The Automotive Aftermarket E-commerce Evolved
E-commerce is a rapidly growing channel within the Automotive Aftermarket, with online shopping expected to be a permanent shift, accelerated by the COVID-19 pandemic, according to an industry report released by the Automotive & Aftermarket and e-commerce investment banking teams at Brown Gibbons Lang & Company (BGL). Resilient demand, passionate consumers, and market fragmentation are among the draws attracting capital inflows into the industry, and e-commerce is an area where investors are showing continued and increasing levels of interest.
Over the next five years the Automotive Aftermarket market will register a 3.1% CAGR in terms of revenue, the global market size will reach $ 1,113,330 million by 2025, from $ 984,890 million in 2019.
Hedges & Company (Hedges), an automotive digital marketing agency, examined trends within the automotive & aftermarket e-commerce channel in the U.S., which is undergoing a fundamental shift in consumer buying behavior, fast-tracked by the pandemic. The report also features an e-commerce roundtable, compiled through discussions with industry executives, documenting a favorable industry outlook.
Aftermarket consumers are increasingly going digital, with the online purchasing shift expected to be lasting. While still a small percentage of overall aftermarket sales, e-commerce represents a significant area of future growth given the “stickiness” of channel sales:
According to Hedges’ data, e-commerce growth in 2020 is projected to reach 50% year-over-year, beating mid-year forecasts, with sales approaching $18 billion —up from $2.9 billion in 2010, a 20% compounded annual growth rate.
By March 2021, Hedges estimates that more than 35% of consumers will be buying auto parts and accessories online when compared to the same period in 2020. Monthly online sales have increased, on average, by 50 percent year-over-year since April 2020. The figures were compiled from an analysis of nearly 100 million website visits.
Strategic and financial buyers remain highly active, underscoring optimism about future opportunities, with mergers & acquisitions activity exhibiting strong momentum continuing into 2021.
READ MORE HERE: bglco.com
Why The Automotive Aftermarket Is Already Bouncing Back
The U.S. automotive aftermarket had its ups and downs in 2020, but is again proving to be resilient. We can anticipate that the fundamental drivers of the aftermarket will cause it to strengthen even more throughout 2021.
The Automotive Aftermarket Suppliers Association (AASA) has studied the effects of the pandemic on aftermarket sales and the factors that will influence its growth in the coming months and quarters.
Market Demand is Stronger Than Expected
At the height of the pandemic, a good solid forecast for 2020 aftermarket sales was a decline in sales, -9% year-over-year (Y/Y), followed by a +12% recovery in 2021. But once federal stimulus payments began in Q2, the aftermarket began to recover as households took their vehicles in for servicing, for repair, and to be enhanced with discretionary add-ons. When the federal government deemed the automotive industry an “essential industry,” this ensured that suppliers could keep their factories open and continue to book sales. Retailers such as AutoZone and O’Reilly produced extraordinary gains in same store sales during this period, further demonstrating aftermarket strength.
Consumer Behavior Changed
The pandemic was a boon to e-commerce sales in the aftermarket. According to eMarketer, e-commerce sales experienced a double-digit increase compared to 2019. DIY trends helped to spur e-commerce, increasing its share versus DIFM over the summer by 10 points.
The U.S. made painful adjustments to the pandemic, some which are headwinds for aftermarket sales and some which are tailwinds. Stay-at-home and work-from-home mandates were the biggest and perhaps longest lasting headwinds for the market. The result was a sharp reduction in the number of miles driven with April showing a 40% decline versus the same period in 2019.
But other behavioral changes emerged to offset some of the lost commuting miles. One is urban de-densification as city residents moved away from close quarters to the wide open suburban and semi-rural areas to avoid the virus. There was also a shift from virus-risky public transportation to the ultimate mobile PPE, private vehicles.
Stay-at-home mandates meant that scores of businesses shut down, unemployment rose, and consumer spending was reduced to the point where new trade-offs in consumer spending occurred. Several product categories, including durable goods, clothing, and out-of-home entertainment, were especially hurt. In the aftermarket, sales in some must-replace product categories such as batteries fared well while others that are miles-driven suffered.
Of note, one beneficial behavior change has seen households holding onto and repairing the cars that they already own, rather than buying a new car or trading in for a recent model year car. The repair and upkeep of these vehicles is clearly a tailwind for aftermarket sales.
Vehicle Demographics Offset Fewer Miles Driven
While the decline in miles-driven led to a decline in sales, other market fundamentals softened the blow. U.S. car parc – the number of cars in operation – continued to increase, which puts more “customers” on the road. That leads to wear and tear and ultimately more sales. Older cars are primed for maintenance and repair, and the average age of vehicles on the road has risen to 12 years. The average age is increasing at a faster rate now than it has in recent years – a side-effect of COVID-19. Aftermarket sales will also benefit from the increasing number of cars aging into the “sweet spot” age bracket of 6 – 11 years of age. This is a time when many cars are coming off warranty and headed to independent repair shops instead of the dealer.
After a down year in the aftermarket, the industry’s resiliency will lead to stronger sales in 2021 and beyond. Though miles driven will remain suppressed, other market fundamentals will help drive sales as the vaccination program rolls out and the economy improves.
