Parts e-Commerce

1. Parts e-Commerce A Dealer Guide tedfellowes@gmail.com FellowesResearch 1

2. Interactive • Guide for your selection process • Lots of material; key content in 1st half • Range of experience: show of hands 0, 1, More Agenda • Summary Charts • Dealer Experiences • Action Plans • System Integration • Trends • Special Cases • Q & A / Wrap-Up • Introduction • Market Factors • Challenges & Risks • Types (Dealer as Seller) • Summary (Costs/Efforts) • Dealer Retail Parts eStores • Wholesale Portals • Retail Portals • Mass Marketplaces • Other E-Commerce Types • No one right solution – many dealers will benefit from multiple solutions • Solutions depend on dealer’s franchises, DMS and off-line parts business FellowesResearch

3. Introduction E-Commerce is Inevitable • Why Attend a Parts E-Commerce Seminar? • Your Customers/Prospects • Your Competitors • Your Costs • Results (May Retain / Add Customers, Conversions & Related Parts, CSI – Without Adding Staff or Increasing Capital Invested) • Innovation Focal Point (6 Types; > 25 Suppliers; >> 50 Solutions) • Messy market [more failures that successes; large & growing body of suppliers] • New • Wholesale eStore • New players likely to enter with new approaches • Related • Dealer’s Service Websites • Tire Websites – Major Advancements FellowesResearch

4. Introduction [Cont.] • Why listen to me? • Parts Systems Innovator • North America, Europe, Japan & China • 1st Electronic Parts Catalog (1986) • 1st Parts E-Commerce – Automaker Portal (1999) • 1st Wholesale Parts Portal (2000) • 1st web parts locator, order referral (2002) • No Horse in the Race • Structured / Actionable FellowesResearch

5. Market Factors Solution Clusters Mechanical (Fleet / IRF / All) Collision (Body Shop) FellowesResearch

6. Market Factors [Cont.] • Associated with Success: • Price Advantages (for Buyer) • Mandates (rare – on the rise) • Systems Integration(B2B; Buyer-side primary; Seller-side secondary) • Dedicated resources – Seller • Boosts communications (buyers still need assistance and fast confirmation) • Other buyer conveniences (24 x 7 order submission; access to digital invoices; parts catalogs; …) Failure common when many of these factors are missing or are weak FellowesResearch

7. Challenges & Risks • Costs • Program pricing can be complicated and/or expensive • Set-up and support/maintenance may be challenging • Optional SEO/SEM & other advertising/marketing costs • Customers • Digital buyers’ expectations are high – fast, accurate responses required • Some buyers prefer phone(you’ll support both – w/ some exception solutions/scenarios) • Some buyers refuse to “own” Part (EPC) look-up • Failure is an option FellowesResearch

8. Parts E-Commerce Types (Costs/Effort) FellowesResearch

9. Dealer Parts eStore Show of hands • Website for selling parts directly (plus Accessories & Merchandise) • B2C now, B2B extensions emerging • Two types: • New Internet Brand (aggressive discounts, AM, …) • Dealership Brand (retail prices; limit service conflicts; customer search satisfaction) • Benefits • Increased sales (most incremental for dealer) • National [International] reach – different markets • TradeMotion, Parts Website, R&R, RevolutionParts, SkyParts, WHI, DST, InterCity Services, PartsFirm, …Accessories: Insignia, SBS, … Suggestion: get both for less than price of two Issues: Domain Name: OE IP Buyer access FellowesResearch

10. Dealer Parts eStore [Cont.] Issues with omitting accessory OE/AM catalogs from eStores • Economics – Internet Parts Brand • Costs: from just over $100/mo. • Transaction fees (credit card / PayPal) – several % • Additional marketing costs (SEO/SEM) • S&H fees; Restocking fees (covers returns) • Evidence of loyalty & less discounting for quality support • Winners: high volume & low prices (depend on special incentives) • Economics – Dealership Brand Extension • Value: TBD (value = brand, CSI, …) FellowesResearch

11. Wholesale Portals Show of hands • Connects Wholesale Buyers to Sellers via Cloud (indirect) • Types: • OEM-sponsored (Toyota TPAS, Volvo-Mack Nexpart, VW partslink24, …) • All/Multi-Makes (Nexpart, CollisionLink, TurboParts, RepairLink, …) • Segments: Mechanical, Collision & Dealer (D2D) • Attributes / Capabilities: • Dealer’s customer-specific pricing; availability • Dealer invoice (typically, no credit card or PayPal) • Dealer delivery or customer pick-up (> 95%) • Potential OEM or dealer purchase incentives • Potential for dealer “microsites” FellowesResearch

12. Wholesale Portals [Cont.] Automaker / buyer program compliance may simplify ROI: participate or exit wholesale • Benefits / Economics • Customer satisfaction & retention(pre-existing trading partners) • More sales (related parts, conversion, new customers) • Possible improved order processing productivity • Other • Customers may research parts (but order by phone – hidden results) • No additional marketing costs to dealer (SEO, SEM) • Upfront and Ongoing Costs / Efforts (enrolling buyers, set-up, …) • Mechanical: WHI, DST vs OEC, Infomedia, Lexcom, … • Collision: OEC, Infomedia, WHI & TradeMotion FellowesResearch

13. Retail Portals Show of hands • Connects Retail Buyers to Sellers Indirectly via Cloud • Parts, Accessories, Merchandise, Tires & Special Parts • Often an automaker program/solution • Benefits • Marketing muscle – top search results (no SEO/SEM costs) • New sales / new customers (referrals only to participating dealers) • Greater order processing productivity • Risks: fees & restrictions • Ford (FordParts.com – OEC); Honda (eStore); Chrysler (Mopar eStore – Chrome Data), Nissan (eStore – TradeMotion), … FellowesResearch

