Your Source for Up-To-Date News and Research on the Collision Repair Industry 

 

click here to subscribe to the FREE INSIGHT Editor's Desk News Alert Email

SUBSCRIBERS-ONLY
Today's News
INSIGHT This Month
INSIGHT Archives
Survey Center
Letter to the Editor

Business Tools
Subscription Information
CSI Reporting
Financial Analysis
IRS Audit Guide

Management/
Technical Info
1999 Market Watch Rates
INSIGHT Inside this month's issue...

Feedback
Letter to the Editor

Ahead of the Game?

Jobbers reporting little return from their online ventures - so far

Much of the recent attention surrounding use of the Internet within the collision industry has been on linking shops with insurers and suppliers of vehicle parts (be they new OEM, used or non-OEM). Left in the background frequently has been the role the Internet may play for the industry’s jobbers, the shop’s current source for paint, tools, equipment and supplies.

Like most parts suppliers, jobbers have traditionally relied on outside sales reps and phone and fax orders to conduct business with shops. But is it possible for jobbers to take some of the costs out of that traditional system, add value to the products they offer, and subsequently increase their market share by making online ordering convenient and less expensive for their shop customers?

The answer, at least based on the experience of jobbers that currently offer online catalogues and ordering capabilities, appears to be: maybe.

"It makes me think of that line, ‘If you build it, they will come,’" one west coast jobber said. "In this case, we built it, but no one’s coming."

He, like every other jobber contacted by INSIGHT for this article, agreed: Online sales at jobber websites have been underwhelming at best.

"Do I get sales through the website every day? Yes," said Charlene Graf of Ketone Automotive, a Chicago-area jobber whose website www.ketone.com has been online for almost three years.

"Do I get the sales I thought I was going to get? No. Will I ever? I don’t know."

"Right now, it’s pretty green, it’s real slow," agreed Raul Esqueda Sr. of Auto Body Supply, Inc. in El Paso, Texas. "There’s a lot of money involved in getting it going," he says of the company’s website www.AutoBodySupply.net, which launched a little over a year ago. "But the results are not there that quick."

Like many of the websites offering shop tools, equipment and supplies, AutomotiveTools.com has a bricks-and-mortar connection. Steve Hughes, president of the company, said the site is an offshoot of his tool and equipment company in Macomb, Michigan.

"At the time we got on the Internet in 1996, there weren’t many automotive tool and equipment companies on there," he said. "Now there are a slew of them. My opinion is: If you’re doing it as a supplement to an existing business, you may get some benefit out of it - in the future. But I would still venture to say that the time and money and investment most of us have into it is not being recouped. I think we’ve done fairly well, and we’re not getting a great return on our investment, but we have hopes for the future. I look at others and don’t think they’re doing nearly as well."

Hughes said his website customers include both professional technicians and do-it-yourselfers - but not his existing customers.

"We’re still servicing our local market as we always have," he said. "But with the website, we definitely generated business outside the area that we would have never found otherwise."

He promotes the site through the Internet search engines and ‘swap-links’ with other sites, such as PartTracker.com. He admits the added cost of shipping may make the price of some tools higher than they may be available elsewhere, but doesn’t believe that’s a key factor in the company’s somewhat lackluster online sales.

"We make it easy and convenient to find and buy the tools you are looking for 24 hours a day, seven days a week," Hughes said. "In time, there will be more and more items that we have that are harder to find or just aren’t stocked by the tool truck - even if you have access to a tool truck. It’s that ease of use - conveniently finding what you are looking for - that will lead more people to buy over the Internet."

Esqueda has a bit more of a fatalistic view of the need for his company’s website.

"We figured if we were going to survive against the big boys, we needed to do something," said Esqueda, who has been in the industry for more than 30 years. "There’s a lot of consolidation of jobber businesses, and once they start doing that in our area, we’re not going to be here that long unless we try something else."

An established jobber, Autobody Supply employs 10 people. But Esqueda said he hoped the site, developed and maintained by his son, would bring in business from outside the relatively small El Paso market - particularly from smaller shops without ties to larger jobbers, shops that would be attracted to the site’s discounted prices.

