Why does the spare parts trade attract entrepreneurs? There are more and more post-warranty cars on the roads, car service stations outnumber dealer service stations, etc. But before opening a retail outlet, many questions arise: from choosing a niche and suppliers to promotion issues.
Explore the market and choose a niche
If you take a look at the number of offers, it may seem that the niche of wholesale and retail trade in spare parts has been occupied for a long time and the demand for all types of parts, assemblies and components is satisfied. However, according to market research, the automotive aftermarket capacity increases by 10-15% annually. And if we consider that it [the market] has some peculiarities due to an endless list of goods, then there is enough space under the sun for many. The key point here is to make up a clear plan of what to do and who to work with.
Initially, the choice is limited by two directions:
- monobrand store (auto parts of a certain brand);
- multi-brand store (automotive parts of various brands and manufacturers).
Both options are viable. Even if you choose a part for a certain car brand and model, the range of parts in catalogues will be impressive. Add here vehicle configuration options and model years, and the quantity of goods will increase significantly. Therefore, a monobrand store with a wide range of products of a particular brand or group of brands (“Japanese”, “French”, etc.) is a promising option. The same is true for a multi-brand outlet focused on fast-moving vehicle parts from various car manufacturers. You can focus your business on areas with short supply and high margins, or, for example, on spare parts for vehicles which were released before the year 2000 (this is a short supply area for the modern market).
Anyway, before making a decision on your core business, it is necessary to analyse the market and competitors of auto parts in order to understand which group of products is more popular in your region.
Choosing a business partner in modern conditions
Before purchasing and delivering spare parts and accessories for cars, keep in mind that in the era of e-commerce the aftermarket has been transformed. Previously, the supply chain was longer: from foreign suppliers and large local wholesalers to regional companies and even small wholesale business. This “nesting doll” led to complex trade mark-ups and additional costs for retail representatives.
Now, aside from providing more favourable conditions to wholesale buyers, large suppliers can even enter the retail market. Online trading has swept away borders and now there is no need to look for business partners on a territorial basis. Such possibilities allow establishing contractual relations with companies that have favorable price offers, convenient logistics and a flexible delivery system. These days you can choose, there is no need to adjust to conditions dictated by the market. A favourable option would be to build cooperation with suppliers who take goods directly from manufacturers.
But even if you have found a common language with the right partner, do not forget that they also have their own interests that they will protect. Pay attention to some aspects:
- if, when drawing up contractual relations, a supplier imposes some items that you do not need, most likely they want to get rid of unmarketable goods at your expense. Do not hesitate to refuse, consider your benefits;
- be attentive to offers of car parts for models that have just been released or are about to be launched. Firstly, such cars will be serviced according to warranty terms, and secondly, expensive units may not be needed in the first post-warranty years. However, this is an unnecessary pressure on your stocks.
How to establish sales channels?
The goal of any business is to make a profit. But this may not happen, even if you have chosen the right niche and found a good supplier of automotive spare parts. Consumers should be tipped off about the store, so, it will be difficult to do without an advertising budget. Yet try using different ways to attract attention.
- Online store or a decent website. E-commerce helps with finding both a plausible supplier and an end user of automotive parts.
- Third-party online platforms. Use online catalogues and other “modular” platforms to make yourself known.
- Outdoor advertising. If there is a billboard nearby, at first try to keep only your ads on it.
- Make friends with local car service stations. Service station owners may be interested in contracts with discounts.
- Check forums of car clubs. This is a prerequisite for monobrand sellers. You will have an opportunity to study the demand and adjust the range.
And also remember about financial strategy and make forecasts. You can simply put the profit in your pocket, or you can use it to expand the range, improve your web-site, etc. As a rule, business owners choose the third option as a compromise.