The e-retailer reports a $126 million net loss, stemming from a $640 million year-over-year increase in spending in the quarter on technology and content ...
(Page 2 of 2)
To feed that growth, U.S. Auto Parts is looking to drive down supplier costs and consumer prices by renegotiating supplier contracts and by sourcing car body parts and, more recently, engine parts offshore. The company also has opened its own distribution center on the east coast, cutting distributor costs by bringing products in directly and shipping orders from its own warehouse, Evangelist says.
But perhaps its most ambitious bid to capitalize on what it sees as rising interest in DIY is its plans for AutoMD.com, a web site that provides car diagnosis and repair content and community features that it acquired for an undisclosed sum last October. The company is overhauling AutoMD.com, Evangelist says, and some of the how-to content will likely be integrated into its e-commerce sites, AutoPartsWarehouse.com and PartsTrain.com, in the third quarter.
Once fully developed, the web site will enable a vehicle owner to input information about the symptoms of a car’s ailment and ultimately arrive at a diagnosis and prescription for repair. Users will be presented with local repair shop options for service if they want a professional to perform the service; Evangelist says the company is qualifying local shops that it would be willing to recommend.
Site visitors also will be provided with counsel on services, parts and cost, and information through how-to guides aimed at building consumer confidence in their knowledge and ability to perform the service themselves.
“We need to help customers find solutions for their cars, whether that means they buy it online and install it themselves, or if that means that we simply direct them to a local shop to get their car fixed. We believe that once they understand the true difficulty and time it takes to take it to a shop versus doing it themselves, they will probably do it themselves,” Evangelist says.
The car doctor
AutoMD.com will likely launch around the fourth quarter as a separate stand-alone content destination, with links back to the company’s e-commerce sites for those who want to buy parts. Evangelist likens the planned site to “an Edmunds.com for repair and maintenance,” a reference to Edmunds, a leading independent source on used automobile values.
Whitney Automotive Group is seeing a shift in what its customers are buying. “Historically they were buying accessories, now they’re buying items designed to keep the car running,” West says. “We feel this economic pressure is driving more people who hadn’t considered automotive repair in the past into doing it themselves.”
The company is going after that opportunity with a strategy that leverages its huge assortment beyond its main site by targeting specific audience segments with a number of new sites that, on the front end, stand apart from JCWhitney.com. “We’re creating a specific assortment for a number of unique micro-segments that we think deserve their own experience,” West says.
For example, flagship site JCWhitney.com is heavy on educational content and customer service, supported by a 250-agent call center whose trained reps provide tips by phone and chat on getting the right tools and finding the right repair instructions. With four microsites launched to date, West says the company is planning several more.
But to target the experienced DIYer who knows exactly what he wants to buy, and is looking for the lowest price possible, it’s launched CarParts.com, with a smaller assortment. The site strips out service and support content-for instance, offering no phone or chat customer service and charging a 15% re-stocking fee, unlike Whitney’s main e-commerce site-and it passes the associated cost savings on to consumers.
CarParts.com’s pricing aims for a price point 10% to 20% lower than the average among online discount sellers of auto parts, which also makes its prices lower than those at JCWhitney.com. For example, a bug deflector retailing for about $40 elsewhere on retail sites goes for $35 on JCWhitney.com and $21.99 on CarParts.com, according to vice president of e-commerce Geoffrey Robertson.
Whitney also is expanding its business model to support other retailers looking for a bigger piece of the parts business. Since last November, it’s powered the automotive tab on Sears.com, handling the category’s entire e-commerce operation, including merchandising, sourcing, customer service and fulfillment and expanding the automotive assortment at Sears.com by hundreds of thousands of SKUs, West says.
“Since we launched Sears, more companies have come to us to say they have automotive traffic and want to do more in the aftermarket. It’s creating a whole new growth channel for us,” West adds.
While store sales still dwarf online sales of aftermarket auto parts and accessories, the category’s online sellers are betting that a changing economic climate will spark sales, and they’re putting themselves in position for that. How fast sales will accelerate and how well any of those efforts will pay off has yet to be determined. But one thing’s clear: while the current market conditions have much of retail sputtering out of gas, they’re fueling opportunity in this category for the unique assets the online channel brings to sales and merchandising.
“This is one of the most exciting times-almost a perfect storm for the aftermarket online,” West says.