1. The Dealers’ Guide

2.  Introduction  Why & Why Not  Dealer-as-a-Buyer  Dealer-as-a-Seller ◦ Dealer Parts Websites ◦ Wholesale Portals ◦ Retail Portals ◦ Mass Marketplaces ◦ Locators 2  Summary & Actions  System Integration  Special Cases  Challenges  What’s Next?  Wrap-Up Parts E-Commerce – Online Parts Trade No one right solution (unlike main dealer websites) Some dealers need multiple solutions Solutions depend on dealer’s franchises and off-line parts business

3.  Why listen to me? ◦ Since 1985 – Automaker/Dealer Parts Systems ◦ North America, Europe, Japan & China ◦ 1st Electronic Parts Catalog (1986) ◦ 1st Parts E-Commerce – Automaker Portal (1999) ◦ 1st Wholesale Parts Portal (2000) ◦ 1st web parts locator, order referral (2002 -2009) ◦ No Horse in the Race ◦ Structured / Actionable 3

4.  Why Listen to Parts E-Commerce Presentation? ◦ Your Customers ◦ Your Competitors ◦ Your Costs ◦ Results  Sell More Parts  Lower Costs Related to Sales (processing, returns, …)  Lower Purchase Cost of Some Parts  Without Adding Staff or Increasing Capital Invested ◦ Not Obvious: > 20 Suppliers; 6 Types (with distinct benefits, costs, buyer segments); 50 Solutions 4

5. 5  AM crushing OE; Volumes Substantial DST reports transaction volumes same order of magnitude as IAP & WHI Approaching $1B/mo. >10% annual growth

6. 6  Dealer-as-a-Buyer (DaaB) Overview ◦ D2D – Idle & Urgent ◦ AM  Dealer-as-a-Seller (Daas) Overview ◦ B2B, B2C, D2D ◦ Portals, Dealer Websites, Locators, Mass Marketplaces ◦ Parts, Accessories, Tires, Merchandise Buyer/Seller Chaos

7. 7  Mechanical Repair (All & Fleet only)  Collision Repair  DaaS - Segmentation Solution Clusters

8.  Consumers & Semi-Pro Buyers ◦ Natural, convenient and faster – particularly for younger and “digital” customers ◦ Searching the web is what digital buyers do  Price shopping  24 x 7 to research, search and order ◦ Web educating more DIYers to do more ◦ Economy – financial pressure to DIY ◦ Wider range of OE (ex: VPI, Performance) & AM Parts 8

9.  Mechanical Repair Professionals ◦ Already switched to parts e-commerce for AM parts due to discounts (most orders) ◦ 24 x 7 & Never on hold ◦ Integration to Shop’s Systems ◦ Online Access to order info/status – current/archived  Collision Repair Professionals ◦ Same as for Mechanical Repair Plus: ◦ Automakers’ Parts Program (discounted parts) ◦ Access to automaker technical info ◦ Future: Compliance w/ Insurance Company programs 9

10.  How Selling Via E-Commerce Benefits Dealers ◦ Some parts buyers require parts e-commerce and more are shifting to e-commerce ◦ More ordered (related parts, conquest/conversion) ◦ Faster & easier to process digital than phone or fax orders (plus save the inbound toll-free charges) ◦ Potential for fewer returns (180° change) 10

11.  Costs ◦ E-Commerce is not free for sellers ◦ Pricing – in a few cases – tricky as old cell plans ◦ Returns can be higher (though recent industry experiences are the reverse)  Culture ◦ Digital buyers’ expectations are higher and heading higher – immediate accurate responses ◦ Digital Orientation required  Customers ◦ Some customers not ready; others inconsistent  Failure is an option 11

12.  AM ◦ Advantages of selective purchases via e-commerce:  Discounts for purchasing via e-commerce  Single source: makes not covered by dealer’s franchises  Speed and accuracy of ordering  Availability and delivery timing ◦ Scenarios  Parts for vehicles in dealer workshop (franchise/not)  Used car prep (maintenance, repair and restoration)  Good/Better/Best service parts ◦ Platforms: WHI, IAP, DST  OE: Idle / Urgent 12 WORLDPACNAPA CARQUESTAutoZone

13. 13

14. 14

15.  Website dedicated to selling parts ◦ Cousin Larry Can’t Build – Catalogs & Billing ◦ Parts – Plus Accessories & Merchandise ◦ > 90% FedEx, UPS or USPS shipment ◦ B2C now, B2B extensions emerging  Benefits ◦ Increased sales (most incremental for dealer) ◦ Low Returns (if done right) ◦ National [International] reach – different market  Easy & Quick Set-up /Maintenance  TradeMotion, Parts Website, RevolutionParts, SkyParts, Reynolds & Reynolds, WHI, Others 15 Issues: 1.Brand vs. New Brand 2.Domain Name: OE IP; Dealer IP/Subdirectory

16.  ROI ◦ A >> Z / (X ∗ Y)  A = Website Sales / Month  Z = Fees for Website / Month  X = % Gross Margin on Retail Parts  Y = % Sales that are Incremental ◦ Set S&H to cover actual costs ◦ Charge restocking fee that covers returns ◦ Upsides  Retained customers that might have left w/out website  Productivity gains from streamlined order processing 16.1

