table of contents - the car care council · table of contents ... it appears that online consumers...

E-Tailing in the Automotive Aftermarket Copyright © 2014 Auto Care Association

Table of Contents

Project Introduction Page 2 Project Scope Glossary of Terms Page 4 Research Methodology Page 5 Market Conditions at Time of the Report Page 6 Replacement Parts: Online Research Habits Page 7 E-tailing Consumer Behavior Page 8 Replacement Parts Market Size Page 9 E-tailing Market Size Page 10 E-tailing: Consumer vs. Installer Page 11 E-tailing Growth Page 12 E-tailing Purchase Drivers Page 13 Primary Drawbacks of e-tail Shopping Page 14 For More Information Page 15

1 1


Much has been written/published regarding the e-tailing channel with respect to the automotive aftermarket. The challenge for the Auto Care Association and its members was to determine specifically how e-tailing is affecting the replacement parts business only, excluding accessories and performance parts. To that end, a unique study was commissioned to address several key questions:

– How big is the automotive aftermarket e-tailing market (in

consumer dollars) for replacement parts only? – What are the leading replacement parts categories purchased

via e-tailing today? – Who are the leading e-tailing “players” and how is this channel

shifting (dynamics)? – What will the short and long-term future hold in terms of e-

tailing’s affect on the replacement parts aftermarket? – What are the underlying consumer and installer attitudes and

behaviors driving the e-tailing channel – today and in the future?

– What “impact” does e-tailing have for the various elements within the aftermarket – manufacturers, distributors, retailers, installers, vehicle owners, etc.

A comprehensive research study was conducted to answer these, and other, questions; focusing squarely on automotive replacement parts sold via e-tailing.

Introduction

2 2


Project Scope

Aftermarket e-tailing refers to parts sold via publicly accessible websites to DIYers and service professionals. This is the primary focus of the research effort.

Captive B2B portals used by service professionals have high usage and are growing; but they do not change the existing business model

“eCommerce” within the automotive aftermarket encompasses both e-tailing and Captive B2B Portals.

e-tailing Publicly Accessible B2C &

B2B Websites

Captive B2B Portals eCommerce & eCatalog

systems

eCommerce

It is important to remember throughout this Executive Summary that the term “e-tailing” refers to a piece of the overall eCommerce business within the automotive aftermarket.

3 3


Glossary of Terms

Replacement Parts – A replacement part, is an interchangeable part that is used for the repair or replacement of failed or worn parts. DIY – consumers that have selected to “do-it-yourself” for repairs and maintenance (no professional installer is involved) DIFM – consumers that have selected to have a professional installer “do it for me” Install It For Me (IIFM) – consumers that have purchased their own replacement parts and selected to bring it to a professional for installation E-tailing – replacement parts purchased via publicly accessible websites E-tail Specialists – companies involved in e-tailing that are focused on the automotive aftermarket (e.g. Rock Auto, US Auto Parts, Tire Rack) E-tail Generalists – companies involved in e-tailing to a broad set of markets, including but not limited to automotive (e.g. Amazon, eBay) Brick & Clicks – traditional automotive retailers and distributors that operate both traditional stores (bricks) as well as e-tail sites (clicks) 4 4


Research Methodology

A triangulated analysis was completed to generate the insights contained in this report – compiling pre-existing studies, existing IMR data, consumer and installer surveys, and in-depth interviews (IDIs) across the replacement part value chain.

Value Chain IDIs

Customer Research

Existing Data/Info

• IMR CCAMS data (at the product category group level) Total sample size:

100,000 households/170,000 vehicles Approximately 4,000 – 5,000 consumers that have purchased parts via e-tail

• Pre-existing studies: Previously published reports, articles, data, etc.

• IDIs with: Warehouse distributors Automotive retailers Generalist/marketplace

e-tailers Specialty (automotive)

e-tailers Manufacturers

Industry Expert IDIs

• Survey of 784 vehicle owners Known purchasers of

auto parts via e-tailers • Survey of 501 installers -

covering major shop types (general repair, specialty repair, collision repair, etc.)

