1/06/14

Deal makes Advance Auto a $1.4 billion B2B e-commerce player

Now that Advance Auto Parts Inc. has completed its acquisition of General Parts International, Advance Auto picks up $850 million in business-to-business e-commerce sales, says one stock analyst.

Mark Brohan , Research Director

Advance Auto Parts Inc. has completed its acquisition of General Parts International Inc., which operates Carquest.com and a chain of about 2,700 company-owned and franchised vehicle parts stores. The deal also creates an enterprise with annual business-to-business e-commerce sales of as much as $1.40 billion, says Seth Basham, a vice president and analyst who follows Advance Auto for Wedbush Equity Research.

Prior to the acquisition Advance Auto, No. 400 in the 2013 Internet Retailer Top 500 Guide, generated estimated annual B2B e-commerce sales of around $390 million. But with the addition of an estimated $850 million in B2B e-commerce sales from General Parts—driven primarily by its WorldPac parts business—Advance Auto now operates potentially the largest e-commerce technology platform in the automotive parts and accessories market used by mechanics and other professionals, Basham says. “This platform enhances their capabilities to serve large accounts, strengthening relationships and increasing loyalty,” he says.

Sign Up for B@Becnews for FREEAdvance Auto in October announced a preliminary deal to spend $2.04 billion in an all-cash deal to purchase General Parts International. Now that the deal has been approved by both boards of directors, the acquisition will create a single vehicle parts replacement and accessories retailing company with combined annual sales of $9.3 billion and a network of about 7,000 stores, Advance Auto says.

The merger of Advance Auto and General Parts also creates a large and multi-faceted e-commerce platform that includes Advance Auto’s MotorShop web platform, WebLink from Carquest and WorldPac, another General Parts e-commerce technology platform. The MotorShop web platform lets professional mechanics and other automotive repair specialists research and order parts or accessories, connect consumers with automotive repair and fix-it facilities, and lets repair specialists take online courses to obtain professional certifications. WebLink is a similar platform from Carquest and WorldPac is an online parts catalog and fulfillment system from General Parts with an inventory of about 100,000 parts, Advance Auto says.

“WorldPac andWebLink from Carquest in combination with MotorShop creates a platform for robust e-commerce growth,” Advance Auto noted in an October investor presentation. “Access to robust online information is a key competitive differentiator in driving sales growth, customer loyalty and retention for commercial and do-it-yourself customers.”

WorldPac, which carries an online inventory of parts and accessories for foreign vehicles, does about 85%, or an estimated $850 million, of its $1 billion in total sales, in B2B e-commerce transactions, across a very sophisticated technology platform, Basham says. Other parts of Carquest.com also generated about $150 million in estimated B2B e-commerce sales. “WorldPac has been at this for about 10 years,” he says.

Though Advance Auto Parts didn’t release specific metrics on its third quarter earnings call in November, its online sales to repair shops are growing at a brisk pace, president George Sherman told Wall Street analysts. “Our B2B e-commerce business grew roughly 50% in the quarter, as we continue to advance our capabilities and improve the breadth of services we offer to our customers,” Sherman said.

With its acquisition of General Parts now closed, Advance Auto will add 38 General Parts distribution centers, 1,248 company-operated Carquest locations across the U.S. and Canada, and another 1,400 independently owned Carquest stores to its operation, says CEO Darren Jackson. “This combination positions Advance as the largest automotive aftermarket provider of parts, accessories, batteries and maintenance items in North America,” Jackson says. “Strategically it provides us with a compelling opportunity to expand our geographical presence, channels of distribution and commercial capabilities to better serve customers.”

Topics:

acquisition, Advance Auto Parts, B2B, b2b e-commerce, Canada, Carquest, e - commerce, general parts international inc.

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