Parts eCommerce - How (and If) Your Dealership Can Profit by

Selling Parts Online

WithTed Fellowes, of Fellowes Research Group, Inc.

Moderated byMike Bowers, Executive Editor at DealersEdge

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Thursday, January 10, 20131 – 2:30pm ET

Ted Fellowes, of Fellowes Research Group, Inc.Ted Fellowes has more than 25 years of experience in service parts solutions for the automotive, truck, heavy equipment and power sports industries. An accomplished innovator, Mr. Fellowes has been in the forefront of many advances in OE service parts productivity.

Mr. Fellowes is also a strong proponent of business alliances, initiating a series of integrations between solutions from various system providers.

Working for Bell & Howell’s Parts Cataloging unit (now Snap-on Business Systems), Mr. Fellowes played a leading role in establishing and growing the EPC business. While at Bell & Howell, Mr. Fellowes helped launch OEConnection, the industry leader in OE parts e-commerce and logistics solutions in North America. And, while at OEConnection, Mr. Fellowes led the design and deployment of e-commerce enabled parts sourcing solutions.

An accomplished and published author, Mr. Fellowes is writing about service parts solutions. A few past publications available electronically:

“Managing Innovation: Cases from the Services Industries” (1988); National Academy of Engineering

"Moving from Parts Stocking to Parts Marketing" - Fixed Operations; March 2008

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Parts e-CommerceA Dealer Guide

ted@fellowesresearch.com

Agenda� Introduction� Market Factors� Challenges & Risks� Types (Dealer as Seller)

◦ Summary (Costs/Efforts)

◦ Dealer Parts eStores◦ Wholesale Portals◦ Enterprise eStores◦ Mass Marketplaces◦ Other E-Commerce Types

� Summary Charts� Dealer Experiences� Action Plans� System Integration� Trends� Special Cases� Q & A / Wrap-Up

• No one right solution – many dealers will benefit from multiple solutions• Solutions depend on dealer’s franchises, DMS and line of parts business• Fail fast – invest in success (experiment)

Introduction� Why a Parts E-Commerce Webinar?◦ Your Customers/Prospects◦ Your Competitors◦ Your Costs◦ Results (May Retain / Add Customers, Conversions & Related Parts, CSI – Without

Adding Staff or Increasing Capital Invested)

◦ Innovation Focal Point (6 Types; > 25 Suppliers; >> 50 Solutions)

◦ eCommerce: where the growth is◦ Messy market [more failures that successes; large, distinct & growing # of suppliers]

Related• Dealership Service Websites• Tire Websites – Major Advancements

E-Commerce is Inevitable

New• Wholesale eStore• New players may enter with new approaches

Market Factors [Online Parts Sourcing]

Buyer Loyalty (Trading Bond – Importance to Buyer)

Low Medium High

Buyer

Urgency (relative to

price)

Low Mass Marketplaces Dealer Parts eStores

(Primarily B2C & Semi-Pro)

OE Retail Portals Marketplace eStores Dealer Parts eStores (Primarily B2C & Semi-Pro)

OE Retail Portals Dealer Parts eStores

Wholesale Portals (Primarily B2C & Semi-Pro)

Medium Bidding

Parts Locators OE Retail Portals

(B2B & B2C)

OE Retail Portals Parts Locators (D2D, B2C, B2B)

Wholesale Portals DMS Direct Client OE Retail Portal

(primarily B2B)

High Parts Locators

OE Retail Portals (D2D, B2C, B2B)

Parts Locators OE Retail Portals

(D2D, B2C, B2B)

Wholesale Portals DMS Direct Client

(primarily B2B; minimal B2C)

Solution Clusters

Collision (Body Shop) Mechanical (Fleet / IRF / All)

Market Factors [Cont.]

� Associated with Success:◦ Price Advantages (for Buyer)

◦ Mandates (rare – on the rise)

◦ Systems Integration (B2B; Buyer-side primary; Seller-side secondary)

◦ Dedicated resources – Seller ◦ Boosts communications (buyers still need assistance and fast confirmation)

◦ Other buyer conveniences (24 x 7 order submission; access to digital invoices; parts catalogs; …)

Failure more likely when many of these factors are missing or are weak

Challenges & Risks� Costs◦ Program pricing can be complicated and/or expensive◦ Set-up and support/maintenance may be challenging◦ Optional SEO/SEM & other advertising/marketing costs

� Customers◦ Digital buyers’ expectations are high – fast, accurate

responses required ◦ Some buyers prefer phone

(you’ll support both – w/ some exception solutions/scenarios)