17.  Segments: IRF, Fleet, Collision & Dealer (D2D)  Wholesale Buyers ◦ Pricing specific to each wholesale account ◦ Buyer needs to know quickly if/when deliver parts ◦ Primarily Local Delivery or Pick-Up; Dealer Invoice ◦ Potential for Incentive Programs ◦ Buyer system integration  Benefits ◦ Customer satisfaction & retention [pre-existing trading partners] ◦ Moresales (related parts, conversion); new customers ◦ Greater order processing productivity  Mechanical: OEC, WHI, DST, Infomedia, Lexcom  Collision: OEC, Infomedia & WHI 17 Issues: 1.Very different from Retail 2.All-Makes vs Franchise 3.Where $$$ is; Effort

18.  ROI ◦ (Y ∗ X) >> Z  Z = Portal Fees / Month  X = % Gross Margin on Wholesale Parts  Y = $ Sales that are Retained + New/Incremental ◦ Upsides  Productivity gains from streamlined order processing  Lower parts returns ◦ Upfront Costs / Efforts 18

19.  After catalog search, Buyer picks (local) Dealer  Parts, Accessories, Merchandise & Special Parts  Often an automaker program/solution  Benefits ◦ Marketing muscle [top 10 search results] ◦ New sales (related parts, conversion); new customers ◦ Greater order processing productivity  Risk: Non-Participation in OE-sponsored Tool  Ford (FordParts.com – OEC); Honda (eStore); Chrysler (Mopar eStore – Chrome Data), Nissan (eStore – TradeMotion), … 19

20.  ROI ◦ A >> Z / (X ∗ Y)  A = Portal Parts Sales / Month  Z = Portal Fees / Month  X = % Gross Margin on Retail Parts/Accessory sales  Y = % Sales that are New/Incremental + ‘Saved’ ◦ Upsides  Productivity gains from streamlined order processing  Lower returns 20

21.  Primarily B2C – AM, OE, Used  Parts, Accessories, Merchandise & Special Parts  Many Buyers Price Sensitive: Idle/Overstock  Benefits ◦ Marketplace brand recognition & traffic HUGE - WW ◦ Marketing and advertising muscle ◦ New sales (related parts, conversion); new customers ◦ Greater order processing productivity  Segments: Set Prices; Auctions; Classified Ads  eBay; Craigslist; Amazon 21

22.  ROI ◦ Transaction Fees Primary  Determine which parts you can afford to sell  For idle, if all else fails, part of a loaf is better than none  Work with Marketplace Partner  Non-transactional fees waived  Listing & Shipping Automation tools available ◦ Upsides  Productivity gains from streamlined order processing  Idle reduction ◦ Upfront & Fixed Costs 22

23.  Two Types ◦ OE-Sponsored ◦ Independent  Use: ◦ Buyer searches for parts available (in stock) ◦ Locator provides list (by distance) of matches ◦ Buyer selects seller(s) from list of matches  ROI ◦ OE-Sponsored: More compliance than profit motiive ◦ Independent: Same as for Retail Portal 23

24. 24 Summary Legend s = secondary / minor or emerging Comp = component / joint marketing

25.  Action Plan ◦ Buying Parts  If in wholesale, participate in automaker D2D programs  If service other-than-franchised: online buying discounts  Investigate policy to buy idle parts (>$X if non-urgent) ◦ Selling Parts  Consider and Re-Consider Automaker Programs  Look for Automaker Funding of Other Programs  If Idle is more than minor pursue online sales  If not in wholesale, try Retail Portal or Parts Website  If in wholesale, study/consider Wholesale Portals 25

26.  DMS ◦ Basic parts e-commerce is DMS independent – not so for many advanced features/capabilities ◦ DMS Integration value highest for: B2B, high volume ◦ Dealer-as-a-Seller  Availability from DMS  MSRP from DMS  Customer’s Matrix Price from DMS  Order  Parts / Quantity to DMS  Status from DMS 26 Considerations: 1.DMS Integration Certification 2.Capabilities Vary by DMS

27.  DMS [Cont.] ◦ Dealer-as-a-Buyer  P.O. Populated / Integrated across DMS applications  Improved parts receipting  Shipping ◦ FedEx & UPS ◦ GPS / Routing – Your Delivery Fleet [Elite EXTRA]  Wholesale Buyer System ◦ Mechanical Repair Shop Systems ◦ Collision Repair Shop Systems  E-Commerce to E-Commerce [Example: Portal to Marketplace] 27

28.  Accessories  Merchandise  Niche: Vintage, Performance  Tires  Idle  Dealer Groups ◦ Dealer Websites Branding, Referral ◦ Trade between stores 28

29.  Responding to Customers (to their satisfaction) ◦ Availability ◦ Delivery day/time ◦ Accurate price (B2B and D2D – not B2C issue)  Dealer Systems Integration  Returns  Part Numbers  Customer adoption uneven 29

30.  Continuing shift to e-commerce: ◦ Locators ◦ Idle solutions (including bulk)  Parts & Service sites  Parts & Accessories: In-a-Box & Installed Prices  Blurring of lines ◦ Portals will add dealer parts “micro sites” ◦ Locators will add parts catalogs and/or “micro sites” ◦ Catalog Improvements: Automaker web EPCs become more useable by non-experts while All-makes OE catalogs become more accurate, complete 30

31. Thank-You For more: www.fellowesresearch.com 31