Press Releases
The use of the Internet in the aftermarket to order parts and accessories might just be catching on faster than many had anticipated. At least, that was the finding by Harris Interactive Inc. Which recently conducted an online survey of professional technicians and do-it-yourselfers.
Calling the results "dramatic," the company said that both of the groups surveyed increased purchasing activity by 27 percent on the Internet during the spring of 2000 compared to November 1999, when an identical online survey was conducted. Increases were reported both for parts and accessories purchases.
David J.R. Ogilvie, managing director of Walden Consultants Ltd. who designed and analyzed the Harris survey, observes the "internet users tell us 78 percent of the time 'shopping around' and interacting with vendors is better than conventional methods of buying parts and accessories. Also, 54 percent of users say price is better on the Internet."
This is consistent with the general opinion that Internet merchandising can serve to broadly lower unit prices, thus creating a challenging environment for high quality earnings.
Henry P. Allessio, who along with Ogilvie is founder of Walden Consultants, points out the Internet opportunity for managing business cost, which in turn creates the potential for earning attractive levels of profit.
"Survey respondents demonstrated a clear tendency for internet transactions to be more accurate than conventional methods of purchasing auto parts and accessories," says Allessio. "Two and a half times more respondents indicated 'better' Internet accuracy than those indicating 'worse.'"
According to Allessio, Fewer ordering errors reduce the need for returns - a substantial hidden cost to aftermarket supplier. Among traditional WDs participating in AWDA's Financial Analysis Report, sales returns have increased in 6 of 7 years since 1992. In 1999, Returned Sales and Allowances were 38% of net sales, about one half of which were "merchandise" returns.
Investments in e-commerce can be significant, Allessio underscored. Moreover, resources invested without first understanding strategic ramifications can devastate a company's competitive performance.
"Most Internet investments are intended to attract, interact, and transact with customers. But that's not enough," said Ogilvie.
According to Allessio, "In order to derive full benefit from online customer activities, resources must also focus on the microeconomics of delivering appropriate values. Many companies are swept-up by the beauty of their website, and fail to allocate enough thinking to the cost side of strategy development."
Walden consultants Ltd. regularly conducts corporate strategy, marketing, competitive analysis, and acquisition planning assignments for domestic and foreign clients. Automotive businesses are one are of specialization for the management consulting firm which has offices in Hopkinton, MA and Brooklyn, NY.