As I sit to write this, we are at an important milestone. One year ago, the world ground to a halt and life as we know it changed. “Quarantine” and “social distancing” were added to the lexicon, and sales of everything we used to go to stores for fell off a cliff. Then, by mid-April, signs of economic life began to emerge, and the recovery took off like a rocket. Powered by a generous helping of stimulus fuel, sales through eCommerce channels were up 40 percent over the bottom of the trough, and through the second half of the year, online sales in the aftermarket were up an average of 50 percent over the previous year (source www.Hedgescompany.com ).
Growth of online sales in automotive products had grown a steady and predictable 14-16 percent annually for years. Then came along 2020, and the sales of automotive parts and accessories online jumped ahead by $1.9 billion to reach $16 billion for the year — an increase of over 30 percent in a single year. Now, whether you believe this dramatic transformation in buyers’ behavior will continue to grow or will plateau at a new higher level, the numbers are too big for anyone to ignore. Brand owners and their distribution partners must all account for this new normal in their marketing and sales strategies.
It’s important to note that this increase in online purchasing is driven largely by DIY consumer purchases. Depending on who you ask, the DIY segment of the U.S. aftermarket is 25-30 percent of sales. The remaining 70-75 percent of sales are to the DIFM (do it for me) segment and the professional channel. Sales in DIFM were actually down to low single digits for the year and do not enjoy the share of online commerce that is true of DIY to consumers.
Regardless of the sales channel that products follow, marketers know to focus on the needs and wants of the customer in developing their strategies. Customers today are digital-first in their product research. And with a large number of options where to make their purchase, both online and offline, they have very little patience for brands or sellers that do not fully meet their needs for fitment info, images, attributes, market copy, fast delivery, and an infinite product assortment to choose from.
Since everyone down-channel is a customer of the parts manufacturer or brand owner, I want to focus on what those channel partners are in search of to maximize their sales. Whether it’s a leading marketplace or specialty .com retailer, the number one need is for a huge assortment. Consumers come to a website with the expectation that they can find virtually any product regardless of the category or the fitment. Therefore, online sellers want to list the complete catalog of product from each brand – not just the fast movers. Online product assortments measured in the millions of items are becoming the norm. This leads to the “infinite aisles” experience that consumers expect.
The second requirement is for complete, current, high-quality product content. Marketplaces and online sellers regularly grade the quality of the product listings they have on their websites. Consistently, they say that the best source of product content is from the brand owner — not distribution. Let me state that again for clarity. Online marketplaces and specialty .com retailers want to get product data for all of the products in your catalog directly from the brand owner — not from your WDs. This includes the fitment data as well as complete, rich product information and images.
I encourage brand owners to take ownership of your brand online. Register for control of the brand in vendor central (or the equivalent). This is not to say there is a direct buying relationship with the brand. Distribution still has a vital role to play. As a brand owner, you have so much invested in your product reputation for quality, fitment and reliability — why would you want anyone else posting your logo, product images, catalogs, descriptions, or product labels online? There is a lot of angst among some manufacturers about unauthorized content listings from sources that are not legitimate trading partners. The best way to address those concerns is to become the recognized authoritative source of content for the brand.
And the third critical need for online channels is high availability and fast and accurate shipping to any point in the country. This is exactly what aftermarket distribution is ideally equipped to deliver. With thousands of WD locations across the country and millions of unique products in stock between them, forward-deployed inventory for practically any popular product is within a day or two of any ship-to location. The partnership between brand owners and distribution is the key to making eCommerce work. If 100 percent of the products are listed on a website and fulfillment is performed by a WD network of locations that carry 20-25 percent of the SKUs that satisfy 98 percent of the demand, there is going to be a need for the factory distribution center to drop ship the last 2 percent of demand. Brand owners should back-stop their eCommerce distributors the same way they serve as the shipper of last resort for slow moving parts when a car is on the lift.
To make the most of the eCommerce sales channel requires a hybrid, cooperative arrangement between brand owners and their distribution network. eCommerce does not displace distribution — it requires distribution. Each party should do what they do best to satisfy the customer. Brand owners should take responsibility for their brand reputation and be the recognized source of high-quality content for 100 percent of their items. Distributors should process a high volume of small orders quickly and accurately, only punching out orders for drop shipment for the slowest items that are not in stock anywhere. Online commerce offers a unique opportunity for the aftermarket distribution network to collaborate and innovate to satisfy the customer. The aftermarket is ready for eCommerce when each link in the chain does what they do best.