"Our target was going to be the little guy, but they’re not ready," he said. "A lot of these shops still don’t have computers, much less think about ordering through a computer."

As a result, he said, the website has generated "disappointing" sales.

Ketone.com, according to Graf, generates an average of three or four sales a day for the 4-store company, which has served outlying Chicago markets for more than 50 years.

"The largest of those orders was for $1,700," she said, adding that a number of buyers have now placed multiple orders at the site. "I don’t really know why they buy from us. I think it could be the price. The only other reason I think people will buy on the Internet is to locate a product they can’t find in their local area. A guy in a rural area, for instance, who want to use a Glasurit product. Or maybe his local NAPA store carries Norton or Carborundum and he wants to use 3M. Those are the kind of things that I think generate Internet sales. But the majority of the couple thousand hits we get on the site per week are still just for information."

Like the other online jobbers, the focus of Ketone’s website has been generating sales outside its traditional markets.

"I thought it was a way to get some sales to fund what I have to do for my local customers: the tech people, the training, the $10,000-a-year budget for paint stick and strainer giveaways," she said. "There’s no way you can do all that unless you have another source of income. So that’s the reason I started the website; I wanted my Internet sales help me maintain my local business."

The company has a full-time employee dedicated to updating and maintaining the website, which eats up virtually all of the company’s marketing and advertising budget beyond its outside sales team.

"And I really don’t see at this point in time that it’s going to make that big of an impact," Graf said of jobber online sales. "I think a lot of people think it will, but I almost think it will be more of a detriment that it will be a help."

How so? First, although pricing on Ketone.com is higher than the company’s pricing for its local customers, Graf is concerned that she sees major products being sold at other websites for 19 percent over cost.

"When you start selling at 19 percent over cost on the Internet, you’re going to have to sell at that to your local customers, and there’s no way you’re going to be able to do that and offer the things a local jobber traditionally does," she said.

She is also concerned that Internet sales will disrupt the commission structure, with local jobber reps providing services to shops but losing sales to the Internet. Online sales also could greatly impact tax revenues, particularly for smaller communities.

"If I sell to California, New York or Georgia, there’s no tax," Graf said. "So this customer of mine who placed the $1,700 order, if he would have paid 6 percent sales tax locally, he’s saving $100. What are these small communities going to do when their tax base erodes? If you multiply that small amount by everyone who’s selling on the Internet, that’s a major issue."

The experience of Ketone.com and the other jobber-linked websites seems to offer some insights into what might drive more online sales of tools and supplies. First, the websites have to make locating and ordering products as convenient as buying locally. With tool trucks and jobber reps calling on shops frequently, this can be a challenge.

"The office supply website I buy from maintains a ‘shopping list’ of the items I buy," a Midwest shop owner said when asked about the convenience of buying online. "I can always add to it, but generally I just run down that list and quickly check off what I need. It shows up here the next day. A website that allowed me to do that with my paint order would probably get my business."

Jobber websites also will need to be more complete and regularly updated.

"At some point, some jobbers with websites are going to get discouraged with it and get out or let their sites stagnate," Hughes said. "I think the people who are willing to continue focusing and making the site part of their business will make it in time. That’s how we’re looking at it."

Jobbers too will need to become more savvy about marketing their sites - and offering customers reasons to come back. A number of shop owners said they have ordered tools and equipment from one website primarily because they frequently visit that sites’s industry news and discussion pages.

The industry portal sites now entering the battle to link shops with insurers and parts vendors may also likely pose another challenge to jobber sites. The future, in short, is anything but clear.

"I went into it thinking like everyone else that the website was a way to increase my sales," Ketone’s Graf said. "We always want to be cutting edge, and I knew if you try to get into it too late, you’re never going to. But I really don’t know at this point, after two-and-a-half years, if it’s ever gong to do what I thought it would do. I would probably say no. But who knows?"

Feedback

Have a comment about this article? Send Email to Charles Baker, INSIGHT's Publisher

©2000 Collision Repair Industry INSIGHT
All Rights Reserved

FEATURED
LINKS:

INSIGHT Supports the NABC!
Do You?