Thursday, February 28, 2013

The WorldPac Experience

What do customers want? We’ve spent a lot of time dissecting this subject as it pertains to service customers. We know what these customers value (“MyGuy”) and where dealers fall down.

But what about wholesale customers? You know, those same pesky independent repair facilities (IRFs) that outperform dealers, at least in the minds of many service customers. Through focus groups and surveys, we know what IRFs value in a parts supplier. Hint: it is not dissimilar to what dealers expect from OEMs.

The Top IRF Requirements
  • Parts Quality – Comebacks cost money and drive customer dissatisfaction.
  • Availability – Gotta get parts quickly to turn those bays.
  • Delivery – Ditto.
  • Price – Net price, that is. IRFs rely on parts margins to contribute to their bottom line.
  • Ease of Ordering – The knowledgeable parts counterperson is being replaced by the user-friendly online ordering system.
So, what do you get when you offer high quality parts with same day availability, five daily delivery times, 35%+ margins, and a slick online ordering system? Seriously loyal IRF customers.

We’re talking about WorldPac, the largest distributor of import auto parts in the US (they also sell parts for domestic car lines), formed in 1995 and acquired by General Parts in 2004. When import-oriented IRFs get together for a focus group, they can sound like a paid ad for WorldPac.

WorldPac’s business model is unique. It is primarily e-commerce based, with no jobber storefronts. IRFs order parts online using WorldPac’s user-friendly website or desktop application; the key is easy parts lookup with live availability, pricing, and delivery time selection. With many local delivery facilities and a privately owned delivery fleet, WorldPac provides multiple (read: as many as five) same-day delivery times to IRFs. Parts are presumed to be high quality, as WorldPac offers “OES” (Original Equipment Supplier) parts made by manufacturers such as Bosch and Delphi. Most fundamentally, WorldPac is dedicated to serving IRF customers; they do one thing, and they do it well.

So how do dealers stack up? Well, they’ve got the product quality nailed, but on the other requirements, the consensus among IRFs is that dealers are floundering. It’s often a tough sell to ask dealers to carry the right inventory to service these IRF customers, and to dedicate staff and vehicles to deliver low-ticket mechanical parts multiple times a day. And OEM/dealer pricing doesn’t always accommodate IRF margins in the realm of 35%. Finally, only some OEMs and dealers have online ordering systems that cater to the needs of IRFs.

Bottom Line: If we want dealers to be on IRFs’ speed dial for competitive maintenance and repair parts, it’s going to be an uphill battle. Improvements made in any single area could generate incremental wholesale parts sales, but to really move the needle OEMs and dealers need a compelling “package” that hits all top criteria.

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