Case Profile: MotoParts Parts-Centric Approach with PARts

Reprint from Power Retail magazine “Case Profile: MotoParts Parts-Centric Approach” published  20th May 2015.

MotoParts-266x266Selling automotive parts online has proved challenging for MotoParts, but developing a parts-centric approach has helped the company progress. Power Retail chats to MotoParts’ Scott Shillinglaw to find out more.

With a long history in the B2B commerce space supplying wholesale auto parts throughout NSW and Australia, MotoParts decided to launch into a completely new sales channel to leverage their existing business model. As one of the largest online marketplaces, eBay was the obvious choice for MotoParts to start their online presence and drive a whole new section of growth for the business.

This decision was prompted by the rapid growth of the Australian online automotive parts sales industry (estimated to be worth $380.3 million in 2014-2015 and growing annually at a compounded rate of 17 percent) centred on New South Wales, Victoria and Queensland – areas that have the highest number of kilometres driven.

Power Retail caught up with Scott Shillinglaw, Online Director for MotoParts, to see how the transition came about.

Can you provide a little background on MotoParts?

MotoParts is the retail arm of South Coast Agencies, which has been in the auto parts trade since 1946.  It’s a family operation, with the current owner’s father starting the business right after WWII.  For decades, they have provided primarily quality B2B services to resellers (chains like AutoOne, Supercheap Auto, Repco and independent  stores) and what is called trade (consisting of mechanics, auto electricians, etc). South Coast Agencies currently has a small retail presence (three stores from Wollongong to Nowra) and are planning expansion.

A few years ago, the current family ownership recognised the need to modernise the backend systems and existing retail stores, with a goal of establishing new revenue streams. As part of this pivot, I was brought in late last year to set up and grow the online retail channels.

How has the business developed since launching?

We’re still in the early stages of testing a beta version of the website. However we have seen early indications of success. The decision was made early on to focus on easy forms of revenue – the ‘low hanging fruit’, as much as I hate that phrase. The two main ones to start with were selected online resellers (drop ship for selected clients) and eBay, due to both of those channels being easy to set up while we were working on organising the supply in a coherent fashion.

On the supply side, we are starting to gain traction after a lot of initial set-up, now putting up between 10,000 and 20,000 new SKUs a month. Growing the supply is obviously necessary in a long tail business like automotive parts.

Describe your business model, and the decision to expand from B2B into B2C.

We’ve expanded into B2C as an additional channel. The existing B2B is still the large majority of the overall business, and we are looking at ways to use experience and assets gained from the B2C expansion to improve the B2B offering.

So the online focus is both B2C and B2B, and we’re working to improve the overall user experience, and revenue, of each.  Both sides have unique challenges, which ensures we don’t get bored.

How long did it take to launch your online sales channel and what led you to use eBay?

The initial due diligence for the various technology partner selection took about a month.  Set-up, front and backend development, and a lot of content wrangling into a coherent format took an additional 10 weeks. From start to finish it took about three and a half months to launch.  We’ve been concentrating since then on increasing the supply listed online, improving operations, and building the initial website version.

We chose to go with eBay as that is where the buyers are. It’s a relatively low cost way of getting sales and a reliable channel. So setting that up first was sort of a no-brainer. That being said, it’s only one channel, and you need to be utilising as many as you can manage effectively, so we’re trying to expand to other channels quickly.

Listing on eBay has already increased our total revenue in just a few months.

Who takes care of your technological needs in terms of your e-commerce platform?

This was sort of an interesting trade-off for us in the planning stages. There were limitations with all of the large established platforms, mainly around the scope of products that we are planning to scale to. 

It’s one of the challenges to auto parts that I believe has made online a somewhat unappealing area as an effective retail channel. To be a good place to purchase, you need to have searchable supply. 

Even conservatively we’re looking at 120 million SKUs – 10,000 parts per car  x 4,000 car models x 3 different brands for each.  That’s not even taking into account specialist products (performance, racing, drifting, tuning, 4WD), general to specialist automotive tools, and associated industries like motorcycle and agricultural parts.

I joke that auto parts online is just like selling clothing, with the main different being that if selling a dress was like a selling an alternator, you would not only need to specify the brand/colour/size, but would also need to specify to the buyer that this dress only fits brown haired women from Queensland who are left handed and born between May 1982 and July 1985. There are so more data points to plan for so organisation of data is critical.

For parts, you are buying the part to work in a larger system. So the primary step is to enable your consumer to identify if the part fits their car.  It’s a classic many-to-one relationship. If you get it wrong, you get a lot of returns and irate customers.

So we did our due diligence to see what solution could cope best with the issues. It came down to a choice between the established online commerce platforms and a parts specific provider that focused on B2B integrations.

Obviously with the former we would get stability, great add-ons and solutions, and the built-in ability to scale to millions of SKUs. However, there’s a more limited understanding of the parts market. With the latter, it’s more bespoke, with better integration around the specific parts problems and databases, but a lot less off-the-shelf tools.

We’ve gone with the latter, with services through PARts Australia, as a parts-centric approach seemed safer. It’s a company that started out doing marketing and online solutions for primarily automotive clients, and has done a lot of work recently assembling and curating a database that allows us to tell a consumer what parts fit their car in a usable format. For Australia, it’s one of the tolls that is making automotive online commerce a lot more feasible.

With the help of data integration and cloud-based e-commerce solutions, Fusion Factory, we deployed CommerceConnect to launch our new online sales channel with eBay and manage product data in a centralised solution.

Fusion Factory has extensive knowledge and experience building e-commerce solutions for clients in the automotive parts industry. They understand the business processes and data requirements associated with the constant changes in the complex world of automotive parts.

The product data is received from PARts, who provide us with automotive parts content, and collated with inventory and price data from our ERP system. The data is frequently synchronised in an intelligent way in order to list products on eBay.

It was vital for our eBay sales success to have a solution that could handle two-way integration with our backend systems—paving the way for seamlessly adding more online sales channels.

What challenges does selling online present for an automotive parts distributor?

Getting reliable ‘e-commerce standard’ data in order to list something that people will buy. The space is unsexy and hard compared to other areas like clothing, electronics, etc. We’ve had to do a lot of catalogue creation and enhancement.

But the state of the industry today is helping with getting access to usable data – attitudes have changed and solutions are now available that make selling lots of parts online feasible. Keeping good relationships with our suppliers is key with all this.

Scaling operations effectively can be challenging. We’ve been working hard to increase the capability of our warehouse systems and team to handle a shift from the current 800-1,000 packages a day to the larger amounts we plan for.

What lies ahead for MotoParts?

We’re excited to be expanding and offering improved retail solutions (B2B and B2C) for our customers. At the end of the day we want to work to allow users to find the best solution for their vehicle, at the best price, and as easy as possible.

MotoParts new online store will be live by next month, we’re just in the final stages of testing so it’s an exciting, if busy, time!