E-Commerce is “Driving” the Automotive OEM Industry
According to Technavio, the global market research giant, sales for the automotive aftermarket will reach $49.5 billion in 2022, with a projected annual growth rate of 20%. Hedges & Company, a leading automotive aftermarket research firm, predicts E-commerce revenue will hit $16 billion in 2020 in the US. Consumers are purchasing online at an unprecedented rate. In their annual auto parts industry analysis, nearly $2 billion in additional revenue is shifting away from brick and mortar to the E-commerce channel in 2020, a 30% increase over 2019.
Automotive aftermarket sales are the area with the most potential for growth. With current economic uncertainty, many consumers are postponing any major purchases and adopting a wait-and-see attitude on spending. Also, consumers are holding on to their current vehicles for a longer period, with the average age of automobiles now standing at a record 11.9 years old according to a study by IHS Markit. Several factors beyond the pandemic’s effects on the economy have pushed the average vehicle age upwards this year and in years past, including:
- Many new vehicles last longer
- The average price of a new vehicle in January 2020 was $37,851 according to Kelley Blue Book
Technology is a huge disruptor, and one of the biggest technology disruptors of the 21st century has been the rise of e-commerce. Many of the biggest companies in the world have experienced explosive growth because of online sales channels. They have transformed purchasing behavior and forever changed the way consumers and businesses choose products and engage with brands.
E-commerce provides unique advantages to businesses in the automotive industry by:
- Controlling costs
- Providing a better understanding of consumer behavior
- Enabling tighter control of brand management
- Increasing direct to consumer sales
These have the potential to increase market share and profits.
What does this mean for the OEM parts industry?
During tough economic times, vehicle owners are even more likely to invest in repairs than purchase a new car. While it makes some automotive aftermarket sales to hobbyists, most are sales made to keep cars operating smoothly for work and personal use.
The downturn in the economy has created a tremendous opportunity for retailers in the automotive aftermarket to develop a robust e-commerce platform. The current aftermarket landscape is transforming because of the pandemic restricting in-store purchases. E-commerce is the fastest-growing sales channel.
Today, more and more automotive customers prefer to shop for parts online.
Reasons Automotive Customers Prefer To Shop For Parts Online:
- Lower cost than traditional retail
- 24×7 access – always open online
- Easily locating the right part
- Ability to conduct independent research and reviews
- Broader product portfolios available online
- Price transparency
The user experience of shopping online for auto parts will only get better as the industry creates easier to navigate and more helpful online experiences for consumers. Interactive sites like Tire Decision offer intuitive Tire Decision Guidelines that generate custom tire recommendations based upon the customer’s vehicle specifications. eBay Motors, a leading site for unbranded auto parts, allows shoppers to view diagrams of specific auto parts for individual vehicle models. The improvements in user experience are speeding up rapidly.
Steps to Starting an E-commerce Auto Parts Business
Now that you’ve seen the benefits of an online e-commerce strategy for selling auto parts, how do you start? Here is a summary checklist of important considerations to make when starting an Auto Parts online business:
- Identify your target market
- Define your Target Client Profile (TCP)
- Create a Business Plan
- Identify and document revenue sources and expenses, operating procedures and policies
- Register Your Business
- Be sure to register your business with the state you will operate from and ensure you have all licensing and relevant permits
- Source Your Inventory
- Identify your supply chain – be sure you have a reliable source for the products you intend to sell online
- Build your e-commerce website
- Contract with an experienced e-commerce developer like Alena Solutions, expert in the design and deployment of e-commerce sites that convert extremely well.
Building an online e-commerce auto parts business can be very rewarding. However, it pays to get professional help when navigating the challenges associated with a new enterprise. Sources of free and low-cost help include:
- Local Chambers of Commerce
- Local Economic Development Departments
- The Small Business Administration
- Small Business Development Council
The mission of these organizations is to help business owners succeed. They have specialists on staff in finance, regulations, and it connects them to the local business community.
Building a powerful team of professional advisors is also necessary. These resources include:
- Certified Public Accountant or Qualified Bookkeeper
- Experienced Attorney in Corporate Business Law
- E-commerce Developer / Marketing Agency like Alena Solutions
E-commerce will deliver vigorous growth in the automotive aftermarket parts industry over the next several decades. According to Global Market Insights, the E-Commerce Automotive Aftermarket will grow at a Combined Annual Growth Rate (CAGR) of 18.5% between 2020 and 2026 (see below).
With a well-executed e-commerce strategy, the future in the automotive aftermarket parts industry looks healthy. The time for action is now. E-Commerce is driving the automotive aftermarket parts industry. Are you along for the ride? Share this with your fellow friends in the auto industry, let us know your thoughts!
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