David Seewack, founder of FindItParts.com, will speak at Heavy Duty Aftermarket Week (HDAW) during the Aftermarket Briefings education session on Wednesday, Jan. 25, 2017.
So what?
Here is what—Seewack is alone at the leading edge of forces facing every traditional distributor in North America. He knows this transition like no one else, as he was a major fleet specialist (complete with lots of branches) in Los Angeles when he sold to FleetPride.
Since then, Seewack has developed an innovative strategy which uses the Internet to transform how heavy-duty truck parts are bought and sold online. Recently, FindItParts expanded by opening strategic distribution centers throughout the U.S. to service customers and to expand its reach in the distribution market.
During his presentation at HDAW Seewack will describe how heavy-duty distributors can leverage their current operations by utilizing technology and creative “out of the box” thinking to improve their businesses. You need to hear his thoughts on channels as they shift towards a focus on our traditional turf—The Last Mile.
The last mile is seeing disruption from new business models that address customer demand for ever-faster delivery, as well as new technologies such as drones and autonomous ground vehicles.
Last-mile delivery
Last-mile delivery, especially of parcels, has recently received lots of attention in the media and from investors. The cost of global parcel delivery, excluding pickup, line-haul, and sorting, amounts to about $70 billion, with China, Germany, and the United States accounting for more than 40 percent of the market.
And not only is the market large, but it’s also highly dynamic, with growth rates in 2015 of between 7 and 10 percent in mature markets (such as Germany and the United States) and more than 100 percent in developing markets. The biggest driver of this growth, not surprisingly, is e-commerce, which has shifted market share from B2B to the B2C.
With the rise of e-commerce, consumer preferences have grown increasingly important in the formerly business-oriented parcel-delivery market. Large e-commerce players, as well as various start-ups, have identified last-mile services as a key differentiator. In fact, the variety of delivery options and the perceived quality of the delivery service are major decision-making criteria for online customers and hence directly affect e-commerce players’ success in the marketplace.
Distributors and Amazon
Newsmaker (and historically excellent visionary) Amazon shares dropped recently following the announcement that the company’s Q3 2016 earnings fell short of analysts’ expectations. Insiders warn distributors not to misread the underperformance as a sign that Amazon is failing to meet its larger goals.
Amazon’s Q3 2016 net sales increased to $32.7 billion, 29 percent over prior year levels. Amazon has never cared what Wall Street thinks about them anyway; for Amazon, it’s about the customer, not the investor dollar. Amazon’s revenues will fall when they stop meeting customer expectations—and their top line didn’t fall.
Let’s not ignore continued growth of the online giant’s new ‘Amazon Business’ pillar, how this business segment could impact distributors, and how distributors can protect themselves against this growing ‘traditional’ industry threat.
Once considered a side business to Amazon’s more established pillars—Prime, Cloud, and Marketplace—Amazon Business is now a key fourth pillar and has become one of the company’s top priorities in what they describe as a ‘must-win’ category. While they’re targeting bigger players like Grainger, NAPA, MSC, and Staples today and aren’t going after smaller vehicle parts distributors yet, all indications are that they will continue to broaden their product offering.
What could the growth of Amazon Business mean for distribution?
Most distributors are probably already experiencing a ‘leak’ of revenues, orders, and customers to the big national players and Amazon Business, an entity that makes the finding, buying, transaction, and fulfillment of products easy, is a big part of these players. Leaks start small and get bigger and bigger as the pressure builds.
Part of Amazon’s earnings miss in Q3 was attributed to the company’s investments into new distribution centers it’s establishing to create a closer epicenter for business and retail products to customers. Manufacturers are increasingly using Amazon Business as a ‘distributor,’ which enables them to say that they’re not selling direct to end users. Meanwhile, Amazon Business is planning to launch 80 new online features to make the buying process even easier and is continually hiring people and resources onto the Amazon Business team.
How do distributors compete with Amazon Business?
Despite the growing threat to the industry that Amazon Business may pose, there’s a message of hope. On the one hand, distributors have an advantage over Amazon, Grainger (and even FleetPride) and other online giants in that they know their products and applications better than anyone; Amazon doesn’t have specialists or relationships as deep as the local guy.
At the same time, the Internet is the great equalizer—Amazon may be bigger than most automotive and heavy-duty distributors, but the Internet can make companies look bigger than they really are. If local heavy-duty distributor branches can extend their unique experience, knowledge, and relationships to customers online, they have an opportunity to compete with Amazon and even beat them.
To do this, they have to move quickly like Amazon and start building a competitive online presence, a time-consuming process which may require an investment in people and resources that don’t currently reside in their company. This can be scary for many distributors, who may not know the vendors, consultants, culture, questions to ask, or how to manage and compensate these creative/web people; for this reason, it can help to bring in a partner or advisor to guide these projects and hold the people/resources accountable.
What can you learn from Dave Seewack?
While this business is still about relationships at the local branch, e-commerce is no longer just about convenience, but about survival. With the growth of entities like Amazon Business, the local branch experience may not go away, but the frequency of it may diminish because someone else offers customers an easier experience for certain products.
Personally, I’d advise distributors to offer the best of both worlds; so called ‘omni-channelling’ to have the coffee and doughnuts onsite for customers while also offering an online mechanism that makes it easy for customers to place an order at 7 p.m. Seewack can show you hints at extending the brand experience in such a way that it remains rich with people and expert interactions, while making it easy for customers to do their job anytime. Now would be a good time to put this session on your HDAW schedule.
Bill Wade is a partner at Wade & Partners and a heavy-duty aftermarket veteran. He is the author of Aftermarket Innovations. He can be reached at [email protected].