◦ Some buyers refuse to “own” Part (EPC) look-up

� Failure is an option

Parts E-Commerce Types (Costs/Effort)

Sales Type Fees Set-Up / Maint. OtherDealer (Retail) eStore

Primary: B2C Emerging: B2B

Upfront FeesMonthly Subscription

Minimal SEM/SEO, advertising

Wholesale Portal Primary: B2B Secondary: D2D

Upfront FeesMonthly Sub (possible low commission)

Customer InfoIntegration (DMS, …)

Buyer enrollments

Retail Portal Primary: B2C Emerging: B2B

Upfront FeesMonthly Subscriptionand/or Commission

Minimal Possible pricing limits

Market Place Primary: B2C Secondary: B2B

Listing FeesMonthly SubscriptionCommission

Part ApplicationsUploading parts Files

DMS / EPC Direct Access

Primary: B2B Upfront FeesMonthly Subscription

Customer credentials

Locator Primary: D2DSecondary: B2C

Upfront FeesMonthly SubscriptionCommission (Idle)

Upload parts files

Bidding, R/A,Buyer System

Primary: B2B Upfront, monthly & (low) commission fees

Varies May verify /processand still not get order

Dealer Parts eStore� Website for selling parts directly (plus Accessories & Merchandise)

◦ B2C now, B2B extensions emerging

� Two types:◦ New Internet Brand (aggressive discounts, AM, …)

◦ Dealership Brand (retail prices; limit service conflicts; customer search satisfaction)

� Benefits◦ Increased sales (most incremental for dealer)

◦ National [International] reach – different markets

� TradeMotion, Parts Website, R&R, RevolutionParts, SkyParts, WHI, DST, InterCity Services, PartsFirm, …Accessories: Insignia, SBS, …

Issues:1. Domain Name: OE IP2. Buyer access

Suggestion: get both for less than price of two

Dealer Parts eStore [Cont.]

� Economics – Internet Parts Brand◦ Costs: from just over $100/mo.◦ Transaction fees (credit card / PayPal) – several % (fraud, …)

◦ Additional marketing costs (SEO/SEM)

◦ S&H fees; Restocking fees (covers returns)

◦ Loyalty & less discounting for quality support (chat/call)

◦ Winners: high volume & low prices (depends on special incentives)

� Economics – Dealership Brand Extension◦ Value: TBD (value = brand, CSI, …)

Wholesale Portals� Connects Wholesale Buyers to Sellers via Cloud (indirect)

� Types:◦ OEM-sponsored (Toyota TPAS, Volvo-Mack Nexpart, VW partslink24, …)

◦ All/Multi-Makes (Nexpart, CollisionLink, TurboParts, RepairLink, …)

� Segments/Types: Mechanical, Collision & Dealer (D2D)

� Attributes / Capabilities:◦ Dealer’s customer-specific pricing; availability◦ Dealer invoice (typically, no credit card or PayPal)◦ Dealer delivery or customer pick-up (> 95%)

◦ Potential OEM or dealer purchase incentives◦ Potential for dealer “microsites”

Wholesale Portals [Cont.]Automaker / buyer program compliance may simplify ROI: participate or exit wholesale� Benefits / Economics

◦ Customer satisfaction & retention (pre-existing trading partners)

◦ More sales (related parts, conversion, new customers)

◦ Possible improved order processing productivity

� Other◦ Customers may research parts (but order by phone – hidden results)

◦ No additional marketing costs to dealer (SEO, SEM)◦ Upfront and Ongoing Costs / Efforts (enrolling buyers, set-up, …)

� Mechanical: WHI, DST vs OEC, Infomedia, Lexcom, … � Collision: OEC, Infomedia, WHI & TradeMotion

Enterprise eStores/Portal� Connects Retail Buyers to Sellers Indirectly via Cloud� Parts, Accessories, Merchandise, Tires & Special Parts� Automaker sponsored� Benefits◦ Marketing muscle – top search results (no SEO/SEM costs)

◦ New sales / new customers (referrals only to participating dealers)

◦ Greater order processing productivity

� Risks: fees & restrictions� Ford (FordParts.com – OEC); Honda (eStore); Chrysler (Mopar eStore –

Chrome Data), Nissan (eStore – TradeMotion), GM (accessories, …)

Enterprise eStores/Portal[Cont.]