• Did not include OE dealers

• e-tailing consultants/ experts

• Trade publications • Member web-survey

5 5


Market Conditions at Time of Report

U.S. inflation adjusted gross domestic product should total 16.16 trillion dollars in 2014, reflecting a 1.83 percent compounded annual growth rate since 2010, and growth over 2013. With the recovery in 2010, the overall economy realized favorable changes in key economic indicators relative to 2010. Some of the most notable changes in the five year compounded growth rates occur in motor vehicle parts manufacturing (8.4 percent), retail sales (4.19 percent), and disposable income (2.4 percent). Evidence of the lack of a full recovery from the financial crisis can be seen in the continued weakening of the U.S. dollar relative to other foreign currencies and the growing U.S. national debt. The broad index of the U.S. dollar to the basket of major foreign currencies is expected to fall .16 percent compounded annually from 2010-2014. However, a declining dollar relative to foreign currencies is expected to be a factor in total U.S. exports increasing at a compounded annual growth rate of 5.2 percent from 2010-2014. Consumer confidence has trended upward from a low of 52.5 in 2010 to 78.1 in 2013 still short of its 2006 mark of 110.

This summary was prepared by Dr. Timothy G. Nash, a Vice President and the Fry Professor in Free Market Economics at Northwood University.

Source: 2015 Auto Care Factbook

6 6


Replacement Parts: Online Research Habits

Consumer Research Habits

Approximately 85 percent of consumers are using the internet to conduct research specific to automotive replacement parts. Of those, almost 40 percent conduct online research either “always” or “frequently” when purchasing automotive replacement parts. The vast majority of that online research results in purchases made “offline.” Approximately 82 percent of consumers research automotive replacement parts online, but purchase the parts somewhere other than the internet. Approximately half of consumers state that they sometimes (or more frequently) conduct research in stores and then complete their purchase online. Younger respondents are more likely to conduct in-store research and then purchase online – perhaps tied to mobile device usage. It appears that online consumers are using the internet to determine the best available price or fair prices for replacement parts.

Professional Installer Research Habits

Over two-thirds of professional installers are “highly likely” to use publicly accessible online sources to research replacement parts (such as brake components, wipers, filters, etc.). This is a much higher percentage than other types of automotive aftermarket products they may purchase, for themselves or their shop (such as accessories, tools and/or shop equipment). Typically installers are using e-tailer sites to research product availability, pricing, warranty information and product specifications/information.

7 7


E-tailing Consumer Behavior

Over 40% of recent consumer automotive replacement purchasers have purchased from online sources at some point…nearly one-in-five regularly purchase automotive replacement parts from online sources. Approximately 35% of these consumers shop online for automotive replacement parts at least once per month, while 20% report shopping online 2 to 3 times per month for automotive replacement parts. Online shopping for automotive replacement parts is much higher among “younger” consumers, with three times as many consumers under the age of 35 frequently shopping online for these versus older consumers.

4%

10%

16%

12%

16%

19%

25%

17%

24%

21%

40%

29%

43%

12%

19%

27%

31%

38%

42%

43%

43%

45%

49%

65%

67%

68%

0% 20% 40% 60%

Automotive Services

Groceries

Pet Supplies

Sporting Goods

Games/Toys

Office Supplies

Health & Beauty Products

Automotive Replacement …

Movies

Travel

Books

Electronics

Clothing

Ever Purchased Online

Regularly* Purchased Online

Which of the following products have you ever purchased online? Which of the following products do you regularly* purchase online?

*Note: Regularly = more than twice per year

Percent of Respondents

8 8


Replacement Parts Market Size

To size the e-tail market for automotive replacement parts, we must first understand the overall size of the automotive replacement parts market. The Auto Care Association estimates the 2013 parts and accessories market at ~$136B*; with ~$89B sold to professional installers and ~$47B sold to DIY consumers. From this, we subtract SEMA’s $32B estimate of the accessories market. For the purposes of this analysis, we have estimated a 50/50 professional/consumer spilt of the accessories market. This yields an Automotive Replacement Parts market of ~$104B

~$136B Total Parts & Accessories Market

~$47B Consumer Parts & Accessories Market

~$89B Installer Parts & Accessories Market

~$31B Consumer Replacement Parts Market

~$73B Installer Replacement Parts Market

~$104B Total Replacement Parts Market

*Source: 2015 Auto Care Factbook 9 9


E-tailing Market Size

Approximately 6% of automotive replacement parts are purchased through “publicly accessible online sources” – otherwise known as e-tailing. Based on the ~$104B in automotive replacement parts sales to consumers and professional installers in 2013*, this yields a total e-tail market for automotive replacement parts of approximately $6.0B in end-user/consumer dollars.

