In the 1980’s a transition occurred in the Aftermarket Parts distribution chain. The modus operandi back then was where that parts manufacturers had appointed distribution agents in geographical areas. These agents were in many instances fiercely loyal however they had limited control of the distribution and the structuring of market channels. The change started in the mid-80s and saw the product manufacturers retaking control of their own destinies, by terminating the existing distribution arrangements. This resulted in the establishment of sales teams and the forging of wholesale arrangements which started the revolution.
Fast forward to the current day where names like Midas, Bosch, Autozone and others have become household names. These brands have been elevated into the minds of the consumer along with the advent of consumerism that has taken place in many aspects of life.
The awareness of the consumer by the distribution chain has led to the need to recognise the various generations and the different buying patterns. The freely available information on the internet means that buyers are better informed before they reach the doors of sales outlets.
Where this is heading to is the increasing need for the industry to embrace e-commerce and its opportunities and threats and to capitalise on the strengths and solve the weaknesses. It is no secret that online sales in all aspects of life is increasing exponentially. The statistics have shown limitations in the availability of connectivity in the African markets, however this hurdle is being overcome rapidly with the rollouts of broadband internet across the continent. The distribution chain which has developed over the years will need to find ways to embrace this changing landscape of demand as the internet is providing not only choice but also more informed buyers.
Websites like Takealot, OnedayOnly, Gumtree, OLX, Facebook Marketplace, Loot and others are providing seamless online buying portals which deliver quickly and allow for hassle free returns if the product is unsatisfactory. These channels are not always the cheapest, but they are convenient, and quick.
Convenience and speed are the driving force of the millennial buyer
Suppliers will firstly need to embrace only the relevant information required to make an informed decision, on the product or the brand.
Secondly they will need to provide the seamless and quick selection of specific products via a catalogued automated filtering system. Africa especially, but not excluding South Africa has one of the most complex vehicle park’s to deal with, which is why the selection process is critical in order to deal with the large number of derivatives.
We have not as yet embraced the discussion on the fitment of these products and or who will perform the processes required. This is where the re-alignment of thinking will need to take a shift in direction. This shift has to be in the minds of the Technical service providers (workshops), who should be embracing the move towards courting customers on line through differentiated service offerings. Again there emerges a threat, in the perceived loss of revenue on the sales of the parts, but provides an opportunity to relieve cash flow, and employ the funds into technology. The prediction is the exponential growth of the Online Vehicle Park and if the right technology is in place this will add to the offering and growth of the business.
How does this link back to the Parts Supply Chain?
The supply chain will gravitate towards more specialised product offerings that are supported by better specialised workshops, who are investing in technology to keep abreast of the millennial customer demands.
The biggest threat is to the traditional sales teams, at all levels, it will take a relatively extended period to transition completely, however this is inevitable. The customer will be making the decision based on the electronic salesman doing the work of making the sale. Furthermore the traditional retail sales store will become less important as a footprint in the market place. As the need for the high-street shop declines the business space will be able to migrate towards less expensive real estate, and this coupled with less sales staff, the profitability could be restored to the channels, provided the reduced costs are not traded away, through discounting and horse trading.
In conclusion the Motor Parts Industry from source to fitment will change shape in the future and the better prepared the players are to work together and develop alliances as well as formalise active strategies to gain and maintain customers, within the realm of the Internet of Things the easier the transition will be