The Race for Auto Aftermarket Ecommerce Dominance
Recently Forbes contributor Sarwant Singh wrote about Future Of Automotive Aftermarket And Car Servicing_ Consumers Will Have More Channels To Shop Around – Forbes. Singh pointed out that automotive aftermarket and car servicing consumers will have more and more channels to shop around. This future, Singh indicated, is due to converging trends in the global aftermarket and car servicing sector.
Citing “The Future of Parts and Service Retailing in the Automotive Aftermarket,” a study published by Frost & Sullivan, Singh mentioned the biggest trends that will change the global automotive aftersales market in the next decade:
- Parts ecommerce will rise: By 2020, online B2C automotive parts and accessories sales are expected to become a US$20 billion business in North America and Europe. Emerging markets like Brazil and China are predicted to experience a huge growth in the purchase of online parts. For Australia, that means a A$1.9 billion business by 2020 potentially when adjusting for market size and exchange rate.
- Suppliers and OEMs will go for direct selling: Singh cites the runaway success of Bosch’s online shop on TMall, a leading Chinese-language B2C ecommerce site (owned by Jack Ma’s Alibaba Group). Bosch’s online shop is estimated to have gained about US$9 million in its first year at TMall.com. This had a snowball effect on many car companies and suppliers. Expect similar trends to happen in emerging markets. Big companies, like Goodyear, are going to be the OEMs and suppliers first to be in the race, but smaller, more mobile players who know the ins and outs of online selling will also have a fighting chance.
- Online giants and traditional distributors/retailers will go head-to-head in B2B sales: China’s Alibaba has crossed the Pacific and debuted its IPO in North America, targeting the U.S. aftermarket. Brazil’s automotive B2B ecommerce Itaro (founded in 2012) has already partnered with 700 independent service garages all over Brazil and is poised to play a greater role in Latin America. These overtures will be met head-on by new or already established online auto parts retailers like U.S. Auto Parts Network, Oscaro of France, and Amazon.
- Online automotive aftermarket B2B and B2C will merge: Integrating B2B and B2C is the name of the game. Ecommerce sites targeting the DIY (B2C) market will also go for the more lucrative non-DIY vehicle owners who rely on garage service shops served by B2B players. New business models will emerge as a result – some will follow the lead of other industries like the travel industry in aggregating parts distribution services and connecting with service centers on an on-demand basis – relying on rapidly changing technologies like the sharing of standardised fitment data and automated remote vehicle diagnosis. Some will become mediators between customers and service centers. Some will both be supplying parts and garage services.
The writing is already on the wall, says Singh, who cites the events below as just a small sampling of what companies are doing to position themselves in the coming automotive parts and aftermarket ecommerce scramble:
- PSA (Peugeot-Citröen), Europe’s second-biggest carmaker, buys online parts seller Mister-Auto in February – a move that would, in the words of Peugeot spokesman Pierre-Olivier Salmon, “allow us to develop our offerings online and reinforce our after-sales service.” This attempt at creating synergy by Peugeot has been criticized.
- The French tyre giant, Michelin Group, (owner of BFGoodrich, Kleber, Tigar, Riken, Kormoran and Uniroyal tyre brands) buys 40% of Allopneus, the leading French internet tyre retailer, in April, for €60 million; then buys Black Circles, one of Scotland’s fastest-growing online tyre-fitting business (which is said to undercut conventional sales prices by 20%-to-40%.), in May, for £50m. Michelin already owns ATS Euromaster, UK’s leading conventional tyre distributor. It is reported “the French firm hopes there will be synergies between the two distributors” – a move also known as integration.
- In April, Openbay, a Boston online marketplace for finding quotes on auto repairs, launches OpenbayConnect, an app to help users find auto service. OpenConnect works inside a diagnostic device plugged onboard an Internet-connected car. When the car encounters a problem, OpenConnect automatically gathers and analyzes data and comes up with a diagnosis. Then (using nearby cell towers) OpenbayConnect contacts mechanic shops nearby for bids to fix the issue. This app is targeted at car owners who only know how to put in gas and drive. Openbay is backed by Google Ventures and Andreessen Horowitz. Smaller companies are using innovation (rather than integration) to move forward in the aftermarket and parts service sector.
The future of global automotive aftermarket and car servicing promises to be very varied and competitive indeed from the consumers’ viewpoint. However, it would be “survival of the fittest” for fitment and automotive parts companies.
How would automotive parts and car servicing companies survive this brave new aftermarket ecommerce future? By being very responsive to changes and challenges. By having an automotive parts e-commerce site that efficiently manages, distributes and shares product and fitment data so problems can be diagnosed real-time and speedily addressed.
PARts can help companies set up and subscribe to data for their e-commerce site. Here’s some of the advantages for auto parts and service companies working with the PARts system:
- Join an integrated automotive aftermarket ecosystem for suppliers and sellers.
- Tap into global standards, global and local brands.
- Distribute your data online, to customer, for e-tailing and e-commerce.
- Supports RedBook, TecDoc, ACES PIES, eBay MVL and more.
Talk to PARts about how and ask for a demo and you can download a copy of the report below.