How eCommerce Is Transforming The Auto Industry And How Your Business Can Adapt Successfully
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How eCommerce Is Transforming The Auto Industry And How Your Business Can Adapt Successfully i95Dev eBook www.i95Dev.com Copyright © 2022 i95Dev. All Rights Reserved
INTRODUCTION The US automotive manufacturing industry - which includes its various allied industries such as auto parts and accessories - is the 2nd largest in the world. In 2018 alone, more than US 140bn worth of vehicles and automotive parts were exported to more than 200 countries. In addition, out of the total US 105bn spent on automotive R&D across the world, almost 1/5th, or US 18bn was spent by the US automotive industry alone. This highlights how vital the industry is for the health of the US economy. The auto industry—which includes sales of cars, light trucks, auto parts, and accessories— represents 23.7% of all US retail sales, making it the largest retail sector – eMarketer Consequently, the US automotive manufacturing - powered by the available infrastructure, government patronage, a large local consumer market, and skilled workforce - is primed to be the premier automotive manufacturing hub of the 21st century, in both B2B and B2C markets. Moving on to its great northern neighbours - Canada; by contributing more than 10% of its manufacturing GDP and 23% of its manufacturing trade, the Canadian automotive manufacturing is one of largest industrial sectors in Canada. It is one of the top 10 producers of light vehicles, enabling the 5 multinational OEMs - Ford, FCA, GM, Honda, and Toyota - to assemble more than 2mn vehicles every year. As a result, Canada has become a hub of transformative automotive technologies, attracting major investments in autonomous and connected vehicles development from leading giants such as Uber, Google, and Nvidia. www.i95Dev.com | Copyright © 2022 i95Dev. All Rights Reserved
While previously, the auto industry was focused more on developing quality products and later identifying and creating a niche market to sell to, the approach has now evolved. It is now highly customer-driven, which highlights how increasing consumer demands have been defining innovation across a variety of industries. The auto industry too, is now increasingly focused on engaging with customers on a meaningful level, and leveraging insights gathered from ongoing interactions, to redirect their investments and strengthen competitive advantage in a demanding marketplace. According to Global Market Insights, Inc, the automotive eCommerce industry is expected to surpass US 30bn by 2025 with global demand to surpass 1bn units. Moreover, a 2019 study of 1089 retail consumers concluded that nearly 49% of the consumers are open to purchasing vehicles completely online. Therefore, digital channels will be a massive influence on consumer journeys, with the number of online communities and reviews expected to surge so that the prospects can evaluate their purchases. www.i95Dev.com | Copyright © 2022 i95Dev. All Rights Reserved
PARADIGM SHIFT: FROM CONVENTIONAL TO CONSUMER-CENTRIC Traditional automotive sales followed a primarily dealer-based model, where all purchasing activities from information gathering, test drives, transactions, and servicing were carried out at the physical brick-and-mortar automotive dealership. However, many consumers are now realizing that purchasing online has multiple benefits, such as lower costs, speed, convenience, more potential for customization and personalization, and a wider option of products or brands, that the traditional channel does not. According to the National Dealers Automotive Association, in the US today, there are 41 major automotive manufacturers selling different types of vehicles through 17,000 dealerships. There are massive resource inefficiencies here as the automotive companies are largely dependent on the dealers to drive sales rather than having the consumers approach them directly in order to generate sales. This is changing following the growing adoption of automotive eCommerce. Frost & Sullivan, a research firm, expects online vehicle sales to rise to 1.3mn by 2035. In addition, according to the US Department of Commerce - although the automotive eCommerce industry is already a sizable market with US 14.6bn in sales in 2018, it represented only 1% of the total US 1.1tn of US vehicle sales. Moreover, according to the 2019 Automotive eCommerce Report, the CAGR for digital sales was 7.61% compared to the overall 1.73% for the overall sales. Hence, it is clear that automotive eCommerce has a massive potential for growth. It is imperative that the automotive executives must pay close attention to the developments in automotive eCommerce and invest in new ways to sell to their prospects. www.i95Dev.com | Copyright © 2022 i95Dev. All Rights Reserved
However, it’s not all doom-and-gloom for the dealers - their opportunities are bound to increase as well with the demand for better electronics, auto parts, car care, and interior accessories expected to surge. This has, nonetheless, shifted the power dynamic in the industry because the manufacturers can now sell directly to the end-consumer through digital platforms. For instance, the Las Vegas-based Findlay Automotive Group has now established a 100% digital purchase program that enables consumers to purchase vehicles from the comfort of their homes. Moreover, other companies such as Tesla, Rivian, Porsche, and Lynk are also selling vehicles directly online to the public. www.i95Dev.com | Copyright © 2022 i95Dev. All Rights Reserved
