The following comes from the October 2018 issue of Truck Parts & Service. To read a digital version of the magazine, please click the image below.
The evidence keeps mounting. In July, MAHLE Aftermarket announced an update to its online parts purchasing catalog. In August, SimpleTire introduced free shipping for every product it sells online. In September, Donaldson debuted an e-commerce site it said would “meet today’s digital demands and business expectations.”
The medium- and heavy-duty aftermarket is diving into the e-commerce pool. Yet, while any e-commerce conversation in trucking seems to gravitate toward the big bad wolf named Amazon, those already active in trucking’s e-commerce aftermarket say the biggest online threat to conventional distribution isn’t Seattle’s monolith, it’s customers.
Customer purchasing habits have changed — and they aren’t changing back.
According to a survey published in January 2017 by MacKay & Company of 956 trucking companies, 55 percent of truck fleets already were buying parts online. Among the fleets who were not, nearly half said they planned to start using e-commerce in the future.
High as those numbers may seem, when compared with other markets they’re actually low. A June 2018 survey by B2BecNews discovered 78.4 percent of corporate buyers are now using Amazon to research or purchase business-to-business (B2B) products. Customer acceptance of e-commerce in the independent aftermarket is only going to continue to rise.
But why? Why has a market that for so long relied on conventional distribution partners for its equipment needs suddenly accepted this disruptive alternative? And, how far will it go? Is the independent aftermarket as we know it in jeopardy?
Regarding those first two questions, those in the know say the answer is as simple as it is obvious: e-commerce is easy.
Why customers prefer e-commerce
In cases where customers know what they want and aren’t in a hurry to get it, e-commerce has eliminated many of the pitfalls found in conventional distribution. Online purchasing permits customers to place an order for any product at any time with a few simple keystrokes. Stock orders that used to require 15-minute phone calls are now 30-second assignments, freeing both customers and distributors to complete other tasks.
These time savings should not be taken lightly, says Bill Wade, partner at Wade & Partners. He says success in distribution today isn’t about having the most SKUs, the lowest price or the fastest delivery in the marketplace. Those traits are mandatory. Wade says success in distribution today is about understanding customer preferences and servicing them the way they prefer. For many of them, he says they now prefer e-commerce.
“You can’t keep doing what you’re doing today but saying you’re going to work harder. That’s not going to save you,” he says. “You have to change the model and the way you are doing business.”
Wade’s words are harsh yet not unfounded. Others see those same customer trends in their operations.
“Customers are getting used to transacting online in their everyday lives,” says Scott Gates, senior director at Ryder Fleet Products. “We are seeing a tremendous uptick in our number of [online] users.”
Ryder has operated an e-commerce site since 1999. Gates says activity on the site was slow in the early years but has since exploded, with double-digit sales growth each year since 2012. The company attributes a lot of that growth to customer acceptance. In 1999 customers weren’t used to buying anything online. But once they started using the Internet for purchasing in their personal lives, Gates says using it to do the same at work no longer seemed unusual.
MacKay & Company Vice President of Sales and Marketing John Blodgett says that much was clear in his company’s recent study.
“I don’t think there were any huge surprises in those results so much as they confirmed what we felt was already going on, and that’s that the market is shifting,” he says. “More and more customers value that option.”
Customers also value the research aspect of e-commerce. Whether comparing product specifications, performance expectations or price, Gates says today’s customers can uncover anything they want to know about a product in just a few minutes through a Google search. In the analog days, that same research would have taken a call or trip to a distributor, at least, and then an undetermined amount of time comparing the limited information found in an already out-of-date product catalog.
Why e-commerce will not eliminate distribution
But e-commerce is not without its drawbacks, first and foremost being customer service. A Google search is no substitute for an experienced counter person when a part needs to be identified.
Steve McEnany, vice president of marketing and technology at Midwest Wheel, says his company has been selling parts to customers via modems “since the early 1990s.” The company’s e-commerce portal garnered an impressive 27 percent of total company sales volume in June, though McEnany says most of those purchases were inventory replenishment orders. When customers have a question, they still prefer to come to a store.
“Our counter teams are problem solvers,” he says.
There are other customer service shortcomings as well. Many e-commerce websites include features that suggest related and/or similar parts to customers when they select a product. These tools are valuable but fixed, because their recommendations are made based on a limited amount of information. The customer isn’t sharing his needs with the website the way he would with a counter person or outside sales professional, McEnany says.
Gates adds the downside to online ordering isn’t an easy problem to solve. He says Ryder created a customer support technical call center to help alleviate customer trepidation when making difficult purchases online. He says the call center is “a great advantage” for Ryder and has helped reduce online order returns but adds there’s still no easy way to know what percentage of purchases customers do not even consider making online due to their concern about ordering the correct part.
Delivery is another hindrance toward a full e-commerce revolution in the aftermarket. The two-hour delivery services Amazon currently offers in urban centers are for high-volume retail goods such as housewares and office supplies. Heavy-duty brake drums are never going to be shipped at that rate.
“People in the heavy-duty market still want and expect same-day service for a lot of parts orders and we’re never going to be able to provide that,” says FinditParts Founder and CEO David Seewack, whose company offers express two-day shipping for the most popular SKUs in many regions nationwide.
As an online-only distributor, See-wack says FinditParts can succeed with two-day or longer shipping times because its inventory is so vast — the company has more than 9 million SKUs — that a lot of its sales are on unique components customers already have anticipated will take time to acquire. With common items, such as the aforementioned brake drum or an LED tail light or hydraulic hose, Seewack believes fleets will continue to expect and demand same-day delivery.
“Their business depends on that immediate access [to parts],” he says.
