No industry is immune to the disruption of Amazon, including the automotive aftermarket. According to a projection from Hodges & Co., the eCommerce giant is expected to sell $5.5 billion worth of aftermarket parts and accessories in 2018 and $1.9 billion worth of OEM replacement parts. More and more drivers are searching for and purchasing parts online rather than going to their local automotive store for car parts. Amazon offers a more convenient, personalized way to shop that is a major competitive threat to traditional automotive retailers, and will require suppliers to change the way they do business with their receivers.
Below are some key challenges both entities need to be aware with the rise in eCommerce, and tips for managing these and succeeding in the new environment.
Suppliers: Expand Your Network
The president and executive vice president (EVP) of the Automotive Aftermarket Suppliers Association (AASA) stated that the introduction of e-tailing and omnichannel retail in the automotive aftermarket has provided an opportunity for suppliers to adapt, innovate and win. Part of this will be expanding their networks to include Amazon, Google and other e-tailers, which is unchartered territory for them. This expansion will require suppliers to share product content in a format that can be used in the online marketplace and to support the digital consumer experience. As suppliers work to meet these demands, they’ll need to keep in mind the following factors:
- Dynamic content: In the eCommerce era, suppliers will need to provide more than standard product descriptions and pricing information to recipients because customers expect more when they shop online. Product photos and interactive videos will help create a dynamic visual experience for the customer that will aid their purchasing decision. It will be important for suppliers to have a streamlined way to manage these digital assets and effectively share files with their receivers.
- Brand ownership: An expanding retailer network can also lessen the control and ownership a supplier has over its brand. Often, retailers take the lead in supplier-retailer relations, and in the current environment, the power lies in the hands of eCommerce players. By streamlining product content sharing processes, suppliers can take back this control and build rock solid relationships with receivers.
- Speed-to-market: In order to deliver the customer experience online shoppers expect, Amazon and Google need to receive product content quickly. This puts the pressure on suppliers to get content formatted in a way that it can be easily shared and used. When content is properly formatted and managed, it is more likely to be accurate and up-to-date. This current, clean content allows receivers to then get products in front of customers more quickly and maximize revenue.
Retailers: Stay Competitive
For traditional big-box automotive retailers, Amazon and other eCommerce retailers are omni-present competitors. Not only that, but Amazon has traditionally pursued a low-margin, high-volume strategy, which appeals to suppliers and OEMs. As e-tailers work to add more automotive aftermarket suppliers to their network, traditional retailers will be challenged to maintain relationships with their existing suppliers and to grow their customer base. Retailers should consider the following challenges when determining the right strategies for managing relations with suppliers.
- Content volume: Because the average vehicle contains more than 20,000 parts originating from thousands of different suppliers, many automotive retailers are overwhelmed by product content. They must keep content organized so that products can be easily sold online and in-stores. With the right technology in place, retailers can maintain better control over all of the content types for each product, and ultimately, sell a greater variety of parts across more vehicle models.
- Streamlined communication: Clear and consistent communication with suppliers about product content requirements will be essential for creating high-quality customer experiences. This will ensure the right information is in front of the right customer at the right time. Additionally, if a retailer can sustain and promote streamlined communication, this will keep existing suppliers around and help attract additional suppliers to the network.
- Speed-to-market: Speed is just as, if not more, important for retailers as it is for suppliers. eCommerce works fast, providing customers the auto parts they need when they need them. Retailers will need to change the way they work to keep up with this pace, and this starts with how they receive product content from suppliers. When content is delivered in the right format, it can be used to get products online more quickly, meeting customer demands for immediate gratification.