Transforming Customer Experience Automotive brands will have to reimagine their customer experiences in order to build into effective mobility providers. It’s crucial that they closely align with digital technologies surrounding connectivity, electrification, autonomous vehicles, and so on to rapidly transform their OEM business model. A quick look at multiple industry sources suggests that millennials will form more than 45 percent of the potential car-buying cohort in 2025, making them the largest demographic to be purchasing new cars. This makes it even more important for OEMs to delve into understanding their preferences and tweaking the experiences they design to adapt to this segment. Going digital Succeeding in an increasingly competitive and challenging market requires that automotive brands innovate rapidly in order to be able to meet growing customer demands. As auto brands seek to leverage digital technologies in order to innovate customer experience and respond to evolving customer expectations, it’s important to emphasize the following trends that are currently leading the way: shifting to online sales, omnichannel commerce, leveraging digital content to simplify the buyer journey, AR & VR technologies, connected cars (IoT), and finally mobility. Research by Accenture, indicates that by 2030, revenues from manufacturing and selling vehicles will be only marginally higher than they are today. However, revenues from mobility services are expected to rise to almost €1.2tn, with profits set to climb to as much as €220bn. The ultimate goal of digitization is to build meaningful and ongoing relationships with customers and engage with them on a more personal level. When talking about the automotive industry, it’s also important to highlight trends that are expected to shift the way people deal for spare parts. www.i95Dev.com | Copyright © 2022 i95Dev. All Rights Reserved
Based on our study, following are critical trends we expect to
see emerge in the coming year:
Consolidation among parts distributors
The number of parts bought and sold everyday are essentially boundless, making it
nearly impossible to channelize every demand through an individual network. As a result,
automotive parts distributors are banding together to serve their customers with highest
supply and diversified options.
Aggressive expansion of OEMs into
aftermarket activities
Gone are the days when the manufacturers would not deal with the needs of the end
customers. OEMs are prioritizing effectively leveraging online presence in order to reach
those customers easily and directly.
Digitization of channels and interfaces
Technology has rapidly changed the way we trade. Customers now have the best options
available to them at their fingertips.
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Access to car-generated data
Car generated data has exhaustive information about the vehicle and its parts. Access to
this data will certainly impact a customer’s buying decision, thereby changing the way trade
happens between a buyer and the automotive supplier.
Increasing influence of (digital) intermediaries
Digital space has provided customers with an open market to look for their requirements.
There are a huge number of players, with each trying to top the favourite list of their
customers.
Higher price transparency and greater
diversity of supply for customers
Customers have a great amount of flexibility and autonomy over their decisions when it
comes to automobile eCommerce. They can quickly compare prices and explore a variety
of options, before choosing the deal that makes the most sense for their needs.
As the automotive market evolves rapidly with increasingly diversified customer expectations and
technological innovations, it has also paved the way for greater transparency for customers while
stiffening competition among suppliers.
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NAVIGATING THE EVOLVING AUTOMOBILE AFTERMARKET INDUSTRY As much as new vehicle sales may have plateaued, the automobile aftermarket industry is evidently thriving. Vehicle owners are increasingly investing in replacement parts to ensure maximum usage for their vehicles. These parts don’t just ensure longevity, but also allow customers to personalize their vehicles, while also enhancing their performance and functionality. While it certainly sounds promising, the after-sales market can also be rather challenging. Most of the aftermarket parts are purchased by servicing stations in most markets around the world. Hence, aftermarket sales is largely a B2B market. As Covid-19 forces us into an economic downturn, the automobile aftermarket industry presents a lucrative proposition for manufacturers and retailers, as vehicle owners are more likely to invest in repairs or enhancements, as opposed to purchase of brand new vehicles. It’s clear that the aftermarket industry is growing rapidly with global eCommerce sales for the automotive aftermarket projected to grow at a compound annual rate of 18.9% from 2017 to 2022, reaching $49.5 billion in 2022, according to Technavio. Yet another report by Grand View Research, Inc., indicates that the automobile aftermarket industry is evolving fast and is expected to reach more than $486 billion by 2025. It is found that the trend of customer intention to buy auto parts online, doubled, in a span of 3 years. Furthermore, according to Pixel Productions, Inc., there are 70 million auto parts (aftermarket) searches every month on Google. This opens up an entire spectrum of opportunities for businesses in the automotive aftermarket industry to build a powerful and productive eCommerce presence. www.i95Dev.com | Copyright © 2022 i95Dev. All Rights Reserved
Why building your own presence is critical in an industry reeling
from the ‘Amazon Effect’
Buyers can now easily and quickly hop onto
Amazon to buy the part they need at a price that
delivers the best value. By design, they will also
have access to a variety of options so they can
choose a competitive, well-priced product.