� Economics◦ Revenue: � Referrals will be ‘lost’ without participation� Dealer may be charged significant % of sale

◦ Upsides� Productivity gains from streamlined order processing� No additional marketing costs …� Customers may research parts (but order by phone – hidden results)

◦ Other Considerations� Restocking fee may be governed by Portal policy� S&H may be set by Portal (enough to cover actual costs?)

Issues with restrictions on marketing/selling accessories via Retail Portals

Mass Marketplaces� Primarily B2C – AM, OE, Used� Parts, Accessories, Merchandise & Special Parts� Many Buyers are Price Sensitive� Benefits◦ Marketplace brand recognition & traffic – worldwide◦ Marketing and advertising muscle◦ New sales – new customers

� Shipping: FedEx/UPS (no body panels)

� Segments: Set Prices; Auctions; Classified Ads� eBay Motors; Amazon; Craigslist

OEM Programs in Mass Marketplaces: Navistar (Amazon)

Two primary uses: (1) High volume, low margin sales of popular parts; (2) distressed parts sales

Mass Marketplaces [cont.]

� Economics◦ Transactional Fees, listing fees & storefront fees� High volume parts at low margins (margin from “backend” – allowances,

TL discounts, other automaker incentive programs)

� Niche parts – hard-to-find, …� For idle, part of a loaf is better than none� Marketplace Partners (WHI, TM, Ford/Driverside, DST – integration only, …)

� Convenient parts list transfer w/ application info� Non-transactional fees waived� Listing & Shipping Automation tools available

◦ Upsides� Productivity gains from streamlined order processing� New markets, new customers, inventory liquidation, …

Challenge: Occasionally more than one part # ties to a vehicle

Other E-Commerce Types� DMS – Buyer Client◦ Dealerships provide a web app w/ direct DMS access for

parts buyers (availability & order submission - limitation: buyer must build parts order)

◦ Karmak (w/ search on partial part number and part name as well as saved parts lists);

UCS (R&R Power); & some fleet solutions (including ADP FleetConnect)

� EPC – Buyer Client◦ Dealers provide wholesale buyers with web EPC embedded

in dealer’s network – buyer creates order by saving parts list◦ Infomedia (Ford, Toyota/Lexus, Hyundai & Land Rover)

� Dealer Wholesale Websites / eStores◦ InterCity, PartsFirm, Parts Website, TM, SimplePart…◦ Varied including niche markets – high customization options

Other E-Commerce Types [cont.]

� Parts Locators◦ Types: OE-Sponsored & Independent◦ Use: (i) Buyer searches by part #; (ii) Locator match list (by

distance); (iv) Buyer selects seller(s) ◦ OEC D2D; ADP PartsVoice; PartsEye◦ Economics� OE-Sponsored: Compliance, buyer convenience/orders� Independent: ROI calculation like that for Retail Portal

� Bidding Solutions [Mandate]

◦ Buyer posts parts needed (and, possibly vehicle info)

◦ Sellers receiving notification, bid on providing parts◦ Commission (low single-digits) per order

Dealer Sales of Parts Seller Centric

Syste

ms

Integ

ration

B2B

Mech

anica

l

B2B

Collis

ion

Cons

umer

& Se

mi-Pr

o Part

s

Cons

umer

Acce

ssorie

s

Spec

ial: Id

le &

Othe

r

Comm

ents

ADP Multiple � � FleetConnect & Integration Amazon Marketplace � � Ex: Navistar Chrome Data Retail Portal � � GM, Chrysler (Mopar.com) Craigslist Marketplace � � DealerMine Idle Market � Idle Parts DST Whsle Portals � � � � All-makes eBay Motors Marketplace � � Ex: GM, Ford, many dealers Infomedia Whsle Portals � � Toyota Insignia Group Accessories � DST Joint Mktng InterCity Services Dealer eStores � � � � TM or PW parts catalog Karmak DMS Direct � � Lexcom Whsle Portals � � � � VW & Audi PartsFirm Dealer eStore Parts Website parts catalog Parts Website Dealer eStores � � � All-makes OEConnection Whsle Portals � � � � � Nearly all-makes; Idle Parts RevolutionParts Dealer eStores � Nearly All-makes R&R Multiple � � � � Dlr eStores, Integ., direct SBS Multiple � � eASY; eStore; joint products SimplePart Dealer eStores � � SkyParts Retail Portal � � All-makes; incl dlr eStores Software Global Dealer eStores � � TradeMotion Multiple � � � � All-makes; eStores, portals WHI Solutions Multiple � � � � � All-makes; Portals, Retail eStore

