CRA Market Trends Explored
Notwithstanding many quick lube, repair and auto body shops that stayed open during the pandemic, eCommerce saw record growth in the aftermarket because the processes and systems for how to run business had to evolve and adapt.
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The COVID-19 pandemic greatly challenged how businesses and individuals in every industry operate. And whether it’s the automotive industry or any other industry, one of the most notable trends that was amplified during the pandemic was the growth of eCommerce.
According to the Auto Care Association’s 2022 Factbook, the automotive aftermarket industry experienced an unprecedented increase in eCommerce adoption, driven primarily by COVID-19 and the corresponding shift in consumer preferences towards shopping online. As a result, 2020 eCommerce sales of new automotive parts and accessories exceeded $16 billion, representing a year-over-year growth rate of roughly 35 percent.
Now while the industry was on a steady growth path prior to COVID, the pandemic exacerbated it. It brought distant thoughts and realizations closer to the forefront, and it’s important that repair shops take notice, said Jim Lang, publisher of Lang Marketing, which aided the ACA in its data and research efforts.
“It is disruptive, no question about it,” Lang said. “Now whether it’s to the benefit or detriment to shops… that’s more complicated.”
While eCommerce is rapidly growing, what makes up eCommerce is shifting. In 2016, an overwhelming amount of the eCommerce transactions in the aftermarket industry were occurring for DIY repairs. But this recent growth isn’t attributed to that. Instead it’s coming from what is categorized as “Online to Offline” (o2o), which are sales that involve the online purchase of auto parts by a consumer that are then installed by do-it-for-me (DFIM) outlets.
Consumers are buying parts online from Amazon, Walmart or a more traditional parts seller’s website and bringing it into shops that the platform has approved.
That, Lang says, presents an opportunity for repair shops.
“If the eCommerce platform controls the relationship between repairer and consumer, choosing where they can have the repair done, then the shops are going to have to seek out a relationship with the platforms,” Lang said.
If shops can become part of an approved list of repairers that these customers can take their parts to, that opens up their opportunity for growth. This will be especially pivotal for general repair shops and quick lubes, where there are a myriad of options and picking between an approved shop and a non-approved shop would lead to a relatively obvious decision, Lang said.
The pandemic accelerated the industry’s growth, but Lang still expects it to grow once the pandemic is over. In the two years prior to the pandemic, automotive aftermarket eCommerce grew by 18 and 25 percent year-over-year, as millennials and Gen Z prefer online shopping than any other form. With those demographics increasingly encompassing more of the buying power, the growth will continue.
“The millennial is not seeking that relationship with the repair shop or any establishment. They have more confidence dealing with Amazon,” said Lang, leading to more DIFM requests than ever before.
So as social distancing and mask requirements disappear, don’t expect eCommerce to face a similar fate.
Article Credit to Adapt Automotive.
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