Parts E-Commerce

1. Parts E-Commerce The Dealers’ Guide FellowesResearch

2. Agenda • Introduction • Why & Why Not • Dealer-as-a-Buyer • Dealer-as-a-Seller • Dealer Parts Websites • Wholesale Portals • Retail Portals • Mass Marketplaces • Locators Parts E-Commerce – Online Parts Trade • Summary & Actions • System Integration • Special Cases • Challenges • What’s Next? • Wrap-Up No one right solution (unlike main dealer websites) Some dealers need multiple solutions Solutions depend on dealer’s franchises and off-line parts business FellowesResearch

3. Introduction • Why listen to me? • Since 1985 – Automaker/Dealer Parts Systems • North America, Europe, Japan & China • 1st Electronic Parts Catalog (1986) • 1st Parts E-Commerce – Automaker Portal (1999) • 1st Wholesale Parts Portal (2000) • 1st web parts locator, order referral (2002 -2009) • No Horse in the Race • Structured / Actionable FellowesResearch

4. Introduction [Cont.] • Why Listen to Parts E-Commerce Presentation? • Your Customers • Your Competitors • Your Costs • Results • Sell More Parts • Lower Costs Related to Sales (processing, returns, …) • Lower Purchase Cost of Some Parts • Without Adding Staff or Increasing Capital Invested • Not Obvious: > 20 Suppliers; 6 Types (with distinct benefits, costs, buyer segments); 50 Solutions FellowesResearch

5. Introduction [Cont.] • AM crushing OE; Volumes Substantial DST reports transaction volumes same order of magnitude as IAP & WHI Approaching $1B/mo. >10% annual growth FellowesResearch

6. Introduction [Cont.] • Dealer-as-a-Buyer (DaaB) Overview • D2D – Idle & Urgent • AM • Dealer-as-a-Seller (Daas) Overview • B2B, B2C, D2D • Portals, Dealer Websites, Locators, Mass Marketplaces • Parts, Accessories, Tires, Merchandise Buyer/Seller Chaos FellowesResearch

7. Introduction [Cont.] • DaaS - Segmentation Solution Clusters • Mechanical Repair (All & Fleet only) • Collision Repair FellowesResearch

8. WHY! [Parts Buyers Prefer E-Commerce] • Consumers & Semi-Pro Buyers • Natural, convenient and faster – particularly for younger and “digital” customers • Searching the web is what digital buyers do • Price shopping • 24 x 7 to research, search and order • Web educating more DIYers to do more • Economy – financial pressure to DIY • Wider range of OE (ex: VPI, Performance) & AM Parts FellowesResearch

9. WHY! [Parts Buyers Prefer E-Commerce – Cont.] • Mechanical Repair Professionals • Already switched to parts e-commerce for AM parts due to discounts (most orders) • 24 x 7 & Never on hold • Integration to Shop’s Systems • Online Access to order info/status – current/archived • Collision Repair Professionals • Same as for Mechanical Repair Plus: • Automakers’ Parts Program (discounted parts) • Access to automaker technical info • Future: Compliance w/ Insurance Company programs FellowesResearch

10. WHY! [Parts E-Commerce – Dealer Benefits] • How Selling Via E-Commerce Benefits Dealers • Some parts buyers require parts e-commerce and more are shifting to e-commerce • More ordered (related parts, conquest/conversion) • Faster & easier to process digital than phone or fax orders (plus save the inbound toll-free charges) • Potential for fewer returns (180° change) FellowesResearch

11. WHY NOT! [Not Ready for Parts E-Commerce] • Costs • E-Commerce is not free for sellers • Pricing – in a few cases – tricky as old cell plans • Returns can be higher (though recent industry experiences are the reverse) • Culture • Digital buyers’ expectations are higher and heading higher – immediate accurate responses • Digital Orientation required • Customers • Some customers not ready; others inconsistent • Failure is an option FellowesResearch

12. Dealer as a Buyer • AM • Advantages of selective purchases via e-commerce: • Discounts for purchasing via e-commerce • Single source: makes not covered by dealer’s franchises • Speed and accuracy of ordering • Availability and delivery timing • Scenarios • Parts for vehicles in dealer workshop (franchise/not) • Used car prep (maintenance, repair and restoration) • Good/Better/Best service parts • Platforms: WHI, IAP, DST • OE: Idle / Urgent WORLDPAC NAPA CARQUEST AutoZone FellowesResearch

13. Dealer-as-a-Seller

14. Dealer-as-a-Seller

15. Dealer Parts Website • Website dedicated to selling parts • Cousin Larry Can’t Build – Catalogs & Billing • Parts – Plus Accessories & Merchandise • > 90% FedEx, UPS or USPS shipment • B2C now, B2B extensions emerging • Benefits • Increased sales (most incremental for dealer) • Low Returns (if done right) • National [International] reach – different market • Easy & Quick Set-up /Maintenance • TradeMotion, Parts Website, RevolutionParts, SkyParts, Reynolds & Reynolds, WHI, Others Issues: Brand vs. New Brand Domain Name: OE IP; Dealer IP/Subdirectory

16. Dealer Parts Website [Cont.] • ROI • A >> Z / (X ∗ Y) • A = Website Sales / Month • Z = Fees for Website / Month • X = % Gross Margin on Retail Parts • Y = % Sales that are Incremental • Set S&H to cover actual costs • Charge restocking fee that covers returns • Upsides • Retained customers that might have left w/out website • Productivity gains from streamlined order processing .1 FellowesResearch