14. Retail Portals [Cont.] Issues with restrictions on marketing/selling accessories via Retail Portals • Economics • Revenue: • Referrals will be ‘lost’ without participation • Dealer may be charged significant % of sale • Upsides • Productivity gains from streamlined order processing • No additional marketing costs … • Other Considerations • Restocking fee may be governed by Portal policy • S&H may be set by Portal (enough to cover actual costs?) FellowesResearch

15. Mass Marketplaces Show of hands OEM Programs in Mass Marketplaces: Navistar • Primarily B2C – AM, OE, Used • Parts, Accessories, Merchandise & Special Parts • Many Buyers are Price Sensitive • Benefits • Marketplace brand recognition & traffic – worldwide • Marketing and advertising muscle • New sales from new customers – but low margin • Greater order processing productivity • Segments: Set Prices; Auctions; Classified Ads • eBay Motors; Amazon; Craigslist FellowesResearch

16. Mass Marketplaces [cont.] • Economics • Transactional Fees, listing fees & storefront fees • High volume parts at low margins (margin from allowances, TL discounts, other automaker programs) • Niche parts – hard-to-find, … • For idle, part of a loaf is better than none • Marketplace Partners (WHI, TM, Ford/Driverside, DST – integration only, …) • Convenient parts list transfer w/ application info • Non-transactional fees waived • Listing & Shipping Automation tools available • Upsides • Productivity gains from streamlined order processing • New markets, new customers, inventory liquidation, … FellowesResearch

17. Other E-Commerce Types • DMS – Buyer Client • Dealerships provide parts buyers with direct DMS access to check availability & submit orders via web app (user has part numbers from previous orders or separate parts catalog) • Emerging – Deployed by Karmak (including capability to search on partial part number and part name as well as saved parts lists); deployed by UCS (R&R Power); and included in some DMS fleet solutions (including ADP FleetConnect) • Dealer Wholesale Websites / eStores • Emerging: InterCity, PartsFirm, Parts Website, TM, SimplePart… • Varied including niche markets – high customization options Show of hands FellowesResearch

18. Other E-Commerce Types [cont.] • Parts Locators • Types: OE-Sponsored & Independent • Use (D2D and beyond): (i) Buyer searches by part #;(ii) Locator match list (by distance); (iv) Buyer selects seller(s) • Economics • OE-Sponsored: Compliance, buyer convenience/orders • Independent: ROI calculation like that for Retail Portal • Bidding Solutions [Mandate] • Buyer posts parts needed (and, possibly vehicle info) • Sellers receiving notification, bid on providing parts • Commission (low single-digits) per order FellowesResearch

19. Legend  = emerging, limited, special conditions or … Summary FellowesResearch

20. Parts e-Commerce Legend  = emerging, limited, special conditions or … Summary FellowesResearch

21. Legend  = emerging, limited, special conditions or … Parts e-Commerce Summary FellowesResearch

22. Dealer Experiences • New consumer parts sales, fewer returns and many repeat buyers – Ford dealer & Parts Website customer • More sales, fewer returns, & higher satisfaction from body shop customers – Nissan dealer & OEC customer • Customized eStore generating $100k/mo. in new business– Chrysler dealer & Trademotion customer • Large volume of parts from new non-local consumers – Chrysler dealer & eBay Motors customer • Dramatically higher productivity and buyer satisfaction – multi-franchise dealer group & WHI customer • Customers love 24 x 7 ordering &real-time inventory access; landed new accounts – GM dealer & DST customer FellowesResearch

23. Action Plan • Business Assessment • Which Sector(s) – Collision, Mechanical [B2B] or B2C • Which Franchises • Which DMS • Select, Try (hard), Evaluate, Keep / Discard – Repeat • General • Look for Automaker Funding (co-op programs) • Send your contact info to ted@fellowesresearch.com & I’ll generate a free parts e-commerce plan for your dealership FellowesResearch

24. Dealer System Integration • DMS • Advanced e-commerce capabilities – DMS dependent • DMS Integration value highest for: B2B, high volume • Capabilities • Availability from DMS • MSRP from DMS • Customer’s Matrix Price from DMS • Order • Parts / Quantity to DMS • Status from DMS • DMS Platforms supporting e-commerce include: ADP, R&R, DealerTrack, Karmak, … FellowesResearch

25. Dealer System Integration [Cont.] • Shipping • FedEx & UPS • GPS / Routing – Your Delivery Fleet [Elite EXTRA] • Wholesale Buyer System • Mechanical Repair Shop Systems • Collision Repair Shop Systems • E-Commerce to E-Commerce • WHI to eBay Motors • TM to eBay Motors • OEC to eBay Motors via DriverSide & Ford FellowesResearch

26. Trends • Opportunities / Advances • Expanding Systems Integration • Wider range of buy-side platforms (tablets, smart phones, …) • Catalog improvements • Pricing incentives use expanding – high impact • Online chat • Dealer parts deliveries to personal residences • Declining parts returns(better catalogs, e-commerce applications, …) • Dealer-as-a-Buyer • Challenges / Threats (to dealerships) • Bidding Systems (State Farm / PartsTrader) – Shops Resisting • AM sector’s success with parts e-commerce FellowesResearch

27. Special Cases • Accessories / Merchandise • Niches: Vintage, Performance, Power Train • Tires • Idle • Dealer-to-Dealer (D2D) • Dealer Groups • Dealer Websites Branding, Referral • Trade between stores • Dealer as a Buyer • Distressed parts (idle, primarily) • AM FellowesResearch

28. Questions & Answers • Your Questions Thank-You For more: ted@fellowesresearch.com www.fellowesresearch.com FellowesResearch