READ MORE HERE: linkedin.com
4 Steps To Create A Memorable Direct Mail Marketing Campaign
Advertisements shout out at you from every direction. They’re in your email inbox, on your social media feed and even on your favorite news site. It might seem like online ads are the only way to get your audience’s attention these days, but consider leveraging direct mail marketing tactics from your toolbox to trigger a lead.
Why use direct mail marketing?
A study by the United States Postal Service indicated that customers subconsciously perceived more value and desirability when products were advertised in physical format. Customers were also able to recall an ad more quickly and with more confidence when it was a physical ad.
Seventy-six percent of customers trust direct mail ads when it comes to purchase decisions. Plus, direct mail marketing has an ROI of 29%, cementing its position as an effective tactic.
How to do it right
1. Choose your mailing list
You can pay for mailing lists that have already been compiled or you can create your own with client accounts, gated content and proprietary data from services such as EDA or RigDig. Either way, your mailing list can be as general or as targeted as you require.
2. Create an engaging design
Good design rules will stay the same despite the medium. Since it is a tangible ad, you have an opportunity to make it stand out even more with high-quality, thick paper and embossed elements or other textures so it feels substantial in your customer’s hands. Interactive designs, such as IBM’s origami mail, also capture the reader’s attention.
You don’t have to stop at packaging. For instance, you could send a full box of branded items or a small gift in an envelope.
3. Personalize, print and distribute
When printing, use variable data printing, which uses software to customize design elements from one printed piece to the next, to personalize the piece with a name, images or offers specific to each recipient.
And while it’s certainly possible for you to print, label and mail every single marketing piece, it’s much more efficient to use the services of a third-party distributor.
4. Measure your results
Take note of how many calls-to-action are answered following your direct mail campaign. Send offers specifically through print mail or ask buyers how they learned of the event or sale when they convert. When registering new client accounts, write down if they came to your business because of a direct mail campaign so you can assess the lifetime value of customers you reach out to with print.
Direct mail marketing can contribute more than you think. With more trust, higher recall and more perceived value, direct mail should still be an asset in your marketing campaign.
READ MORE HERE: randallreilly.com
Automotive Aftermarket Trending Strong Through 2026
Rising used car sales and aging fleets in the United States are contributing to growth in demand for aftermarket services and maintenance.
The automotive aftermarket components market is projected to show robust growth from 2020 through 2026, according to a report from Global Market Insights released at the end of December 2020. The industry is primarily consumer-driven and undergoes rapid changes owing to constantly evolving consumer preferences and demands, the report noted.
Shifting market competitiveness in emerging economies, such as China, India, Thailand, and Vietnam, is another contributing factor enabling manufacturers to offer economical goods to the global market, aiding global expansion. Advancement in technology coupled with rapid improvement in logistics also has allowed manufacturers to offer high-quality goods faster and farther.
In the United States, increasing used-vehicle sales are further propelling the maintenance and repair side of the automotive aftermarket. Global Market Insights provided statistics from the US Bureau of Transportation that cite used car sales rising from 37,255,000 in 2015 to 40,805,000 in 2019. Aging vehicle fleets are also considered to be a growth factor in the demand for aftermarket services and maintenance, as consumers keep their vehicles longer.
Replacement parts dominated the automotive aftermarket share in 2019 led by several factors from rising vehicle ownership to surging car accidents. The Alliance of American Insurers (AAI) said that the price to build a vehicle worth $25,000 only using OEM parts could cost over $100,000.
Evolving consumer lifestyles coupled with the rising need for functional and specialized gadgets are supporting consumer demand. The interior accessory segment leads the market due to an increase in the adoption of audio/video accessories, gauges, and switches. Fast-paced innovation and rapid prototyping are enabling manufacturers to quickly meet industry needs, said Global Market Insights.
As the lifespan of machinery increases, so does the need for spare parts to replace failed or worn original components. Replacement car components are in high demand, according to Xometry, an on-demand custom manufacturer specializing in 3D printing. The US automotive aftermarket industry totaled $318.2 billion in 2013, contributing more than 2.3% to GDP. Additionally, the average age of registered automobiles in the United States has been growing steadily and is expected to reach 11.7 years by 2019, but the extended lifespan of the automobile has increased the window for component failure, increasing the need for aftermarket parts.
OEMs also have the opportunity to realize profit from the production and sale of aftermarket components while protecting their intellectual property and fending off competition from third-part manufacturers who reverse-engineer and sell components at prices that OEMs often cannot match with traditional manufacturing methods, Xometry said.
Hedges & Company, an automotive digital marketing and research agency for the automotive aftermarket industry, released its most recent report, “Automotive Aftermarket: Transforming the Auto Parts Market 2021.” It said that personal consumption of auto parts hit an all-time high in June 2020, reaching an adjusted $50.509 billion; July (revised) was $49.884 billion and August improved to $50,303 billion, reported Hedges.
Hedges’ research shows the North American online auto parts industry market size will be about $26 billion in 2021. It will be up 30% or more from 2020. The light-duty automotive aftermarket industry size is projected to be $290 billion in 2021. The entire automotive aftermarket/auto-care industry, including medium and heavy duty, will be about $388 billion in 2021.
READ MORE HERE: plasticstoday.com