Your eCommerce Wins Don’t Happen in the Margins
For most Parts Managers, selling parts with slashed margins is about as enjoyable as driving with slashed tires. Yet, that’s the reality parts sellers face when opening up an eCommerce platform. The comfortable profit margins you’re used to as a result of markups at your over-the-counter business shrink – a lot – in the more competitive online space.
Let’s get the numbers out in the open first. You’re probably used to profit margins as high as 35% at your parts counter. Well, depending on the part, you might sell the same exact item online for cost+15% (on the high side) all the way down to cost+2% (on the low end).
The reality is, there’s nothing you can do about these slashed margins. You can’t cheat the system, since online retailers like Amazon and eBay reward competitive pricing models. If you sell brake pads at cost+35% online, you flat-out won’t be shown to customers.
Change your profit mindset, and the revenue will follow
Selling on eCommerce platforms isn’t about winning the profit margin game, it’s about chasing that sweet, sweet gross profit. Online is a sheer volume play, and selling more products opens you up to benefits and incentives that you can’t find at your dealership.
For one, more sales obviously equals more customers. And that means more opportunities for you to provide excellent customer service that will keep buyers coming back to you. Shoppers are smarter than ever and have more choices than ever, so when you meet or exceed their expectations, you stand out. The more 5-star reviews you earn through responding to questions promptly or offering creative promo deals, the better your chances are of showing up in online searches.
Another bonus of high-volume selling is OEM kickbacks. In fact, these backend manufacturer incentives are where many parts managers see the bulk of their gross profits from online revenue. You probably can’t move enough product at your counter to reach volume quotas, but you certainly can online where the reward can be huge even at cost+2%.
10% of something beats 30% of nothing
Your parts counter is your baby. We totally understand. And we’d never suggest you have to make the ultimate choice between your counter business and your online platform. You’re not replacing high margins with slim ones – you’re adding a new source of volume-based online revenue to what you’re already making in-store. So get greedy and start looking at slashed margins as a huge opportunity!
Getting online for the first time and figuring out the best pricing model for your inventory and your brand can be tricky. That’s why the online selling experts at RevolutionParts have created tools to optimize your pricing to become a volume seller on Amazon, eBay, your webstore and our Storefront Plugin.
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Amazon dominates the online auto parts sales sphere. The website generates over $150 billion in sales per year. If you want to get in on the action and generate some revenue for your dealership, you’re going to have to win the Buy Box.
“Whatever is worth doing at all, is worth doing well,” Robert Lasdon quotes Phillip Stanhope—but more importantly, his aunt— when asked about the work ethic he brings to his role as Internet Parts Director of Delray Acura & Hyundai.
Use these strategies & resources you already have at the dealership to accelerate inventory turnover.