It’s tough to point at a single factor—it’s part of an overall trend with selling online getting stronger, with more penetration. Auto parts sales are having more penetration into online, and consumers are more accepting of it. We saw more manufacturers selling direct, and that’s a piece of it. It’s many many things.
A lot of our readers are concerned about online parts ordering, and don’t have a lot of trust in the process. Counterfeiting and return issues are a couple of the issues these shop owners bring up. What are you seeing on that front? How can these organizations build trust with their client base?
I think anyone that has an online presence, needs to make the consumer comfortable with the brand. They need to give the consumer answers to their questions, and they need to educate the consumer. That might be how to tell this part from a counterfeit part. If that answers the question, why should that consumer buy this brand or this product, it’s all in education and building trust. There are more and more reviews on products and on resellers. There’s a lot of moving parts to building that trust with the consumer.
Why wouldn’t you want to do everything you can to educate a consumer about your brand, about your customer service? Do you actually have a physical address on your website? It’s so important because consumers are so savvy today. Consumers are experts at browsing the web. Any website needs to take an active role on telling the story about a brand, or about a product. Just info on if the product is stocked, when will it arrive, what is the shipping. The more you can educate a consumer, the better off you’re going to be.
The forecast had a prediction of online retail sales reaching $16 billion in 2021. What are the main trends that will contribute to that $6 billion increase?
I think more manufacturers are going to sell direct. There are so many consumers going to manufacturer websites already, and we find about a third of them are coming with the intent to buy. I think that’s going to be a growing trend.
Consumers feel the need to go to manufacturer websites, because they don’t feel they’ll see the entire product line otherwise. They want to confirm that a part will fit their vehicle. You’ve got this building trend of consumers looking at manufacturer websites, visiting to do these things. A third of them are coming, they’re looking to buy direct the from manufacturer. The manufacturer may not support that, but consumers are accepting that as a sales channel.
Convenience is a big part of that. Consumers are increasingly expecting to be able to find the info online without having to make a phone call.
One big part of this study is the shift to ordering parts on mobile phones. Hedges & Co. forecasted that half of the sales this year will occur on mobile devices. What does this mean?
Ordering from a phone, the growth in mobile is a very significant trend in the aftermarket. More consumers are used to using their phones, we’re connected all day long. More sites have gone to responsive design. Google has been reporting on the explosive growth with mobile devices for the past several years. It’s a rapidly growing category.