17. Wholesale Portals • Segments: IRF, Fleet, Collision & Dealer (D2D) • Wholesale Buyers • Pricing specific to each wholesale account • Buyer needs to know quickly if/when deliver parts • Primarily Local Delivery or Pick-Up; Dealer Invoice • Potential for Incentive Programs • Buyer system integration • Benefits • Customer satisfaction & retention [pre-existing trading partners] • Moresales (related parts, conversion); new customers • Greater order processing productivity • Mechanical: OEC, WHI, DST, Infomedia, Lexcom • Collision: OEC, Infomedia & WHI Issues: Very different from Retail All-Makes vs Franchise Where $$$ is; Effort

18. Wholesale Portals [Cont.] • ROI • (Y ∗ X) >> Z • Z = Portal Fees / Month • X = % Gross Margin on Wholesale Parts • Y = $ Sales that are Retained + New/Incremental • Upsides • Productivity gains from streamlined order processing • Lower parts returns • Upfront Costs / Efforts FellowesResearch

19. Retail Portals • After catalog search, Buyer picks (local) Dealer • Parts, Accessories, Merchandise & Special Parts • Often an automaker program/solution • Benefits • Marketing muscle [top 10 search results] • New sales (related parts, conversion); new customers • Greater order processing productivity • Risk: Non-Participation in OE-sponsored Tool • Ford (FordParts.com – OEC); Honda (eStore); Chrysler (Mopar eStore – Chrome Data), Nissan (eStore – TradeMotion), … FellowesResearch

20. Retail Portals [Cont.] • ROI • A >> Z / (X ∗ Y) • A = Portal Parts Sales / Month • Z = Portal Fees / Month • X = % Gross Margin on Retail Parts/Accessory sales • Y = % Sales that are New/Incremental + ‘Saved’ • Upsides • Productivity gains from streamlined order processing • Lower returns FellowesResearch

21. Mass Marketplaces • Primarily B2C – AM, OE, Used • Parts, Accessories, Merchandise & Special Parts • Many Buyers Price Sensitive: Idle/Overstock • Benefits • Marketplace brand recognition & traffic HUGE - WW • Marketing and advertising muscle • New sales (related parts, conversion); new customers • Greater order processing productivity • Segments: Set Prices; Auctions; Classified Ads • eBay; Craigslist; Amazon FellowesResearch

22. Mass Marketplaces [cont.] • ROI • Transaction Fees Primary • Determine which parts you can afford to sell • For idle, if all else fails, part of a loaf is better than none • Work with Marketplace Partner • Non-transactional fees waived • Listing & Shipping Automation tools available • Upsides • Productivity gains from streamlined order processing • Idle reduction • Upfront & Fixed Costs FellowesResearch

23. Locators • Two Types • OE-Sponsored • Independent • Use: • Buyer searches for parts available (in stock) • Locator provides list (by distance) of matches • Buyer selects seller(s) from list of matches • ROI • OE-Sponsored: More compliance than profit motiive • Independent: Same as for Retail Portal FellowesResearch

24. Summary • Legend • s = secondary / minor or emerging • Comp = component / joint marketing

25. Summary • Action Plan • Buying Parts • If in wholesale, participate in automaker D2D programs • If service other-than-franchised: online buying discounts • Investigate policy to buy idle parts (>$X if non-urgent) • Selling Parts • Consider and Re-Consider Automaker Programs • Look for Automaker Funding of Other Programs • If Idle is more than minor pursue online sales • If not in wholesale, try Retail Portal or Parts Website • If in wholesale, study/consider Wholesale Portals FellowesResearch

26. Dealer System Integration • DMS • Basic parts e-commerce is DMS independent – not so for many advanced features/capabilities • DMS Integration value highest for: B2B, high volume • Dealer-as-a-Seller • Availability from DMS • MSRP from DMS • Customer’s Matrix Price from DMS • Order • Parts / Quantity to DMS • Status from DMS Considerations: DMS Integration Certification Capabilities Vary by DMS FellowesResearch

27. Dealer System Integration [Cont.] • DMS [Cont.] • Dealer-as-a-Buyer • P.O. Populated / Integrated across DMS applications • Improved parts receipting • Shipping • FedEx & UPS • GPS / Routing – Your Delivery Fleet [Elite EXTRA] • Wholesale Buyer System • Mechanical Repair Shop Systems • Collision Repair Shop Systems • E-Commerce to E-Commerce [Example: Portal to Marketplace] FellowesResearch

28. Special Cases • Accessories • Merchandise • Niche: Vintage, Performance • Tires • Idle • Dealer Groups • Dealer Websites Branding, Referral • Trade between stores FellowesResearch

29. Challenges • Responding to Customers (to their satisfaction) • Availability • Delivery day/time • Accurate price (B2B and D2D – not B2C issue) • Dealer Systems Integration • Returns • Part Numbers • Customer adoption uneven FellowesResearch

30. What’s Next? • Continuing shift to e-commerce: • Locators • Idle solutions (including bulk) • Parts & Service sites • Parts & Accessories: In-a-Box & Installed Prices • Blurring of lines • Portals will add dealer parts “micro sites” • Locators will add parts catalogs and/or “micro sites” • Catalog Improvements: Automaker web EPCs become more useable by non-experts while All-makes OE catalogs become more accurate, complete FellowesResearch

31. Parts E-Commerce – Dealers’ Guide Thank-You For more: www.fellowesresearch.com FellowesResearch