Bottom Line Profits From Online Parts Sales – Pt. 1
This is the first of two articles that explores several best practices, such as online parts sales, recommended to dealers looking to boost their fixed operations profitability. This article is adapted from the November/December 2019 Fixed Ops Magazine.
What’s the best way to win more quotes and increase online parts sales on marketplace and pricing platforms like PartsTrader or PartsTrader integrated with OE Connection? While there’s no single secret, managers like Brit Willcox, Wholesale Manager at Nally Honda, believe that it is critical to have the right tools and the right process to respond to every opportunity. “We are working on several platforms and we try to return a true quote with a full pricing and delivery information to 90% or higher across the board depending on volume and order complexity.” says Wilcox. “And we focus on making sure we have the right match and identify any OEM manufacturer rebates or pricing support.”
Other managers agree. In a recent survey, parts managers were asked about what makes their dealership successful in online parts sales. They reported that creative pricing methods, properly incentivizing managers and willingness to explore new technologies are key competitive advantages in winning more quotes.
Adjust Prices Often to Win More Quotes
When working with online pricing platforms, it’s a given that the right price is important in winning more quotes. But dealerships need to look beyond available manufacturer pricing support and/or conquest pricing. The overwhelming majority of dealers surveyed, about 86%, vary their online parts price to match local conditions or they expand their market. In doing so, they offer competitive conquest style pricing on more parts even without the manufacturer support programs. These dealers report win rates that are 30% higher when compared to dealers sticking with fixed prices.
Best Practice: Pricing flexibility is key to winning in a transparent marketplace and it is critical to capitalizing on the dynamic prices and incentives offered by OEM’s.
Use Price to Achieve Business Goals
If variable pricing is critical, then what are the factors that should drive price change? According to the survey, most dealers use price to gain market share or grow parts sales in a new territory.
Further down on the list are factors like time of year, the need to reduce high inventory levels and whether they are responding to an existing customer or a potential “new” or latent customer.
OEM wholesale price changes landed in the middle of this list. With the growing importance of dynamic pricing and online parts sales in the industry, this result is somewhat surprising and may truly be low because only a few OEM’s currently follow this practice.
Article By: Mike McFall, President, JDJS Consulting
Mike McFall is the President of JDJS Consulting. He has over 25 years of experience in the automotive industry, having served on the board of Fenix Parts and worked with dealers at General Motors, AutoNation and Black Book before establishing JDJS Consulting.