However, most buyers don’t, infact, possess
the ability or knowledge expertise to make this
judgement call on the issues with their car or which
new parts can help resolve them. And this is a
huge competitive advantage for distributors when
compared to Amazon’s offerings.
Part distributors have a variety of factors working in their favour when they choose to set up their
own marketplace:
They’re well They can easily Incorporating services
recognized for add new products into the marketplace
their domain as they evolve will help distributors
expertise in enabling customers
to make better, more
well-informed
choices
Having their own The platform can be
marketplace allows leveraged to offer
them to offer on-demand consultation
competitive pricing to consumers, thus
simplifying their journey
in choosing the
right parts
www.i95Dev.com | Copyright © 2022 i95Dev. All Rights ReservedFACTORS TO LOOK FOR WHEN
CHOOSING AN AUTOMOBILE
AFTERMARKET ECOMMERCE SOLUTION
From our extensive experience with the auto industry and a deep understanding of its challenges,
we recommend prioritizing the following factors when choosing the right eCommerce solution for
your organization:
Ability to handle serious inventory challenges
There are numerous players in the industry across the world who produce various
models, with a few of these models in production for more than a decade. To serve
such an industry, the aftermarket industry handles a large variety of parts in different
sizes. This can be an inventory management nightmare. Automobile aftermarket
eCommerce players need serious solutions that handle these challenges.
Smooth shipping services
For larger auto parts, shipping can be tedious and challenging. Not all shipping operators
are suitable to address these needs. When dealing with larger auto parts, this information
should be tracked real time and made available to the end customers.
To achieve this, eCommerce players need an integrated eco-system to integrate
disparate systems. Lack of such a feature would impact customer experience negatively.
Customer upselling
Upsell and cross-sell has the potential to generate a lot of revenue. However, not all
eCommerce players have the necessary setup to achieve this. Most offline stores
generate considerable revenue from this by recommending parts that fetch them better
margins. Replicating this requires having a good eCommerce setup in place to manage
the information in real time.
www.i95Dev.com | Copyright © 2022 i95Dev. All Rights ReservedEfficient handling of custom orders
Most B2B eCommerce businesses must offer a certain amount of customization, and
the automobile after parts market is no exception. The workflow needed to handle
custom requests is quite different from a standard request and is unique to each
business.
Product discovery
Improving Product Discovery not only enables businesses to sell their most promising
products but also helps to map the customer journey to further refine and simply a
customer’s search for a specific product. It also has the added advantage of amplifying
cross-selling opportunities, helping platforms to eliminate barriers while cutting down on
research time.
Customer management
B2B customers require a different approach to customer management, as opposed
to B2C, due to the more complex pricing structure. Consider whether the solution you
choose is able to do this effectively.
Pricing
Pricing is obviously a critical factor in determining the right solution but when combined
with performing a thorough analysis of how various solutions stack up against each
other - in terms of features, user reviews and product videos etc., can enable better
decision making.
www.i95Dev.com | Copyright © 2022 i95Dev. All Rights ReservedBENEFITS OF THE AUTOMOBILE ECOMMERCE PLATFORM THAT I95DEV HAS DESIGNED FOR ITS CLIENTS. As consumers increasingly turn to buying automotive parts online, we’ve worked with companies across the automotive industry, to equip them with opportunities to benefit from eCommerce. Here are key highlights of features we’ve incorporated for these clients: Catalogue Creation: With this feature, you will own the entire process of your business. You will not need any further assistance as everything is possible with the click of the mouse. From catalogue creation, catalogue maintenance, import of data with various formats, catalogue updation to the entire process automation, you are in charge. An advanced eCatalog functionality we designed for a client was immensely successful in simplifying product discovery and order placement. It included features like Map based product navigation that displays a map of a part with its components and hyperlinks to view more details Where used/ Component of functionality to display all parts where the specific component is used Advanced Product Pricing to replicate the pricing rules based on contracts signed, the product line, and the customer type in the eCommerce system Advanced Customer Accounts to create multiple child accounts with varying permissions Quick order with real time part suggestion that displays the list of relevant SKUs – information fetched dynamically from the ERP system Warehouse inventory flags that display the status of inventory across multiple warehouses Performance – the Magento eCommerce store leverages Magento EE split database functionality, and is deployed with load balancers, with a separate server for Magento admin, and failover servers. www.i95Dev.com | Copyright © 2022 i95Dev. All Rights Reserved
Single Source of Publication
The independent data retention lets
you enjoy the one source publication.
