Today technology plays an important role in the success of many enterprises, and across many industries, by;
- Adding convenience, product options and information to retail transactions
- Establishing unrestricted geographic boundaries
- Deploying target market segmentationEstablishing rules of the game on a per transaction basis
In 2014 Motor vehicle and Parts Dealers accounted for $680.0 B in Ecommerce sales, up 45% from the same period in 2012, as per economic census data. The continual growth of Ecommerce in the USA is expected to continue at a moderate pace year over year, however customer communication, marketing and Data mining via web based systems will continue to grow at a faster pace than sales, customer service and retention web applications will outpace them all.
The North American parts aftermarket is fragmented, mature and well served by multiple entrants who sell highly commoditized parts and service, the main competitors are; Independent repair facilities (IRF’s), Wholesale Distributors (W/D’s), Engine specialists, customers hold significant buying power through information resources and vendor choice.
Undisclosed Parts Group and its Dealer channel is primarily focused on the 1st owner of an Undisclosed branded vehicle, subsequently limiting our customer reach to new Undisclosed truck owners (regardless of truck volumes) and a percent of National fleet (our largest customer segment) yearly purchases. These limitations combined with a well-served customer, the perception that the OE Dealer is a higher cost option, makes for a highly challenged growth environment.
Distinguishing us on service and customer experience while very worthwhile for our brand image and truck sales will not significantly grow our top line sales in parts. An increase in proprietary parts will add to the bottom line, but is still limited to a self-generated market. In essence, our growth is based on the number of trucks we sell.
To distinguish ourselves with National fleets we developed Fleet X in 1987, since that time it has given us the capability to reach the Major and National fleets (our largest customer segment), increase sales year over year and ensure customer retention by;
- Nationwide pricing/consolidated billing.
- Mutual benefit for undisclosed, our Dealers, and Customers.
- Constant contact from our field sales force.
- All makes product offering.
- Customized customer solution services. (‘BULLWORKS” application)
Projected 2015 Fleet sales are $950m; in 2003 e-commerce was introduced to our Fleet program. Functionality is limited to VIN based part number look up, order processing and billing via MSC Fleet X. The methodology has worked for many years, and has added real value to our customers. However customer expectations are growing, the market is more competitive, the dividing line between OE/WD is graying, as it pertains to wear items, subsequently, customer parts purchasing opportunities outside our channel have increased, new engine and emission technology should mitigate some of this effect in the service aftermarket but will not completely mitigate it at the Major, or National Fleet level as they service their vehicles in house. In either case we are still somewhat limited to our brands vehicular park.
2) Vision Mechanism (from 2011, position paper)
This vision paper proposes a solution, which can propel growth applying available technology. In particular cloud technology, which can be applied to growth initiatives at a reasonably low cost and shorter implementation timeframe.
Cloud Computing /technology is basically a collection of services which communicate with each other. The communication of services with each other involves either simple data passing or it could involve two or more services that coordinate with each other to perform some activity. The name of cloud computing is being derived from the existence of data and applications on a “cloud” of web servers. In simple words cloud computing can be defined as getting the work done by sharing and using resources and applications of a network environment without being concerned who owns, and or who is the manager, of these resources and applications. Now with help of this technology Resources and data required for the work to be done is no longer restricted to one’s personal computer but are hosted elsewhere enabling it to be accessible at any time and at any location and this advantage lifts the bar of time and place on the work to be done and hence enables the user to work on system applications anytime and from anywhere.
Since that time (2011) when I originally introduced this paper to Undisclosed, there have been many start up companies that are moving to cloud computing as IaaS some examples are as follows:
- Jive software, And the list goes on
Cloud Computing uses information technology as service over the network. Cloud Computing consists of Infrastructure as a service (IaaS), Platform as a service (PaaS) Hardware as a Service (HaaS) and Software as a service (SaaS). A cloud is used as a storage medium, which handles applications, business, and personal data also.
Cloud Computing has an important feature of workload shift so; personal computers are no longer required to run these applications. There is a network of computers that handles the cloud itself. It significantly decreases the use of hardware as well as software on the front of user as all the processing and handling of data is done by the cloud. The interface software that is the only thing that the user’s computer ought to know is running all the applications.
The biggest concerns surrounding cloud technology are security and privacy, sensitive company information which we cannot keep under lock and key is a major concern, the counterargument to this position is that the companies offering cloud-computing services live and die by their reputations. It benefits these companies to have reliable security measures in place. Otherwise, the service would lose all its clients. It’s in their interest to employ the most advanced techniques to protect their clients’ data.
Given these aforementioned technological advancements, our opportunities are to:
- Recast our way of going to market
- Create a new Network/Channel
- Develop an enhanced Fleet X offering, and expand retail sales while securing POS (Point of sale) information
- Re-establish undisclosed customer facing with local market
- Reduce “Channel squeeze”
- Meet or beat local delivery requirements (By including competitors in virtual network)
The vision here is to deploy technology that develops a distinct virtual “one stop shop” offering supplemental support for all brands, while creating a new sales mechanism, breaking with the traditional “Go to Market” shown below.
- The Independent repair facility can be a customer shop or a local for hire shop
- Low inventory at shop level requires frequent delivery, unscheduled repair for fleet shop, and for hire shops require high level of flexibility from suppliers.
