Ron Hassey (R.H.) from GlobalAutoIndustry.Com Audio Interview Series: Today I’m interviewing Fernando Murguia, Managing Director of TecAlliance de México and Regional Sales Director of Central America. Today we are going to discuss about the “Ecommerce a new business channel in the independent aftermarket in Latin America”
R.H. “How are you doing Fernand0?”
F.M.: “Hello Ron, I’m doing excellent and I hope you too. I want to take this opportunity to thank you and Globalautoindustry.com for this invitation.”
R.H.: “How will the eCommerce channel will impact the independent aftermarket in Latin America?”
F.M.: “The retail ecommerce in Latin America is still in an early stage of consumer adoption and the aftermarket is not an exception, but the ecommerce channel will impact massively the independent after market in the following years and nowadays we are observing a rapidly transition from a traditional offline market to a newly and attractive online channel.
This new channel is emerging, particularly in countries like México, Argentina, Brazil, Colombia and Chile, driven by three channels of retail and wholesale operations:
- specialized parts and accessories companies
- regional and global market places
- wholesale distributors of parts and accessories
The market size for the ecommerce in Latin America is approximately 72 billion US dollar and the forecast for the next 5 years is 110 billion.
In México for example the number of internet users has increased at a 2 digit rate and more than 70% of the population, above 6 years have an internet connection. The most popular devices used with an internet connection are smartphones followed by laptops and desktops, tablets and finally smart TVs.
So there are excellent conditions to develop the ecommerce channel in the automotive aftermarket.
R.H.: “What are some opportunities to participate in the emerging eCommerce in Latin America?”
F.M: “The opportunities are multiple to participate in the automotive aftermarket ecommerce in Latin America. Today only 5% of the total online operations are related to vehicle parts and accessories and the consumers in this sector have a high level of technology adoption.
In parallel, there are more than 100 million vehicles in operation in the top 10 countries in LatAm, so the size of the market is quite attractive for parts manufacturers, retail and wholesale traders and off course market places who wants to participate in the ecommerce business.
In TecAlliance we have identified three types of consumers for vehicle parts and accessories:
- B2C consumers: car owner, car driver and installers
- B2B consumers: Jobbers, garages, fleet managers, mobility platforms (Uber, Cabify, etc.)
- Online to Offline consumers: in this specific case the consumer buys products online and then is transferred to a specialized garage for the part installation
R.H.: “What are the challenges to participate in the eCommerce in Latin America?”
F.M.: “There are many challenges for a company who wants to participate in the eCommerce. First of all, the part manufacturers must prepare the product data ready for the eCommerce.
All the data must be standardized with the vehicle applications, the product specifications, including nice product images.
In Latin America the most popular standard is TecDoc, which provides a structure to categorize the parts and accessories, as well as the vehicle data to prepare the product applications.
Talking about the parts and accessories distributors and retailers, there are many challenges to solve:
- publishing and promotions,
- payments methods (including cash operations),
- product delivery,
- drop shipping,
- warranties, changes and returns
- maintain up-to-dated information
In my opinion one of the biggest challenge to solve is the “just-in-time” dilemma. This means that the installer must receive the product order at the exact moment when the vehicle is under repair.
As in any other technology solution, the innovation is key to participate in online business; the website must offer important tools like shopping basket, customer experience, product search optimizations, payment security, wish lists, etc.
R.H.: “What are the differences between the traditional ecosystem in the independent aftermarket compared with the ecommerce ecosystem?”
F.M.: “In the traditional ecosystem participates the part manufacturer, the wholesale distributor, the jobbers, the garages and finally the car owner or the driver.
In the new ecommerce ecosystem we have the same elements plus
- the market places (such as Mercado Libre, Amazon and eBay),
- online specialized shops (such as MasRefacciones: https://www.masrefacciones.mx)
- online big retail chains (such as Walmart and Costco: https://www.walmart.com and costco.com)
- wholesale distributors selling in B2B and B2C platforms,
- the traditional retail shops selling in B2B and B2C websites offering the online-to-offline model
- and there are also 2 new members in the ecosystem such as the delivery companies and the payment providers.
R.H.: “What are the key actions to participate in the eCommerce in Latin America?”
F.M.: “In TecAlliance we have identified 7 key actions to start selling in this new channel:
- On the top of the list we have the data standardization of the product information. Without a good data the chances to fail are enormous.
- Innovation is a key element for an online business
- Multi-platform solutions with responsive websites, working in any of the most popular operating systems and the ability to play in smartphones, computers and any other emerging device such as smart speakers
- Solve the just-in-time dilemma, means that the part must be in the right moment when the vehicle is in the garage
- Offer customer experience. For example online-to-offline experience, customer reviews, product ratings
- Offer multiple payment solutions: In addition to traditional online payment methods such as credit cards, PayPal, google pay, etc. in the Latin-American countries there are still people that is not in the financial system, so they pay in cash. The payment method must offer a solution for this problem.
- The website must grant a fast product finding experience including: search by car make and model, search by VIN, search by part number, search by part interchange, etc.