In this space, we’ve talked extensively about how digital trends that were already coming to the B2B market have been greatly accelerated by the coronavirus pandemic. Chief among those is the proliferation of eCommerce as a percentage of overall sales, to the point where it’s now become the preferred method for automotive and truck parts buyers. While there are clear mitigating factors – more people working from home, the forced reduction of face-to-face sales calls – it’s safe to assume the online wave is here to stay.
According to Hedges & Company, aftermarket parts eCommerce revenue in the U.S. and Canada jumped 53 percent from the first week of March to the last week of May. This represents a 66 percent increase versus the same time period in 2019. These are staggering figures. The pandemic, and the resulting economic contraction, has driven down new car sales as consumers tighten their purse strings. From March to early May, retailers missed their initial forecast by almost 800,000 vehicles. When economic downturns hit, drivers are focused on keeping their current vehicles on the road, boosting demand in the aftermarket. As we’ve seen, most of that aftermarket sales boom is occurring online.
With that said, here are some considerations for aftermarket parts distributors looking to win with eCommerce, starting with the big one.
Address the Goliath in the Room
Any B2B eCommerce conversation must start with Amazon Business. Auto parts distributors are well-aware of the competitive threat posed by the eCommerce giant. Heavy-duty truck parts may be behind the curve on quantifying their risk exposure. When Zilliant Chief Marketing Officer Lindsay Duran spoke at Heavy Duty Aftermarket Week in January, only a few hands went up when she asked the crowd, “How many of you in here are concerned about Amazon Business?”
She went on to explain why they should be. “Every space Amazon moves into they begin to take over more and more of that market and disrupt the market,” Duran said.
During COVID-19, Amazon’s revenues have exploded. Ian Heller of Distribution Strategy Group explains the effect this is having on traditional distributors:
“More customers are going to demand outstanding online capabilities because they will be comparing you with Amazon and Amazon Business,” Heller said. “If you’ve been dragging your feet about investing in eCommerce because you thought it wasn’t essential yet, then you’re losing money right now as more people work from home. And no matter how good your eCommerce capabilities are, they’re going to have to get better.”
Let’s talk about what that means in practice. The big advantage you have over Amazon Business is your expertise. Your rocks in the fight against Goliath are your specialized industry knowledge and differentiated services. B2B buyers place a huge premium on pricing transparency, ease of use, personalization and inventory availability. Your advantage is you have better relationships and customer data to inform your own eCommerce store or marketplace. By improving your pricing and user experience in combination with attached services, there is an opportunity for enterprising distributors to carve out a position near the top of the online pecking order.
Other Important Considerations:
How can you enhance and improve your digital presence and strategy without wasting time and money?
As a traditional distributor, you’re not going to chart a groundbreaking new course in the way humans interact with a digital commerce site. Nor should you try. This is about making sure your customers and prospects find the products and services they need quickly, at a fair and market-aligned price, and with the type of recommendations and service they can expect from a field sales rep. Functionality reigns supreme.
Can you ensure online pricing is consistent with pricing a customer would receive if they called in, visited a branch, or were speaking with their dedicated account rep?
Pricing alignment across channels is exceedingly complex, especially when relying solely on spreadsheets and email exchanges to set prices. Only with an automated tool can you be confident that the list prices you set are rational and consistent. From there, a pricing system that can account for factors like customer segment/volume/geography/etc. ensures your tier prices follow your overall segmentation strategy, wherever your customer sees the price. Take a hard look at your current capabilities and think about how confidently you could answer this question in the affirmative: “Can we prevent a scenario where our current customers end up seeing a published list price that is lower than what they’re already paying?”
Should you allow an anonymous web visitor to see your prices, or keep prices protected behind a log-in screen?
Your answer may vary based on your specific corporate strategy. But remember, price transparency is something buyers want and expect, and you will be measured against Amazon Business. Plan accordingly.
How should you think about the general list price you publish online?
Web scraping technology has allowed distributors to quickly access competitive online prices for years. But, especially during periods of market turbulence, you must have a process attached to web scraping. If a competitor drops price by 50 percent, you don’t want to automatically follow them down. That kind of price action should trigger an alarm on your side, so your team can address it as part of your strategy and (ideally) take into account price sensitivity. In addition to competitor prices, any list price strategy must also account for costs and product-value relationships.
How do you deal with negotiations online?
When you’ve confidently delivered rational list and tier pricing online, discount negotiations will necessarily decrease. However, there will always be scenarios where negotiations are required. If you don’t yet have a self-service negotiation capability, you will soon be lagging behind. Intelligent automated negotiation decreases friction for customers and ensures that prices stay within a pre-determined deal envelope.
Are you able to capture and execute against the wealth of data you will collect online?
A key advantage to eCommerce is the customer and product data that becomes available. Rather than word of mouth from reps in the field, you can rely on hard data like page views, cart abandonment, search terms, time spent on each product page and more. Leading companies will be able to incorporate that data into their pricing calculations and use it to improve price elasticity measurement. Are you currently set up to take full advantage of this rich data?
Several aftermarket parts distributors that we talk to have remained afloat and are now thriving despite the pandemic because they have a sound online sales strategy in place. Others have taken a bigger hit, partially due to an over-reliance on in-person sales. With business increasingly moving online for aftermarket parts distributors (and not looking back), we’re well beyond the theoretical. It’s time to lead with eCommerce.