- OE Dealer is part of the channel not the customer
- End user has multiple choices
- Wear items do not have same warranty period
- Suppliers sell to all channel entrants
From an undisclosed parts perspective the Market is substantially singular brand oriented and Organic.
Traditional go to Market
Notes: What we need
- Undisclosed does not have customer facing with local municipalities, for hire IRF, or local independent fleet
- Undisclosed Dealer as with all Dealers is/are perceived as high cost option
- Primary focus is truck sales
- IP captive product is “special sauce”
- Margin vs. volume imbalance
Vision Go To Market
- Leverage inventory as a virtual resource, irrespective of channels to fulfill customer order
- Undisclosed Parts Group can bring a substantial customer/and brand offering into the cloud immediately by leveraging the resources of all Undisclosed brand, as well as MWM & MFORCE engines, Continental mixers, Customers suppliers and partners.
- Marketing and Branding consistency within product offering across channels
- Cross channel returns management
- Integrated customer communication on order status
Challenges today/questions about tomorrow
Our business has expanded to include the following customers segments;
- Online Customers (single product line)
- Business Partners / Joint Ventures
- Owner Operators
- 2nd to 4th Owners
- 2C-5 Customer Base
- Collision / Body shops
We have initiated, implemented and are looking to enhance;
- On command parts info
- Parts estimator
- Parts publications
- Cross reference
- OE Connection
- PartSmart web store
- Amazon storefront
- Customer connect
The aforementioned customer segments and system applications were initiated after the implementation of THE OPERATING SYSTEM, The challenge has become maintaining our edge with piece mill systems, a well defined system strategy should be a major part of this proposal or any systems initiative, the vetting out and quantifying of system based e-commerce initiatives should answer the following and many other questions:
- Is it a key element in managing the customer relationship virtually on a 24×7 basis?
- Does it enable the customer to personalize and customize products and services?
- Will it enable us to find new customers and to better target existing customer preferences?
- Does it link producers, suppliers, and customers in a virtual supply chain?
- Does it enable access from multiple gateways?
- Will it integrate customer touch points across the entire channel?
- Does it capture customer information regarding product/service use, and buying behavior?
- Will it sell more parts?
4) Viewpoint & Summary:
While Facebook, (600m users) Twitter, (200m users) created a social network/natural market to sell product into E Bay, ($11.4B) and Amazon, ($43.8B) created a virtual store from which to buy product, in either case it’s not the technology or the concept, but rather the ability to gather users in a common place creating a virtual market in which information can be exchanged, products and services can be sold, The limiting factor of our offering is the local ‘FAST DELIVERY’ of a part, this can be mitigated by addressing the whole channel as the relevant scope, competitors which can be suppliers delivering products and services to customers.
Customer retention or “ LOCK IN” is paramount as we move forward, The pressure on commodity product pricing from major and national fleets will continue, as will competitiveness for the customers share of wallet, At the fleet management level, vehicle uptime and customer satisfaction will continue to be a byproduct of initial product quality and ease of doing business respectively, At the shop level (IRF) local delivery replaces inventory, which persuades and satisfies the shop manager, delivery today is measurable in hours not days.
Creating a competitive “LOCK OUT” in the hopes of creating customer loyalty is an expensive proposition, (closest we can come today is captive IP product), particularly in commoditized wear items, however, save for “knock off” / “will fit” of competitive truck parts, and tires, The Heavy duty customer does not require much else from a parts perspective.
Solving the right part, right place, right time, keeps us in the game, going beyond that to competitor “LOCK OUT” requires much more some example are;
- Fleet operations cost reduction
- Fuel consumption cost reduction engineering recommendations
- Inventory reduction at fleet shops
- Shop management and efficiency
- Problem solving
- Shop tools
- Re-engineering services
While the system network is certainly a “blank sheet of paper” The physical channel requirements and paradigm shift needed to be successful, are certainly a lot to overcome, however the rewards are great, leveraging technology and the entire channel will allow us to treat customers in an individualized way, we can offer a value proposition which will be hard to replicate, allowing us to establish an enduring relationship based on collaboration and joint benefits.
In 1987 Fleet X essentially defragmented our Dealer pricing to major and national fleets, effectively harnessing the local support infrastructure by focusing it towards a common customer, Undisclosed redefined ways of doing business by building new capabilities via Fleet X, we were able to set new standards of customer satisfaction essentially challenging the industry status quo, today we have the opportunity to address the whole channel as the relevant scope, harnessing the channel as a whole, which means that the customer is at the center of strategy with the primary objective being to keep the truck on the road, regardless of who repairs it or what brand it is.
Our goal is to create a virtuous circle, where in our network can effectively be used
- Look up, source, and purchase parts
- Schedule delivery of parts
- Schedule installation of parts
By applying the technology available and the experience gained from years of creating a market niche such as Fleet X, we need to redefine, reset and recast the rules of competition within our industry becoming the rule maker once again, To that end, we cannot continue to prolong the past, but should put our energies and resources in creating the future.
For publishing purposes, Our clients name has been withheld. And is known throughout the document as Undisclosed.
Write to Mike at: email@example.com