Well, it's official. Companies marketing auto parts via the Internet have finally came up with the correct method for doing so, and as such, are making bigger and bigger gains with their slice of what I've always considered my (or our) pie.
Like this article? Sign up to receive our weekly news blasts here.The original goal of this article was to chastise these up-starts, but very begrudgingly, my attitude was switched, my perspective changed, and I became fully aware that my traditional stand for independents was on shaky knees and loose ankles. However, the foundation of my stance was based upon a perceived relationship that exists between independent jobbers, the manufacturers and our warehouses. That relationship does exist, but the manufacturers and warehouses are clearly viewing these Internet companies as a huge source of volume and revenue that provides them with an immediate cash infusion.
What follows is an interview I conducted with the founder of a very prominent online company that has been doing business since 1999. They have a national TV advertising campaign that sort of pokes a stick at the shortcomings of a traditional jobber. Combined with their mission statement of “liberating the information hidden behind the parts counter,” whenever I saw this commercial I began to grind my teeth and my blood pressure rose 30 points. Most of my ire was directed at the wrong target. It's not the Internet companies’ fault that they are doing well. In fact, fault, as a characterization, is totally incorrect. Read on.
Q: Your company has been doing business since 1999 via the Internet, and it seems you have done very well. For 2012, what are your company's goals?
A: To improve our cataloging, our customers’ overall experience and train and hire more employees. We feel it's very important to stay focused, but we must also look for better ways of doing business and attracting more customers.
Q: What are the largest obstacles you see for the next 5 years?
A: Hiring the right people. Since this is a very specific industry, finding the people with the right communication skills is tough and usually requires a great deal of in-house training. It's not everyone that can provide the customer service that a car enthusiast demands, or the advice that a novice needs. It is one of the reasons that we started the company. In our own prior experiences, when dealing with various parts houses we would actually wait for the one person that could take care of our needs, and it was very frustrating for us. We like to think all of our parts specialists are indeed specialists, instead of one person that knows everything and the rest of the people whom only know some things.
Q: Since everyone has competition, what advantage does your largest competitor have that possibly allows them to be more competitive?
A: Our largest on-line competitor utilizes an off-shore call center where the average worker makes about $10K per year. Our call center is stateside, and we tend to hire new college graduates, who are professionals within the industry. As I said before, since we are trying to improve our customers overall experience, we don't see off-shore call centers as a way to do it. We want repeat customers that can actually develop a relationship with a particular parts specialist.
Q: Do you have an actual warehouse facility, or do most of your parts ship straight from the manufacturer?
A: Most of our parts ship direct from the manufacturer or a national distributor.
** Note, my interviewee did not want to give too much 'strategic company information' regarding this question.
Q: How do you view the independent jobber?
A: We're all in the same boat or in this together. As much as we are different, we face the same challenges.
Q: Returns have historically been a huge issue with Internet-based auto parts suppliers. Would you share what your return rate is?
A: While I'm not at liberty to tell you the exact percentage, our distributors tell us it's lower than the average. We think it's lower than average because of the type of customer that we typically service. I don't know the exact demographics, but our customer tends to know a great deal more about their vehicle or application than a traditional retail shopper.
**This alludes to the possibility that all items returned go back to whence they came. Hmm....
Q: Do you really think that something is being hidden behind the parts counter, and what has your company done to liberate the issue?
A: I don't think there is a subversive nature of a traditional jobber vs. what we do. It just seems that a traditional approach to pricing and finding parts is time consuming, and while a retail or jobber store may have the ability to price and source multiple brands, it's usually not the case. Our approach is to make available as many brands with pricing as we can and let the customer decide which best fits their needs, not the parts store. If they have further questions, our parts specialists can assist with more in-depth information. Also, it seems that due to limited brands availability, a lot of jobber stores give the stock answer that it must be a dealer item if they can't locate the item readily. It's all about the accessibility of information, not that it's being hidden, more like it is just not available or commonly resourced. We are trying make a difference in how our customers make buying decisions instead of simply relying on the decision a parts store makes for the customer.
Q: You mentioned the fact that you source parts from the manufacturers and distributors.
A: We buy a lot of parts from a national programmed distributor.
Q: Do you offer special dealer or installer programs to attract business or fleet buyers?
A: Not really. But they have the ability to develop a relationship with individual customer service parts specialists.
From the surface of the above interview, this online company looks just like any other automotive jobber. However, their approach is truly customer driven, their business model is unique, and they have taken advantage of a lot of resources and offerings that most jobbers do not. Their in-house staff is within US borders, they are technology savvy and have a clear goal for growing their business. Personally, I can't fault them for anything as much as I initially wanted. To this company, I say good luck and Godspeed. You've done your homework, and it's paid off.
Still, I feel the need to blame someone for the Internet business model not being a traditional distribution idea, along with my own inability to get some of this “easy” money. Mind you, I'm not looking for fault, I looking to get my share of their pie! If we disect the interview, several things rise to the top: It’s an Internet-based company with a knowledgeable service department and a national TV advertising campaign. They buy factory direct and from national programmed distributors. Outstanding customer service is actually a goal. They have no real need for a large warehouse and don’t stock a huge inventory of multiple brands. All sales are paid up front, and as an added bonus, customer may not have to pay sales tax. They also do not have to appeal to installers and dealers with wacky manufacturer promotions.
I wish my warehouses and manufacturers would assist in my transition from a traditional jobber to an Internet jobber, where I would have no real inventory, no warehouse, no dealer programs or program group affiliation, better shipping methods and pricing But sadly, it’s not gonna happen.
If the warehouses and manufacturers are willing to provide product to Internet storefronts, what's next? Will they allow the traditional side to direct ship via an affiliate website to the end user, or will they sell the end user themselves? I don't have the answer, but I do know this much, something is going to happen to fundamentally change how a traditional jobber markets product and conducts business, whether it be Internet based or at a store near you. And finally, if the warehouses and the manufacturers allow indiscriminate returns from storefront jobbers, why do they limit a true jobbers' returns and stock adjustments to a percentage of purchases or inventory that is actually STOCKED? Potentially our trust is being tested to a breaking point.
As a warehouse, or national distributor, I'd be careful about the allure of a quick, easy buck that some Internet companies provide and instead pay homage to the true jobbers that got you this far.
Thanks to my interviewee, I have a whole new perspective, and a lot of respect for your business. I will no longer operate in a traditional sense of being one in the timid herd that is quietly led to an over-grazed pasture. I'm looking for a way to slip through the fence and make my way to the lush meadow where the few prized livestock graze. I'm bullish about future opportunities. Grab your business by the horns, lead it in the direction you want it to go, and it'll keep you away from the southern business end of a north-bound stampede of disgruntled traditionalists.
