The simple truth about selling auto parts online: it’s a different market than what you’re used to in-store.
Brick and mortar selling techniques are great for, you know, in-store sales. But when it comes to selling online, you need to tweak your strategy.
Online shoppers are just plain different that then people who come to your parts counter. If you’re running your eCommerce parts store the same way as your dealership parts store, you’re probably losing a lot of money.
1. Your prices are too high.
Remember: you’re competing with Amazon pricing. List price is simply too high to be competitive.
Auto Part shoppers do their homework before making a purchase. According to a study from UPS, only 27% of automotive shoppers have returned an online purchase, compared to 62% of general online shoppers.
This means that automotive shoppers are really doing their research before they buy.
They’ll come across a range of prices during this stage. If your price is drastically higher than the others, they won’t buy from you.
You can’t make many sales with list pricing. It’s better to set your pricing strategy at cost + %.
Although it depends on part category and brand, most dealers find the most success with a 15%-18% margin when selling on a parts website.
Margins for individual parts aren’t as high as you’re used to, but typically selling online is a volume game of selling as many parts as possible.
Impact on your ad campaigns
Most dealers don’t think about this one: Pricing can have a HUGE impact on the success of your Google shopping ads. Since these ads display your parts side-by-side with the competition, an overpriced item really stands out.
If you’re working with a marketing agency, they’re tuned into the success of your ad campaigns and should be able to suggest what pricing changes will help you improve.
2. Your prices don’t change between selling channels.
If you really want to take over the online automotive market, you need to know the differences between various selling channels.
Just as the in-store market isn’t the same as the online market, eBay isn’t the same as Amazon.
A lot of dealers will run the SAME prices across everywhere they sell: eBay, Amazon, and their individual parts website. And while it’s certainly easier to keep the same prices, you’re also losing money.
Amazon is the most competitive channel, so your prices there should be as low as you can go. eBay runs a competitive market too, but it’s not as tight as Amazon so you can raise you prices a little and still make sales.
You have the most freedom on your parts eCommerce store, so while you should still set a competitive price, you can price at a higher margin than on Amazon and still see orders come in.
Each of the online channels has unique strengths and weaknesses, so it’s always a great idea to sell auto parts on eBay and Amazon in addition to your parts website.
3. You’re not using a pricing matrix.
Instead of setting your entire auto part inventory to cost + 17%, change it up depending on what the cost actually is.
Smart parts managers use a pricing matrix (also known as a pricing table) to set more competitive pricing without going through their inventory part-by-part.
Here’s an example of how you might balance your pricing table/matrix:
$0-$10 parts: cost + 20%
$10-$50 parts: cost + 18%
$50-$100 parts: cost + 17%
$100+ parts: cost + 16%
With this pricing matrix, higher-priced items don’t skyrocket out of control. Your prices can stay competitive while you still make a profit.
At the same time, you won’t lose out as much money when a customer makes a tiny purchase which costs more to package than what you’ll make on the sale.
Some dealers set the smallest margin for high-priced items, while others set the smallest margin for a certain category like brakes or filters.
If you can get one category to be the lowest, most competitive price, it can become your “loss leader” and draw in customers.
A customer finds your parts website because of your amazing low-priced brake pads, and ends up buying all the auto parts they need while they’re there.
Even if you lose a little money on the brake pads, you’re making up for it with everything else in their cart.
4. You’re losing money on small, cheap parts.
Sometimes customers buy a single $1.49-priced screw. Your dealership makes hardly anything on that sale, and you still have to pay labor costs for someone to box, label, and ship that tiny screw.
Overall, you lose money on the sale.
This is a place where a price matrix will be your best friend. Items under a certain price threshold should be bumped higher in price, in order to make the sale worth it to you in the first place.
Feel free to set higher margins on these cheap little parts! Customers will usually buy the part anyway, especially if it’s an add-on to a larger order.
Some dealerships decide on another route: not selling these items at all. If a part is under a certain amount ($1.49, $5, whatever you choose), they simply won’t sell it online.
5. You aren’t buying in bulk.
A lot of fast-moving parts like filters and windshield wipers can be bought in bulk from the manufacturer.
The parts will be overall less expensive for you, so you’ll make more on the resell.
It can also be a great way to undercut the competition while still making a profit. If you’re stocking your inventory with oil filters purchased for less, you can price them at cost instead of cost + %.
It’s a price that your competition will be hard-pressed to match!
6. You’re not tailoring to your brand.
Certain brands of vehicle see a lot more competition than others, so the pricing will vary a lot between GM and Porsche.
DIY-Friendly and Standard Brands
Any of the DIY-friendly brands (such as GM, Mopar, Honda, Ford, and others) need a much more competitive pricing strategy. Customers can comparison shop across dozens of stores and find the lowest prices.
Even slight pricing changes will have a major impact on your standing among the competition. Watch competitive pricing and keep your margins as low as possible.
At the same time, these brands are very popular and take up a huge portion of the market. Competition is stiff, bu so many customers are looking for Honda and Ford parts that you’ll still make a fair amount of sales, even if your price isn’t the absolutely lowest out there.
It’s still possible to overprice your luxury OEM parts and drive away customers, but the pricing margin can be set higher without a negative impact on your sales.
Luxury brands aren’t sold as often, but they’re sold for a higher price—your customers are already expecting to pay more. Keep your customer demographic in mind.
Luxury car owners likely fit into a certain income bracket, so a $10 difference in price between two parts websites won’t be a deciding factor in their purchase.
7. Your shipping price is too high.
Even if your auto parts are perfectly priced, customers will abandon their order at the last second if your shipping fee is through the roof.
If you have lower prices and padded shipping then you’ll be competitive, but if you have high prices and high shipping fees then it’s a recipe for lower sales.
READ MORE: 8 Tricks to Avoid Overpaying for Shipping
Competitive pricing has the added bonus of making your marketing efforts way more successful, too. For example, Google shopping campaigns show pricing side-by-side, so a good price will make your ad that much more effective.
If your parts website has been struggling to make sales, trying a new pricing strategy might be just the fix you need.
Even though you can’t set margins as high as your in-store parts counter, you’ll make up the difference in the sheet volume of sales that go through a successful parts website.