SummaryLegend� = emerging, limited, special conditions or …

Parts e-Commerce

Dealer Sales of Parts Buyer-centric Ordering

B2B

Mec

hani

cal

B2B

Collis

ion

Cons

umer

&

Sem

i-Pro

Par

ts

Cons

umer

Ac

cess

orie

s

Com

men

ts

OPS Buying Services � Includes delivery logistics PartsCheckLive Bidding � � Reverse Auction PartsTrader Bidding � � Reverse Auction – SF Program

Legend� = emerging, limited, special conditions or …

Summary

Near / Approaching E-Commerce

B2B

Mec

hani

cal

B2B

Colli

sion

Cons

umer

&

Sem

i-Pro

Par

ts

Cons

umer

Ac

cess

orie

s

Com

men

ts

PartsVoice Locator D2D & B2C; buyer systems access PartsEye Locator D2D & B2C Various Idle Liquidation D2D (some B2C) Various Repair Apps � � Parts Suppliers matching criteria

Parts e-Commerce

Dealer Purchases Parts

AM

OE

Disco

unted

Dis

tresse

d (Idl

e)

Autom

aker

D2D

Comm

ents

ADP Integration � � � � Integration with leading B2B solutions Amazon Marketplace � � Craigslist Marketplace � DealerMine Idle Market � Idle Parts DST Whsle Portals � � eBay Motors Marketplace � � IAP (Epicor) Whsle Portals � InterCity Services Dealer eStores � Special / Customized websites Karmak DMS Direct � OEConnection Whsle Portals � � � SkyParts Retail Portal � � WHI Solutions Whsle Portals � �

Legend� = emerging, limited, special conditions or …Summary

Dealer Experiences� New consumer parts sales, fewer returns and many

repeat buyers – Ford dealer & Parts Website customer

� More sales, fewer returns, & higher satisfaction from body shop customers – Nissan dealer & OEC customer

� Customized eStore generating $100k/mo. in new business– Chrysler dealer & Trademotion customer

� Large volume of parts from new non-local consumers – Chrysler dealer & eBay Motors customer

� Dramatically higher productivity and buyer satisfaction – multi-franchise dealer group & WHI customer

� Customers love 24 x 7 ordering &real-time inventory access; landed new accounts – GM dealer & DST customer

Action Plan� Business Assessment◦ Which Sector(s) – Collision, Mechanical [B2B] or B2C◦ Which Franchises◦ Which DMS

� Select, Try (hard), Evaluate, Keep / Discard – Repeat � General◦ Look for Automaker Funding (co-op programs)

◦ Send your contact info to ted@fellowesresearch.com & I’ll provide feedback and suggestions on parts e-commerce plan for your dealership

Dealer System Integration� DMS◦ Advanced e-commerce capabilities – DMS dependent◦ DMS Integration value highest for: B2B, high volume◦ Capabilities� Availability from DMS� MSRP from DMS� Customer’s Matrix Price from DMS� Order� Parts / Quantity to DMS� Status from DMS

◦ DMS Platforms supporting e-commerce include: ADP, R&R, DealerTrack, Karmak, …

Dealer System Integration [Cont.]

� Shipping◦ FedEx & UPS◦ GPS / Routing – Your Delivery Fleet [Elite EXTRA]

� Wholesale Buyer System◦ Mechanical Repair Shop Systems◦ Collision Repair Shop Systems

� E-Commerce to E-Commerce◦ WHI to eBay Motors◦ TM to eBay Motors◦ DST to eBay Motors◦ OEC to eBay Motors via DriverSide & Ford

Trends� Opportunities / Advances◦ Expanding Systems Integration◦ Wider range of buy-side platforms (tablets, smart phones, …)

◦ Catalog improvements◦ Pricing incentives use expanding – high impact◦ Online chat◦ Dealer parts deliveries to personal residences◦ Declining parts returns (better catalogs, e-commerce applications, …)

◦ Dealer-as-a-Buyer

� Challenges / Threats (to dealerships)

◦ Bidding Systems (State Farm / PartsTrader) – Shops Resisting◦ AM sector’s success with parts e-commerce

Special Cases� Accessories / Merchandise� Niches: Vintage, Performance, Power Train� Tires� Idle� Dealer-to-Dealer (D2D)� Dealer Groups◦ Dealer Websites Branding, Referral◦ Trade between stores

� Dealer as a Buyer◦ Distressed parts (idle, primarily)

◦ AM

Questions & Answers

� Your Questions

Thank-You

For more: ted@fellowesresearch.comwww.fellowesresearch.com

Contact me if you are willing to help my research on parts e-commerce