eCommerce Has Permanently Disrupted the Way New Car Dealers Sell OEM Parts
Over the past two decades, retail has drastically changed with the rise in eCommerce. Compared to other sectors, the automotive industry has been slower to expand into online sales. Even slower has been the adoption of eCommerce strategies in the parts department.
Traditionally, the parts department has relied on customers walking through the door and driving up to the service lane, or in some cases on local repair shops and collision centers ordering parts for their customers. In the past, consumers seeking out an OEM replacement part for their vehicle would have to physically come into the dealership, and parts were looked up in a physical or PC-based parts catalog.
As an online presence became a vital component for businesses to flourish, dealerships created their own websites to better serve vehicle buyers and attract new ones, and later they even added new tools to allow customers to book service appointments online. However, the ability to browse parts and order online was rarely integrated into these sites. Even today, in 2022, the majority of dealerships do not provide an online option for consumers to browse or shop for parts, with only a quarter of new car dealerships selling parts online.
Instead, most parts departments continue to rely on old selling methods, including a parts form that online visitors can fill out to request information about a part. This form results in few conversions and is seen by consumers as inconvenient and impractical - even when they receive an actual response from the dealership.
Although only a fraction of dealers are selling online, it is becoming increasingly apparent that this is where the industry is heading, with more dealers adopting parts eCommerce strategies.
COVID-19 Solidifies the Importance of Parts eCommerce
If the shift in selling online wasn’t apparent before 2020, it quickly became a central strategy for many franchised new car dealerships as COVID-19 hit and the world began to shut down. In the U.S., businesses across the country closed their doors, and consumers went into lockdown. Even in states where stay-at-home orders were not adopted, and areas did not shut down, dealerships still saw a sharp decline in business.
Many dealerships found relief in their online parts business to combat this sharp decline in business. During the shutdown, many people use the time to repair their own vehicles or begin new projects. This led to a rise in the demand for car parts.
According to a 2020 eCommerce report from RevolutionParts, dealers selling parts online actually saw a 27% increase in online parts sales, despite the economic challenges.
The pandemic accelerated the shift to online shopping by more and more people. As restrictions lifted and people began to return to normalcy, one habit that most people are holding onto is shopping online. In 2022, over 230 people in the U.S. made purchases online. In the automotive industry, the shift to online shopping has been drastic. Before 2020, only 32% of consumers felt open to purchasing a vehicle online, but this number has since risen to 61%.
The impact of parts eCommerce doesn’t just impact parts being sold online, it also affects those being sold over the counter. According to Hedges & Company, regardless of whether a consumer purchases online or in-store, 74% of all parts purchases begin with an online search. This means that people are not just shopping online for a part, but they are researching where they can get the best price, who has the part in stock, and how fast they can get it. If a dealership does not have a way for consumers to conduct this research, the probability of being passed over is high.
New Opportunities for Franchised Automotive Dealers and Manufacturers
The challenges dealers began facing in 2020 are far from over, as we are now dealing with the fallout of the pandemic and worldwide supply chain issues that have threatened the supply and production of new vehicles and auto parts. However, just as dealers were able to combat pandemic challenges in 2020, dealers who are selling parts online are now using these same strategies to mitigate the impact of the damaged supply chain.
Creating an online parts business allows individual dealers to expand their customer base and reach parts buyers across the country and internationally. This means complete reliance on the local market has been eliminated, as new online revenue streams have been established, including selling parts through the dealership website, a separate parts web store, or through an online marketplace such as Amazon or eBay. Not only that, dealers can deal with obsolescence or aged inventory challenges by listing parts where they will be searchable by buyers who need them.
Manufacturers have also understood the major opportunity eCommerce presents and often provide sponsored solutions to allow dealers to sell their OEM parts online through official parts eCommerce programs. Dealers and manufacturers know that they cannot compete with the aftermarket via traditional methods only. If they do not add their products to the online market, then consumers will no longer benefit from the opportunity to buy their higher quality products, and they will miss out on sales that go straight to aftermarket vendors and resellers.
With the average vehicle age continuing to increase each year and the lack of availability of many new vehicle models, owners are looking to buy parts to maintain their vehicles longer and many even make upgrades to older vehicles Offering parts and accessories both online and over the counter gives dealers a multichannel strategy commonly used across industries to attract new customers and tap into this growing segment of second, third, or fourth owners of vehicles who would otherwise buy from the aftermarket.
The online parts market also grows larger every year, presenting new growth opportunities for franchised dealers and manufacturers. Most consumers today incorporate a hybrid form of online and offline shopping habits, meaning the method of selling products strictly over the counter is outdated and will prevent
Ibrahim Mesbah is the Co-Founder and CEO of RevolutionParts, which transforms the way parts buyers and sellers connect.
A technologist, founder, and CEO, Ibrahim is passionate about marketplaces, payments, and eCommerce. Having spent the last decade leading the RevolutionParts platform, which has powered more than $3 billion in parts and accessories sales.View full profile