Accessory To Profits
Taking your parts and accessories department online can bring in business from all over the country, but there are several key issues to consider...
April 2013, Auto Dealer Today - Feature
The car dealers I talk to at the various conferences and seminars I attend and host are always interested in learning about new trends in the industry. They often bounce ideas off of me to get my input. To me, the best dealers I’ve worked with are the ones curious about what’s new and exciting, but they are also very thorough in understanding the complete picture of any major investment of their time and energy before they actually move forward with it.
Ali Amirrezvani is the president, CEO and co-founder of DealerOn Inc.
I would estimate that once every two weeks or so, one of my customers or prospective customers will ask me my thoughts on whether they should add parts and accessory sales to their dealership’s existing online presence. We have seen many of our customers have fantastic success creating content for the service department side of their fixed operations, but the parts and accessories piece is a much trickier proposition for online marketing. Here are a few unique challenges for parts and accessories that aren’t issues for the variable ops and service department sides of the dealership:
1. PARTS AND ACCESSORIES IS NOT A LOCAL MARKET.
Franchised dealers have a supreme advantage in terms of organic search results on Google. That’s because Google has refined its search algorithm over the last few years. So, when a consumer searches “Toyota dealers,” he or she is provided with local dealers based on the shopper’s physical location. That means dealers are only competing with a handful of other dealers in their area selling the same vehicles in the same designated market area (DMA).
Vehicle repair and maintenance services are even more hyperlocal, and Google’s algorithm responds accordingly. It knows consumers looking for “brake repair” or “oil change” services are not going to travel more than 20 or 25 miles.
Parts and accessories, however, is completely different. If I need a brake light for my Ford F-150, I’m just as likely to buy it from someone shipping it from 3,000 miles away vs. having someone ship it to me from the same ZIP code. Again, Google’s algorithm reflects this consumer behavior, which means there is no local influence whatsoever in the search results you get for an “F-150 brake light.”
2. PARTS AND ACCESSORIES IS AN ONLINE TRANSACTIONAL BUSINESS.
We sometimes forget that for most consumer shopping sites, the end result is a purchase, not a phone call or e-mail lead like it is on dealers’ sites. Traditional e-commerce sites, including parts and accessory sites, have a layer of complexity that doesn’t exist on a traditional dealer website, such as a shopping cart checkout process.
To run a parts and accessories website, you need a fully functioning shopping cart engine, a credit card gateway, a pricing module for shipping and a pricing module for taxes. It is a dramatically more complex platform than a dealership website, which stops at the lead form. Most dealers haven’t worked with a site like this before and many aren’t prepared for its complexity.
3. PARTS AND ACCESSORIES IS A HIGH-VOLUME, LOW- MARGIN BUSINESS.
Car dealerships are fairly unique businesses. Most dealers only log about 100 transactions per month, but they make a few thousand dollars on each one. There are few other commodity businesses that generate anything close to those kinds of margins, or succeed with so few monthly transactions.
Most online retail businesses have razor-thin margins, numerous product lines and an enormous number of SKUs — pretty much the exact opposite of a traditional car dealership. Amazon is the biggest online retailer of them all, and that company is still trying to figure out how to sell online profitably. Thousands of SKUs require thousands of pages of website content and a pricing/discounting database to manage the inventory. Again, this is not an area in which most dealers have much experience.
4. PARTS AND ACCESSORIES IS A MATURING INDUSTRY.
There are already a number of fairly sophisticated websites focused on this business model. If you search Google for a brake light or floor mat for any vehicle, you will find multiple sites that already cater to the online parts and accessories consumer. Many of these sites are selling across manufacturers, so they have the benefit of additional scale that dealers looking to sell their own OEM’s parts would not. Again, these are important considerations to take into account when considering building a parts and accessories site.
So if you’re going to start selling parts and accessories online, make sure you’ve thought through the issues I outlined above. Meanwhile, I strongly encourage you to market your service departments aggressively online. None of the challenges that I highlighted for parts and accessories are relevant for the service department. In fact, in many cases the field is tipped in the dealers’ favor, if they are willling to invest in that business.