Introduction
E-Commerce usage surged 44% in the U.S. in 2020 as people shopped online more amid the COVID-19 pandemic (Figure 1). Many people began using the online marketplace in new ways, purchasing anything from groceries to vehicles online for the first time. This trend significantly impacted e-commerce in the automotive aftersales space as well; already an increasingly important sales channel pre-pandemic, e-commerce growth at most automotive OEMs surveyed in 2020 outpaced general e-commerce growth as monthly volumes on OEM platforms grew by an average of 131% year-over-year (Figure 2); however, this is still just a small slice of the business as e-commerce accounts for 1% or less of parts and accessories sales at all OEMs surveyed.
| Year | E-Commerce Sales Growth | Total Retail* Sales Growth |
|---|---|---|
| 2010 | 17% | 3% |
| 2011 | 18% | 5% |
| 2012 | 16% | 4% |
| 2013 | 14% | 3% |
| 2014 | 15% | 4% |
| 2015 | 15% | 4% |
| 2016 | 15% | 3% |
| 2017 | 16% | 4% |
| 2018 | 14% | 4% |
| 2019 | 15% | 4% |
| 2020 | 44% | 7% |
| OEM | Volume Growth Year-Over-Year |
|---|---|
| Auto OEM 1 | 353% |
| Auto OEM 2 | 151% |
| Auto OEM 3 | 116% |
| Auto OEM 4 | 104% |
| Auto OEM 5 | 92% |
| Auto OEM 6 | 59% |
| Auto OEM 7 | 43% |
OEM Performance
At the same time, recent survey results show that customers still buy parts online more frequently from other retailers, such as NAPA and AutoZone, and Amazon than they do from the OEM (Figure 3). 65% of digital customers are most interested in a convenient experience or a low price, which OEMs have not demonstrated they are able to provide (Figure 4). On most OEM websites, customers must select a transacting dealer prior to making a purchase, cannot see part price or availability until they have selected a dealer, and do not receive the same service level as they do from other providers (dealers believe they have 5-7 days to complete most e-commerce orders, compared to Amazon Prime’s 2-day guarantee).
| E-Commerce Channel | Percentage of Respondents |
|---|---|
| A retailer’s website | 65% |
| Amazon | 53% |
| The OEM / dealer website | 36% |
| eBay | 27% |
| Rock Auto | 26% |
| Other | 3% |
| E-Commerce Channel | Quality | Value | Convenience |
|---|---|---|---|
| A retailer’s website | 58% | 21% | 0.21 |
| Amazon | 55% | 36% | 0.09 |
| The OEM / dealer website | 79% | 21% | 0 |
| eBay | 50% | 38% | 0.13 |
| Rock Auto | 38% | 46% | 0.15 |
There is still room for growth in the e-commerce space as 78% of survey respondents indicated that they are receptive to purchasing automotive parts online in the future (relative to the 42% of survey respondents who have previously purchased a part or accessory online), but it is critical that OEMs play an active role in shaping their e-commerce solutions with a strategy to capture this growth and keep customers in the OEM space. An e-commerce offering involves changes to the supply chain, pricing strategy, marketing tools, and dealer interaction, among other members throughout the entire aftersales organization, and to implement a successful strategy, all stakeholders within an organization need to be aligned. OEMs must understand what their customers are looking for, what their competitors are doing, and how they can best outfit their dealer networks to execute the strategy.
Conclusion
Without adequate solutions, customers will frequent non-OEM vendors that can provide a better price and a more convenient experience. It is imperative that OEMs understand where their solutions stand today and where they need to be in the future if they are to capture this growth opportunity. In an e-commerce strategy, OEMs must consider questions such as how to structure online pricing competitively, how to deliver greater value to end-customers, how to differentiate their dealers in e-commerce marketplaces, what the optimal fulfillment models are, and whether to support sales through non-OEM channels.
The digital space is a difficult one to navigate, and without a proper plan in place, digital customers will leave OEMs behind.
Authors
Meredith Collins
Director
Colin Horgan
Senior Associate Consultant