6%

94%

Total Estimated Automotive Replacement Parts Market - $104B -

Offline Purchases

~$98B

e-tail Purchases ~$6.0B

*Source: 2015 Auto Care Factbook 10 10


E-tailing by Customer/Installer Type Contrary to conventional wisdom, the largest portion of the e-tailing market for replacement parts is the Professional Installer segment. This is due to the overall size of the Professional Installer market compared to the smaller consumer/DIY portion. In addition, professional installers purchase a slightly different mix of products – which results in a higher average price/cost per part and therefore a higher dollar volume. e-tailing penetration (as a percent of dollars spent) is estimated at ~8.5% among DIY consumers and ~4.5% among professional installers. The leading product categories purchased via e-tail sources are very similar for both consumers and professional installers. Braking Systems, Ignition & Engine products, and Glass/Mirrors/Lamps are “high-volume” categories for e-tailing. *The Installer e-tail market size estimate has been “marked up” to reflect consumer dollars (as presented in the Auto Care Factbook) in order to provide an apples-to-apples comparison for the consumer e-tail market. Actual sales from e-tailers to installers is approximately 35% lower, or roughly $2.4B. This is important to remember when triangulating sales figures from leading e-tailers.

45%

55%

Consumer e-tail ~$2.7B

Installer e-tail* ~$3.3B

Total Estimated e-tail Automotive Replacement Parts Market - $6.0B -

11 11


E-tailing Growth

Key market participants (e-tailers, parts suppliers, etc…) estimate that the e-tail channel will more than double in size by 2018.

– Total aftermarket growth = ~3.5% annually – e-tail channel growing at ~17% annually – Reflects relatively conservative growth estimates, with no “game-changing” industry developments

Evidence of this growth is abundant, with recently published information from leading auto parts e-tailers showing continued double-digit gains over the past 2 years.

$6.0 $13.2

$28.8

$104

$124

$147

6% 11%

20%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$0

$50

$100

$150

$200

2013 2018 2023

e-tail Channel Total Aftermarket e-tailing Penetration

Auto

mot

ive

Repl

acem

ent P

arts

($B)

e-tailing Penetration (%

of total market)

12 12


E-tailing Purchase Drivers

While e-tailing provides online customers with several “convenience” factors, including locating hard-to-find parts, comparison shopping and parts information/specifications; these factors do not appear as primary purchase decision drivers for most consumers. Not unexpectedly, price and availability frequently drive the decision to purchase via e-tail versus in-store.

“When asked to rank the top benefit of purchasing parts online, saving money was cited, followed by the ability to compare pricing and the availability of a bigger selection.” - AutoPartsWarehouse.com

Finding the right part presents mixed results. Getting the right part has traditionally been a barrier for e-tailing, but that barrier is eroding due to an influx of new and improved online/mobile apps

– VIN/plate number driven - “now you can put your plate number in and from the plate they get the VIN, and from the VIN they get the perfect part. It’s taking risk out of buying online.”

– Ultimately the impact of onboard diagnostics and telematics will allow the vehicle to diagnose many problems itself and communicate the “right part” for repair/replacement

In addition, the amount of “how to” videos has increased significantly in the past 3-5 years. Younger consumers are becoming more likely to conduct their own repairs because of the availability of these videos.

13 13


Primary Drawbacks of E-tail Shopping

By far the most significant drawback to purchasing replacement parts via e-tailers is shipping timeframe. Amazon, eBay and Google (among others) are currently in an advanced testing phase for same-day delivery in multiple cities. It is estimated that Amazon same-day delivery could soon reach 31% of US consumers by 2015. This has the potential to significantly disrupt traditional retailing. Younger respondents apparently have an easier time finding information and product specifications – therefore they are more focused on price, availability and convenience than older respondents.

0% 5% 10% 15% 20% 25% 30% 35% 40%

Brand ratings/reviews

Ease of finding warranty information

Product availability

Convenience

Price

Ease of finding product specifications

Ease of finding product installation information

Shipping timeframe

What is the primary drawback of purchasing automotive replacement parts online?

14 14


For More Information

For More Information – Please Contact the Auto Care Association In addition to this Executive Summary, additional reports providing insights across all of the various information sources/research elements are available at the Auto Care Association website www.autocare.org.

e-tailing in the Automotive Aftermarket Stocking Number Member Price Non-Member

Price

Full Report 75054 $1,750 $2,750

Executive Summary 75055 -- $750

Market Size & Growth 75056 $1,250 $1,750

Repair Shop/Installer Survey Results 75057 $750 $1,250

Consumer/Vehicle Owner Survey Results 75058 $750 $1,250

15 15

table of contents - the car care council · table of contents ... it appears that online consumers...

Documents