Online sales help boost bottom line for some dealership groups

Many dealership groups overlook selling repair parts online as a viable way to ratchet up revenue. Rhode Island's Tasca Automotive Group is not among them.

In fact, it's fair to say the group — which runs 12 dealerships in Connecticut, Florida, Massachusetts and its home state — has cracked the code when it comes to selling original automaker parts online. Tasca is poised to rack up $26 million to $27 million in online sales this year, says Mike King, head of e-commerce parts.

By comparison, stats from the National Automobile Dealers Association show the country's 16,623 franchised new-car dealerships sold an average of $3.9 million in parts in 2020. (Figures for just online sales aren't available.)

"There aren't a lot of places that do the volume we do," King says, noting the company's four websites include about 4 million manufacturers' SKU numbers. "We process and ship about 1,000 orders a day. And we have a big staff, a call center and three warehouses around the country."

Granted, Tasca had a head start. In 2014, the auto group bought two parts websites King developed and hired him to grow its online sales. Tasca kept those two websites running to leverage their brand equity and added two more, King says.

Nonetheless, it shows what commitment to online sales can yield, backed by the proper resources.

"It's a good marriage," King notes. "There's strength in numbers."

Jon Hedges, principal of Hedges & Co., an aftermarket parts consulting group, says he is not surprised "to hear a dealer group is doing that well, but it's not very common."

"It's all about the commitment," he says.

King declined to divulge many details about how Tasca became an industry outlier.

"I'm not going to tell everyone exactly how the soup is made, only that it tastes delicious," he quips.

But the group's success underscores the revenue potential in an oft-ignored area, says Mike Rich, marketing director for RevolutionParts, which develops e-commerce platforms for dealerships. The company has nearly 2,000 clients in North America.

RevolutionParts directly integrates dealership websites with automakers' parts catalogs, supplying all the required parts data and images. The company also can integrate websites with eBay and Amazon to reach an even wider audience, Rich says.

"Historically, a lot of dealers ignore online sales," he tells Fixed Ops Journal. "In general, parts is one area that receives the least amount of light. But COVID-19 lifted the veil a bit and showed dealers the importance of selling parts online."

In fact, sales generated by RevolutionParts websites grew 28 percent in 2020 compared with 2019, to a record $420 million.

"We can get dealerships up and running quickly — usually within 30 days — with a platform that's optimized to provide a world-class shopping experience," he says.

The price of RevolutionParts' subscription website service varies, but it averages around $550 a month, Rich says.

Providing a great customer experience is one ingredient in the secret sauce that keeps Tasca's online sales humming.

"For the most part, the customer experience sucks when they buy parts from dealerships," King asserts. "But our customers are the reason we come to work."

The other ingredient is a financial trade-off: Lower prices yield smaller profit margins but also amp up volume, King says.

"People are price-conscious," he notes. "They don't want to spend $800 on, say, a side mirror for a Ford F-150 if they can get it for $650."

Tasca sells parts worldwide, King says.

"We'll send a cigarette lighter to a little old lady in Kansas City or a 40-foot shipping container stuffed to the brim with parts to Australia," he says. "If anyone in the world wants to buy a part, I'm happy to sell it to them."

On a local level, the auto group creates a virtual boundary — a "geofence" — for its online marketing efforts to avoid cannibalizing in-person parts sales at its dealerships, King adds.

Selling parts online isn't for the faint of heart, however. The initial learning curve can be expensive, King says.

"There are lots of mistakes to be made, and there's a number attached to every mistake," he explains. "It can take years to establish yourself … and you're going to spend $200,000 to $300,000 making mistakes before you're running like a clock. Some dealers just don't have the appetite for that."

Hedges advises that dealers interested in diving in should find a consultant who's knowledgeable about the auto industry. While he concedes this sounds self-serving, he notes dealers must fully understand how consumers search for parts — how they use year, make, model, part numbers and other aspects of fitment.

The bottom line: It's all about providing convenience, great prices and top-notch customer service, King says.

The chance to develop a different revenue stream shouldn't be ignored, Rich suggests.

"Online parts sales offer a constant source of revenue that can help you reach the holy grail — that 100 percent absorption number," he says. "Don't miss the party."