Just one click and the data is updated
everywhere.
Identification of Spare Parts
This feature gives you access to the
entire data in just a few seconds.
All you need to do is search for the
specific part and all details will be
made available at your fingertips.
E-Ordering of Spare Parts
Optimized order processing through
electronic media to provide hassle free
order without any transmission error.
Here’s an interesting insight into a company that is already leading the industry in this
regard - RTW Wheels, a wheel and tire company in Texas, shifted to Magento eCommerce and
allowed the customers to order parts at wholesale price. This OEM made a huge difference to its
sales and customer acquisition by making one simple decision of shifting their business model to
the automobile eCommerce platform.
www.i95Dev.com | Copyright © 2022 i95Dev. All Rights ReservedMOVING FORWARD IN A COVID-IMPACTED WORLD The automotive industry, much like a plethora of other industries, has undoubtedly been shaken up by the coronavirus pandemic. It has set the stage for extensive, long-term disruption, causing serious economic upheaval, along the way. As expected, the economic downturn has led to a decline in GDPs, but it’s important to note that the effect of this recession is expected to be twice as severe as the last and cause uncertainties for a much longer period of time. Lockdown across the globe and social distancing measures led to a steep decline in the number of store visitors as well as, miles clocked by vehicle owners. Furthermore, since car travel has declined considerably, it has also led to fewer collisions. All of these conditions, coupled with a weak economic trajectory, all point to the fact that the automotive aftermarket demand may not return to pre-pandemic levels for years. However, all of these government induced efforts to contain the pandemic have led to a new trend, in terms of customers’ growing preference for shopping online. This may be crucial to generating profitable business opportunities for forward-thinking eCommerce automotive business models. Businesses and consumers alike have begun their journey towards this transition, and it is expected that this trend will continue for the near future. For automotive dealers, it’s crucial to identify ways to maximize returns from their underutilized revenue channels. Automotive aftermarket players that jump on adopting long-term measures to solidify their business standing through eCommerce will certainly be better positioned to bounce back from the impact of the pandemic. www.i95Dev.com | Copyright © 2022 i95Dev. All Rights Reserved
CONCLUSION The automotive industry clearly needs to adapt and evolve rapidly. As in all aspects of their lives, customers have come to expect superior, seamless experiences from the automotive industry as well. But the good news is, businesses now have access to a varied set of digital technologies that can make these experiences possible. While adopting robust eCommerce solutions is certainly on the radar for most manufacturers, we recommend that this is prioritized and adequate investments are assigned to get the ball rolling. Staying ahead of the game in a post-covid world requires that businesses identify new ways of selling and invest in modern technologies to meet the rapidly evolving customer needs. If you are looking to dominate the automobile industry in the near future, it’s imperative you take a glimpse at what else can do for you. Contact us to know more about our company and how we can help you implement outcome-driven Automobile eCommerce solutions. www.i95Dev.com | Copyright © 2022 i95Dev. All Rights Reserved
About i95Dev
i95Dev is an end-to-end eCommerce product and services
company specializing in designing, developing, and maintain-
New Jersey
ing B2B/B2C ERP integrated omni-channel eCommerce
33 Wood Avenue South, Suite 600, solutions. i95Dev’s eCommerce solutions are powered by
Iselin, New Jersey, 08830 industry leading shopping carts such as Adobe Magento,
Ph: (301) 760.7499 BigCommerce, and Shopify.
Fax: (301) 576.3655
We are a leading systems integrator supporting complex
New York
eCommerce integrations with various ERPs, POS, CRM,
1430 Broadway, Mobile, and Social Applications. Our integration products for
7th Floor New York NY 10018. Magento and Microsoft Dynamics (Dynamics 365, Business
Ph: (646) 688.3662
Central, GP, AX, and NAV), SAP, and SAGE ERPs are globally
recognized.
Los Angeles
303 North Glenoaks Blvd., i95Dev's products and solutions enable retailers, distribu-
Suite 200, Burbank, CA – 91502 tors, and manufacturers to utilize current and emerging
technologies such as mobile, social media and marketplaces,
Australia
to reach more clients efficiently.
Sydney, NSW – 2145,
Ph: (02) 8015 5446 With a strong workforce of 300+ eCommerce enthusiasts,
spread across Australia, India, and USA, i95Dev has helped
Hyderabad energize digital commerce initiatives of clients across 25+
Level 1 – Wing 2, Block ‘C’, industries and 15+ countries.
Cyber Gateway,HITEC City,
Madhapur, Hyderabad – 500 081,
Telangana, India.
Ph: +91(40) 66710711
info@i95Dev.com
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