We had an awesome interview with James Windrow from RevolutionParts at Digital Dealer. A lot of really valuable information…
RevolutionParts makes it easy for dealers to sell parts and accessories online through their own webstore, their dealer website, through Amazon, and through eBay. James says, “it’s that simple!”
True automotive eCommerce.
What is keeping dealers from selling parts online?
James answers, “Parts in general, the parts business is counter-cyclical. So when people are buying new cars, they’re not investing in their own cars. But when they’re holding their cars longer, which they do in markets like this. They buy more parts, more accessories, they’re putting more money and resources into their cars so there’s no better time to start investing and selling online. Or to sell parts online than when people are holding onto their cars for longer and longer. So what keeps the dealers out frequently is just fear of technology. It seems very complex, it seems very scary to sell online, to get into eCommerce. The other thing is they hear there’s no margin, it’s too competitive, they’re selling at cost plus 60 or thereabouts through their Service Drive, maybe cost plus 30 wholesale and depending on the brand they may not get any more than cost plus 10 or cost plus 20 online. So that scares them.”
So what’s the answer?
James explains, “number 1 is understanding obviously gross profit vs. gross margins so getting 15% of $100,000 a month in sales is a pretty good bottom-line contribution. If you’re not selling online at all that’s zero of zero right? So it’s just understanding the importance of it. It is a volume game. But it’s a great way to add dollars right to the bottom line!”
Gain Dealership Customers
“Parts Departments, especially Parts Departments that are in rural areas where they have a limited audience and a small geographic area to sell to. Where else are they going to sell to? If they go online, now they open up to a national market where they sell to millions and millions of buyers, that they would never normally reach. So it’s a great way to bring in customers, to acquire new customers and then once they buy from you, they will buy from you again.”
What is 100% Absorption Rate Everyone Talks About?
“The mythical 100% absorption rate would be a point at which dealers fixed operations revenue is covering all of their operational expenses. And when that happens their ability to do a lot of things on the new car side such as sell at much lower prices and then that in turn drives more people back to the service lane and so when we talk about absorption rate, most GM’s are thinking primarily Service, but this opens up a whole new channel of revenue to help them hit that 100% absorption rate.
Subsidize your margin compression losses!
So if your in a really competitive market where you’re having to really reduce the margins on your new cars that could hurt. So you can start to take a loss. So if you could make up some of that money in parts, it’s good business.
I don’t want to overstep expectations, but we have dealers selling a million dollars a month plus in parts and accessories. And we have dealers selling in the hundreds of thousands all the way to tens of thousands. It really is what you put into it. How much time you are willing to wait. But for the dealers who are having tremendous success, it’s a game-changer.”
What Are The Differences Between Selling Parts on eBay, Amazon & Your Own Website?
eBay: Do you have obsolete parts? If you need to get that inventory sold ebay is the place. You can move obsolete parts there at a low margin, but high volume. “eBay is perfect for that.”
Amazon: They take anywhere from 9-14% so it’s hard and really painful for dealers to sell parts on Amazon because they take so much. However, if you sell accessories on Amazon, not mechanical, but accessories that tend to have a lot of higher-margin items, you can sell them at a competitive rate, give Amazon their share and still do pretty good yourself!”
Standalone Webstore: A webstore is perfect for mechanical. So if you want to build your own business that you can sustain and grow over time. A standalone webstore is the best way to go.
Different strategies and inventory should be used on different platforms. That also changes your marketing strategies as well.