Selling Spare Parts Online
In the world of online part sales, disruption is difficult to achieve. With so many hyper-competitive sites focused simply on listing and driving to the lowest price, buyers are often left without the information they need. As a result; quality, reputation, and buyer experience are eroded by mass platforms selling everything but usually guaranteeing nothing.
Simply creating a platform among many that does the same thing would only make the problem worse. To truly disrupt the current model facing sellers, one must also look at how they are selling and be open to considerations of new and novel methods. And more importantly, they must be open to learning that the path to success as a seller is not in creating another hyper-competitive cut-throat site. It is instead to be found in creating a professional, collaborative environment with a platform where they can all flourish.
The challenges of selling parts online are numerous. One of the largest hurdles is that there is no centralized platform for doing so because so many sites are industry specific. Even with multipart platforms, the parts offered still tend to stay within the same general track, meaning that while it is likely that you can find a site that sells parts for any automobile, it is unlikely that same site will have a section where you can sell washing machine replacement valves or a replacement grille for your tractor. These industry specific sites may provide options for sellers who offer parts for specific machines and appliances. But they multiply the efforts required to locate sales channels for scrap yards, breaker yards, and volume lot purchasers who need to move a wide variety of parts that change rapidly from month to month.
A second challenge results from the goals of the sellers themselves. Part sellers may be individuals building a one-person business, companies that specialize in specific spare parts, and companies that operate scrap and breaker yards that need to move excess parts to maximize their investment. In many cases, these companies are not looking to make the sale of spare parts their primary business, but instead are simply looking for an additional sales channel. These sellers may, or may not, be experts on the parts they wish to move. But regardless, if they are only looking for additional channels, the task of setting up and managing their own site, or in the deep research needed to move specific parts on a case by case basis, may be too extensive an investment in time to justify the effort.
A third challenge is that often, sellers may feel caught in a play of extremes. In this scenario, there may not be enough local or regional customers to drive the sale of the parts they have, yet the online options may be so many as to be overwhelming. As an example, a Google search using the term “Buy Online Auto Parts” returns over a billion results for auto parts alone. And other industries are equally deep in options with “Buy Online Computer Parts” returning almost as many results. Yet the potential customer base for most sellers in the 100 km radius, or even 1,000 km radius, may not be enough to develop a viable sales channel.
Finally, as OEMs recognize the potential value of the aftermarket sale of parts many have begun to improve efforts to capture revenue from the aftermarket world by improving their service and warranty offerings. These OEMs can take the game to a new level by analyzing the data available for life expectancy, utilization, and other factors to build in a lucrative service and supply for equipment sold. These sales often have higher margins than their primary equipment and their participation in these markets can impact smaller sellers offering aftermarket, used, and reconditioned parts. The scale of an OEM in this arena allows them to leverage their efforts through SEO, data analysis and other professionally developed online tools to give them an advantage over smaller players.
Challenges of Current Options
In selling parts online sellers are faced with price constraints from the start. Even in cases where a buyer has the money to buy a premium part from an OEM, many do not do so. It is almost a foregone conclusion that those seeking parts are doing so first for price with convenience a very close second place. There may be exceptions such as extremely rare parts or those that require precision where a used or reconditioned part is too great a risk. In general, sellers are almost immediately constrained by price when selling online. But the online market potential is too big for sellers to ignore. As recently as 2015 it was estimated that aftermarket auto part sales in the US alone topped $124 billion. And with quality logistics and delivery systems available today, the worldwide sale of aftermarket parts is even larger. As a result, competition can be fierce among the options available to sell parts and those options are not always geared toward the seller.
Here is a look at some of the most common options, and their additional constraints, available to sellers:
Everyone loves the monster that is Amazon for its convenience and prices. And the platform also offers sellers a platform for directly selling both branded parts and aftermarket parts. While it isn’t a mecca for spare parts, it does have scale that is unrivaled and provides a systemized selling platform and extensive analytics for the seller. The drawbacks for sellers include:
Amazon can be a jungle in terms of competition. With low pricing already built in as an expectation, the competition is often left to struggle for convenience options. If, for example, a part is sold by a seller using Fulfillment by Amazon, those parts are then available through the vast Amazon logistics chain and may even qualify for Prime shipping. Further, based on volume and feedback, certain sellers may also achieve higher page rank within the Amazon site or a banner denoting “Amazon’s Choice”, further pushing buyers to that seller.
