US online automotive aftermarket small, but growing

Port Washington, New York — The share of automotive aftermarket business transacted online has doubled in the US in the past three years, market research firm NPD Group Inc. contends, although at 14% penetration it ranks among the lowest industry sectors tracked.

"E-commerce is the hottest topic in the aftermarket today, and the most frequent thing I get asked about," said Nathan Shipley, executive director and automotive industry analyst of NPD Group.

"Looking forward over the next three to five years, I expect its penetration to grow to about 25%. Observing industries that have gone down the e-commerce path long before automotive aftermarket, 25% to 30% is the maturation point we are seeing."

The top product categories purchased online in 2017 were lighting, interior accessories and exterior accessories, NPD said, with online penetration of 18%, 13% and 11%, respectively, in dollar volume terms.

This contrasts with in-store business, where the top three categories purchased were batteries, motor oil and performance chemicals, based on NPD's Retail Tracking Service.

NPD's research also shows that the e-commerce aftermarket demographic is quite different than that of its brick-and-mortar counterpart.

According to NPD's Checkout E-commerce Tracking — based on information collected from more than 3 million consumers through data provided by Slice Intelligence — the largest contingent of online buyers are consumers aged 35 and older, with five or more purchases annually. By contrast, millennials tend to be light buyers, with just a single purchase annually.

This is in line with NPD's findings in its 2018 Consumer Outlook Survey, the market research firm said, in which a high percentage of younger (43%) and older (51%) millennials reported having no plans to purchase automotive products online in 2018.

With millennials both entering their peak driving years and being fluent in online researching and purchasing, this demographic is an important factor in the aftermarket's online strategy.

While consumers were split when asked whether they would purchase automotive products online in 2018, their opinions shifted in favour of the idea when presented with the option to buy online and pick up in store.

Based on purchase frequency, consumers are most attracted to "click and mortar," or traditional retailers with an online presence, which allows them to buy online and pick up in store.

This is a popular option, as it captures 40% share of e-commerce sales.

"Immediate need gives physical stores the upper hand because timing is everything for the automotive consumer who often purchases products to fix something that is broken, not save for future use," Shipley said. "However, having the right parts, at the right time, and at the right store poses a challenge for auto parts retailers.

"For these reasons, it's important for both shopping channels to coexist, and for retailers and manufacturers to avoid putting all their eggs in one basket," he added. "E-commerce presents an invaluable opportunity to enhance the shopping experience and ultimately drive foot traffic to the store."