eCommerce in Heavy-Duty Parts & Accessories – who and how?

Approximately $14 Billion in passenger car parts and accessories (P&A) were sold online last year.  That means more than 10% of passenger car P&A sales are online.  I estimate <1% of heavy-duty P&A sales happen online today.  How will eCommerce emerge in heavy-duty P&A?  There is much to consider.

The traditional brick-and-mortar dealers and retailers are not the ones driving the growth in passenger car P&A sales online; it is estimated that half of the online sales volume in passenger car P&A is going through eBay, and a very small percent is going through major retailer websites.

Could it be different with heavy-duty parts eCommerce?  To deliver the highest potential value to a heavy-duty truck owner, I think it has to be different.

Heavy-duty truck owners can measure days out of service in dollars of business lost.  Every truck owner manages towards maximizing “uptime” and reducing days out of service.  Unlike many consumer goods, heavy-duty parts are not driven by normal shopping behavior, but rather by a part failure or maintenance event.  Faster fulfillment options on replacement parts make a real difference.  Leveraging stores and dealers that are near to the customer as fulfillment options for an online sale can deliver a better experience for the customer.  The shelves and stock rooms of brick-and-mortar locations can serve as “forward deployed inventory”, sold online or over the counter depending on who clicks “buy” or walks in that day. Local pick up or potentially even same day local delivery for an eCommerce order becomes possible if the nearby brick-and-mortar location has the item in stock.  Shipping from a retail location that is closer to the customer than an eCommerce distribution center (or a potential drop-ship vendor) could significantly shorten shipping time.

Beyond convenient pick up or shorter shipping time, brick-and-mortar locations can install and service a part purchased online.  Anything requiring installation is more difficult to sell in a pure eCommerce model unless the customers have the equipment and know-how to install it themselves. Having nearby service locations can enable a product sale by coupling it with an often-needed local installation or service.  Even the possibility of local support should increase the potential buyer’s comfort with, and ultimate conversion in, an eCommerce sale.

Is this improved model likely to be the dominant emerging model in heavy duty P&A eCommerce?  Frankly, I think pure eCommerce players are better positioned to gain traction first.  It will take time to tackle the major challenges of running a combined eCommerce + brick-and-mortar retail strategy (often referred to as an “omnichannel” business).  If today’s big store-based players can conquer those challenges though, they should be able to win customers with the superior experience.

So, onto those challenges: First and foremost, it is very difficult to build an effective eCommerce business out of a store-focused business.   Pure eCommerce players tend to be lean and nimble, and require a very different set of employee skills than traditional retail store management. Trying to build an eCommerce business out of a retail store business can mean having a higher cost structure and mismatched expertise.

As one element of that higher cost structure, having a physical location in a US state today means having to pay local sales tax on an eCommerce sale heading to a customer in that state.  Internet sales tax in the US is evolving, but right now that is an additional cost that pure eCommerce players often avoid.

Beyond that, if the stores group and the eCommerce group are run separately, they can become a liability for each other. Completely separate online and in-store businesses can create an inconsistent, confusing, potentially frustrating customer experience (e.g., different product assortment than the consumer expects to find in either channel, inconsistent pricing, inability to return online orders in-store).

Running a successful omnichannel business also means a high degree of back-end integration between eCommerce and retail store systems (inventory and supply chain management, order management, point-of-sale, etc.).  That often means tackling issues with, and trying to add new functionality to, legacy IT systems that have been largely regarded as a cost center to be managed rather than an asset to invest in.  Achieving that integration can therefore be a substantial effort.

I am ready to see eCommerce become a bigger part of heavy-duty P&A, and I think many P&A customers are ready as well.  The question now is: how will it happen?  Will fast-moving, tech-savvy, pure eCommerce players make a big push and gain loyalty first?  Will the big companies with dealerships or stores rise up and deliver a superior experience to a broad audience first?  Will third-party providers step in to help enable those big players to lead, or at least quickly follow, with a better offering?

Leave comments and let me know what you think.