The parts offered on Amazon are often white label products or branded products intended for the aftermarket space. This, in conjunction with the fulfillment option mentioned above works in favor of larger sellers with an already extensive web presence leaving small sellers at a disadvantage. And while there are sellers who move used and reconditioned parts on Amazon, that segment is a minority, pushing them to sites where that grade of part is more common.
And finally, as a part seller, success on the Amazon platform may find sellers competing with Amazon itself on the sale of the same or similar parts. Amazon has taken a hit in recent years from sellers who claim that Amazon began offering the same products and parts within months after a seller began to move a part successfully. This kind of poaching not only pulls revenue away from sellers who cannot compete on scale, it further drives the price point lower.
eBay was founded in 1995 as an auction site for consumer-to-consumer and business-to-consumer sales. Originally operating as a type of online “flea market”, the site quickly grew into an outlet for resellers, aftermarket, reconditioned and used parts as well. In many ways, eBay became a “Go To” outlet for those grades of parts for sellers who don’t feel the need to use Amazon, or whose parts may be lower in perception of quality or condition than on larger platforms. Drawbacks in using eBay include:
Many buyers are wary of the type or quality of part they are receiving. Loose guidelines have allowed for descriptions to swing wildly and the definition of used vs reconditioned, or new vs “new in box” can vary. And in some cases, unscrupulous sellers have listed counterfeit goods or conducted outright scams, further damaging the perception of sellers in buyer’s minds. The result is skepticism from the buyers
As a worldwide marketplace favored by new, used and reconditioned parts suppliers, the volume of competition can make it hard to stand out. The result is that regardless of quality, it is difficult to compete on any front other than price, mirroring the dilemma found on Amazon.
Do It Yourself (DIY)
There is an old saying that “if you want something done right, you have to do it yourself”. And many sellers attempt this journey as well. Some sellers have sufficient scale within their company to pursue the establishment of their own platform. And there are individual sellers with technical knowhow that can set up and manage their own site as well. But by and large this option is also not optimized towards sellers.
Of major concern is cost. It is expensive to set up and run an online store. Doing it right requires subcontracting professionals at a premium rate to assure that links connect where they should, and the payment system always works. Cost alone is often a disincentive for many sellers with annual costs in 2018 for a small to medium ecommerce website ranged from £9,000-23,000.
Search Engine Optimisation (SEO)
Assuming one can afford the cost, SEO is equally critical. No matter how good you make your ecommerce site, without effective SEO no one will see it. And just as many do not have the skills to develop their own site, the same is true for SEO. There is both an art and a science in quality SEO and in the cases where a seller cannot do it themselves, it is again left to costly professionals to build top flight SEO at considerable expense.
Even with a dedicated webpage and optimized SEO, there remains the step of bringing the awareness of the site to the buyer’s attention. Old fashioned marketing and advocacy aimed at the target market is just as much a need in online business as it was in traditional retail. And like the cost associated with building a website and SEO, the time required to market and build a following is considerable.
This combination of factors for sellers looking at DIY options are the very things that drive them to the Amazons and eBays of the world in the first place.
Developing a Clear Platform for Spare Parts
From appliances to combines, from rare items to common machinery, and from enthusiast to Saturday home repair, the term “spare parts” covers a lot of different things. But the breadth of the definition need not limit part sellers from seeking and participating in a platform that addresses the challenges of currently available options. What is needed is clarity of definitions in an organized platform to provide an outlet geared toward the seller.
A clear, seller-oriented platform would have the following attributes:
Clear Definitions Per Grade
As discussed in the eBay examples above, grade definitions vary wildly. Used, reconditioned, refurbished, new, “like new” and “new in box” are all used in an overlapping manner. What one seller may call used may be lightly reconditioned. What one seller refers to as “new” may be new in the sense that it was a return and no defect was detected upon testing, if it was tested at all. A platform with clear definitions per grade would help clarify description lines, criteria, and protocols for grading parts. Eliminating the overlap and ambiguity would allow sellers to sell on the platform to buyers with more confidence in the part they are purchasing and more credibility in terms of buyer feedback to drive future sales.
