Withstanding consolidation and knowledge transfer were the hot topics during the distributor panel at Heavy Duty Aftermarket Dialogue, presented by MEMA and MacKay & Company, Monday in Grapevine, Texas.
After a busy morning of mixed economic projections, Monday’s afternoon distributor panel, moderated by MEMA's Shannon O'Brien, was a notable shift in tone. With representatives from FleetPride, HDA Truck Pride and Aurora Parts on hand, the panel turned its attention away from sales forecasting and more toward operations and business management. The panelists noted the headwinds facing the general economy and aftermarket in 2024 and beyond, but said the largest concerns for their companies today are no longer exclusively of the parts availability and price variety.
It's making sure their companies can evolve with the industry’s winds of change.
Consolidation is a particular gust from which no business can hide. HDA Truck Pride President and CEO Tina Hubbard said it is natural and logical that some independent aftermarket operations are changing hands as many company founders and owners choose to retire and exit the market. Hubbard said what HDA Truck Pride and other groups can do is not shy away from this reality, but meet it head on.
She said just as HDA Truck Pride has exiting member principals, they also have members looking to grow. The group has been working to connect those parties to each other so when a distributorship is sold it doesn’t have the exit the network. She also mentioned the success multiple HDA Truck Pride members have had with ESOPs (employee stock ownership programs), and said HDA Truck Pride has worked to educate its entire network to their value.
As a consolidator, FleetPride will continue to look for businesses to add to its network that fits its culture and goals, said President Mike Harris. But Harris also acknowledged with acquisitions comes challenges. Bringing an established business into a new company comes with growing pains, and its only with transparency, through communication and processes, that those pains can be removed.
“I know it sounds cliché but when there is a lack of communication is where a lot of challenges arise,” he said.
And consolidation isn’t just occurring in the distribution channel. Suppliers are merging too. Brad Fulkerson, president and CEO at Aurora Parts & Accessories, said manufacturers need to do a better job of “making sure the aftermarket is not an afterthought in those M&A conversations,” because when it is, fulfillment and customer service issues can arise.
Customer service from distributors was a point of emphasis Monday as well. The panelists all acknowledged the aftermarket (suppliers and their distribution partners alike) must do a better job committing to e-commerce. The panelists said e-commerce shouldn’t be looked at as a replacement for stores or in-person sales, but a supplement.
“We are seeing more digital orders coming into branches and we will continue see more of that,” said Harris. “It’s only going to grow.”
And e-commerce isn’t just helpful because it enables customers to place stock orders faster, and frees up distributors to do more consultative selling. Online product catalogs and libraries can do that too.
Fulkerson said distributors want to sell face to face because they’ve always done that and like to do that, but today’s new, younger customers “might not want to buy that way.
“There is a generation that believes they can find the information to buy any part online.”
Hubbard agreed, adding suppliers who do provide comprehensive product data and literature to support e-commerce are to going to win with that generation of customers more often than not.
“When the customer buys online, nine out of 10 times they’re going to buy the part with the picture over the one without it,” she said.
Added Fulkerson, “If you don’t have good product data and somebody else does, I think [the customer is] going to buy the competitor’s part … Regardless of what they bought previously.”
But even with more emphasis on e-commerce, the distributors say in-house product expertise will still matter in the years ahead.
A customer may not worry about buying the wrong $5 widget online if they know it can be immediately returned. But a large, heavy, complex component that is needed immediately to get a truck back on the road, most customers are always going to want an expert to help them make that purchase. The panelist said today’s aftermarket (suppliers and distributors) needs to be doing everything it can to ensure the people who have that expertise are sharing their knowledge with their employers and colleagues. The retirement of the aftermarket’s front line of counter associates cannot lead to a death of product expertise within the channel, the panel said.