Only 18 months ago, end consumers like you and me couldn’t buy spare parts online from our own car manufacturers. Meanwhile, bizarrely, we were able to buy branded parts from the Walmart and Amazon websites. This has changed. And the pace of change is accelerating fast as the largest auto-mobility companies realize the scale of success enjoyed by early niche adopters of automotive e-commerce.
By Fathi Tlatli, President, Global Sector Auto-Mobility, DHL Customer Solutions & Innovation
Now everyone is clicking for pole position
E-commerce is an electronic online transaction executed by a consumer. Anyone can do it, anywhere, anytime, which means that car-makers need flexible e-commerce logistics that enable new customer-centric business models and support unpredictable volumes.
Automotive consumer behavior is being transformed by general e-commerce activity, such as buying shoes, groceries, and washing machines online.
End consumers like the price, convenience, availability and wide product range provided by online shopping. Although the auto-mobility industry has been stuck in the e-commerce slow lane compared to most other industries, particularly the retail sector, today it is starting to power ahead. Car-makers can see how e-commerce increases access to a larger pool of consumers, providing invaluable market insights and building customer intimacy. It also ensures brand control, boosts profit margins, and secures competitive edge.
Here at DHL, e-commerce is getting lots of attention from our auto-mobility customers, many of whom are trying out various new business models in different countries. Their digital pilots are currently evolving, but three key opportunities stand out for me in the auto-mobility industry – the online sale of parts, tires and accessories, complete vehicles, and new auto-mobility services.
Order now! Parts, tires and accessories
Parts account for 55% of today’s $750 billion global automotive aftermarket sales, and purchasing them online is predicted to grow by more than 15% a year until at least 2022, with fastest growth in the emerging markets of China, Mexico, Brazil and India. Car-makers can apply high-level models from retail and consumer industries to establish optimal e-commerce models and launch new web stores serving customers in differing categories. Some B2C online purchases will be made by DIY (do-it-yourself) enthusiasts, likely to buy the easiest-to-fit parts such as light bulbs and windscreen wiper blades. Representing perhaps the biggest market potential, other online B2C purchasers will be DIFM (do-it-for-me) customers who will buy parts with online fitting, installation booking, delivery to workshop and more.
And of course there will continue to be B2B transactions with workshops, dealers and increasingly companies offering new types of business – for example, a highly customer-centric mobile tire delivery and installation service provided at the end customer’s home or office.
Challenges for car-makers with online parts transactions include limited availability, long delivery lead times, high delivery fees, and difficult returns. Logistics can offer the required solutions including cost-saving e-facilitation and e-fulfilment services, efficient last-mile delivery, and better returns processes. Currently the returns rate for automotive parts is 21% (the third highest rate in any sector) yet managed strategically reverse logistics can save 20% on each returned item, improving margins by as much as 15%.
Your shopping basket contains 1 item: Car
To buy a complete vehicle online requires a high degree of confidence and trust along with more complex e-commerce capabilities. But make no mistake. The day is coming when your online shopping basket could contain a car!
Already 44% of customers say they would be happy to buy a vehicle online, whether new or used, and of course almost all of us (98%) start our purchasing journey by researching vehicles on manufacturer websites, social media, and independent review sites.
Many of us make aesthetic decisions – vehicle color, seat fabric – by going online to consider our options. But then we typically walk into a dealership for a test drive and to sign the paperwork.
As car-makers find powerful ways to bridge online and offline worlds, the shift to digital becomes inevitable. Daimler for example is expecting a quarter of Mercedes Benz new and used vehicle sales to happen online by 2022. The supply chain and logistics will play a strong enabling role in this e-commerce transition, moving car fleets more flexibly, managing inventories, enabling test drives from home, maintaining online ledgers to prove authenticity, and much more.
Popular item: New auto-mobility services near you!
As well as buying parts and complete vehicles online, end consumers are sure to use e-commerce for new auto-mobility services too. Public and private vehicle sharing schemes are becoming increasingly popular – why purchase an expensive truck or passenger vehicle to only use it now and then?
Efficient logistics will be required to support an inner-city fleet of, say, 300 battery-powered vehicles. Each must be tracked, cleaned, recharged, and re-positioned to within a specified walking distance.
At DHL, we are several steps ahead of the competition already. We have deployed and manage thousands of our own last-mile electric delivery vehicles, and we are running app-based pilots in several European cities to use car trunks as mobile delivery points for authorized parcel deposit and collection.
Before you go…
Of course, there is no one-size-fits-all solution for auto-mobility e-commerce. Consumer requirements will drive solutions, and other industries can provide useful examples of best-practice business cases. Logistics providers must leverage their existing e-commerce networks in support of auto-mobility, sharing the strategic and operational journey with car-makers hoping to achieve pole position in the online world.
Please get in touch to discover how we are already supporting e-commerce initiatives, and how we are building online expertise with leading auto-mobility customers. And as always, I’m very interested to learn about your thoughts and experiences.
Meanwhile, if you would like to keep in touch and read my future blogs, follow me.