Ownership of Specific Grades
As fascinating as Amazon and its analytics and dynamics can be, the oversupply of sellers and Amazon’s own tendency to poach buyers from the sellers creates a bit of a free for all. In a specially designed platform for sellers of spare parts, once grades have been defined, sellers could take ownership of specific grades. Being the only seller of a part means the buyer knows exactly what they are getting and whom they are getting it from. Grades would range from new to reconditioned to “as is” and even to 3D printed and custom-made parts for equipment requiring specific tolerances.
As there would only be 1 seller per part, the price can be set at a point that is attractive to both the buyer and seller. The buyer would only see 1 price and have the confidence that that price is applicable for the grade of part they want to purchase. The seller would not have the downward pricing pressure that is applied on other ecommerce sites.
Ease of Use
As it is serving the collective needs of a seller group, the site would deliver to the seller an easy to use interface with clear payment, shipping, return and back office options. This would eliminate the issues encountered by DIY sellers.
Can Be Used with Other Channels
A clear platform would allow sellers the flexibility of using it in conjunction with other channels. For example, a seller with clear ownership of the “reconditioned” grade may choose to use the new platform to maximize their profits for that grade of part while still using other platforms such as eBay to move less valuable “as is” parts or parts acquired through scrapping that do not fit into the seller’s core business.
The site would allow the seller to contribute relevant content applicable for the parts they offer. The content could be in the form of “how-to-guides”, blog posts or participation in online forums. This benefits the buyer by supporting their repairing requirements and in turn leads to greater traffic to the site and further sales.
Sellers too can take steps to help bring such a platform into being.
A key responsibility of the part seller is to understand their product and their market. To do this, sellers could take the same approach as OEMs in analyzing the potential market in which they are selling. A recent study indicated that OEMs have discovered that margins for aftermarket services were as high as 25%. Using such measures as Product Lifetime (the period during which a piece of equipment is in use), OEMs are able to successfully calculate the amount of aftermarket revenue possible for given equipment. This helps them establish value and availability for aftermarket parts.
OEMs have also begun to view equipment utilization as a factor in aftermarket parts. Here, it is important to understand the logic that just because equipment has high utilization doesn’t necessarily mean that its parts demand will be higher. For example, both heavy diesel trucks and gas turbines have high utilization. However, parts for the truck will be lower in cost because they are easier to obtain through aftermarket supply, and because the downstream financial impact of downtime for a single gas turbine is higher than the downstream impact of a heavy diesel truck that has been sidelined. In this way, both availability and price are better understood.
So, what do diesel trucks and gas turbines have to do with home repair? The answer lies not in the description of the product but in the dynamics revealed in the analysis of the data. A clear platform for sellers would need to embed the analytics and market trends for the markets of those it served to allow sellers to tap the same type of analysis for hopefully the same understanding of potential margins to set pricing of parts among the grade levels.
A Seller Oriented Platform
The success of one seller can only lead to the greater success of the collective.
The spare part market has long needed a dedicated platform to define the space as a market niche in and of itself and not merely as a tag along or piggyback on other platforms. With the delivery of a dedicated platform, sellers can differentiate their premium parts from their lower end offerings and choose which site works for them. It allows the seller to become the manager and expert on their own parts class to build the credibility and confidence among consumers that is lacking or missing in mass seller’s platforms such as eBay and Amazon.
And sellers do not have to wait for the above site to be developed. BuyAnyPart delivers on a clear platform oriented toward sellers. Offering powerful search capability, clear definitions of grades and ownership of grade lines, sellers can use BuyAnyPart as a channel by itself or as part of their overall sales strategy.
Unlike other platforms, selling on BuyAnyPart isn’t the cut-throat competition seen in eBay and Amazon. Rather, it is a platform of sellers working in collaboration with one another.
Buyers seeking parts return for parts unrelated to their previous purchases. This strengthens transactions and overlaps the effect across grades to other sellers. The result is an organic networking effect where the reputation and credibility of the sellers and the BuyAnyPart platform are enhanced in a way that other sites can’t compete with.
By operating the platform in this way, BuyAnyPart is vested in the interests of the seller and in helping sellers achieve their goal.