Whether you’re looking to start a new auto parts store or are looking to expand on your current operation, you always need to be asking yourself one question: is this venture going to be profitable? There are a lot of factors that go into profitability, which we will cover today. In this article, we will also be discussing the different types of auto part stores as well as several other factors that auto part retailers need to take into consideration.
What Factors Determine the Profitability of an Auto Parts Store?
When it comes to the profitability of an auto parts store, there are a few key factors that come into play. These include the following:
- Store Location – The importance of the location in a company’s success cannot be overstated. If you operate in an area where walk-in customers are numerous, you may increase sales and revenue per sale while maintaining high margins. Alternatively, if you are based outside of a region, your sales will be affected. It is extremely tough to run a business with low sales.
- Product and Service Quality – It is critical to offer high-quality automobile parts and accessories in order to ensure repeat purchases. To keep your consumers, you must provide excellent quality items and services. You will lose your consumer base if you do not. Loyal customers are the lifeblood of your company. To increase sales, maintaining the quality of products and after-sales services is necessary.
- Keeping Expenses at a Minimum – When starting a company, you should do everything possible to keep costs in check. Otherwise, your company will be unlikely to succeed. Many entrepreneurs make the error of increasing their unnecessary expenses frequently. For example, they buy unneeded items for their workplace or opt for a space that’s too big for their needs at that moment.
- Procurement – Auto parts retailers must be shrewd buyers to maintain healthy margins. If you cannot get the best prices for the auto parts and accessories you sell, your profits will quickly erode. Get access to large wholesalers’ markets and directly approach the spare parts manufacturers. Compare prices with other suppliers to obtain the best possible price for your purchases. Never skimp on quality to save money. That’s because high-quality items are your company’s lifeblood.
What Are The Different Types of Auto Parts Businesses?
Automotive aftermarket entrepreneurs have several business models to choose from when starting an auto parts business. Below are some of the following:
- Brick-and-Mortar Auto Part Retail Store – This is the most common type of auto parts store. It’s a physical location where people can walk in and purchase auto parts. The store might also offer repair services, car washes, or detailing.
- Brick-and-Mortar Store with a Workshop – This model might help you increase your income. A car parts shop that also has its own workshop enables customers to purchase components and repair them in one location. Customers like buying spare parts from businesses with workshops nearby; therefore, it may be a fantastic way for entrepreneurs to develop their businesses.
- Auto Parts Wholesaler – A wholesaler sells auto parts to retailers, who then sell the parts to consumers. The advantage of being a wholesaler is that you can purchase auto parts at a lower price since you’re buying in bulk.
- Online Auto Parts Store – An online auto parts store sells car parts to consumers over the internet. This type of store has several advantages, such as not having to pay for a physical location and lower overhead costs. Customers nowadays prefer to shop online rather than going out in person and shopping. Customers choose items online, and online store owners send their products via courier right to their doors. If you don’t want to run an actual brick-and-mortar store, this is a fantastic opportunity. An internet business may be set up from the comfort of your own home.
What You Need To Know About The Online Automotive Aftermarket Sector
COVID-19 has had a significant influence on the online sales of automobile parts and accessories since 2020. The previous several years have witnessed record levels of internet vehicle maintenance, components, and accessories purchases, which are expected to continue.
The total amount spent on auto parts and accessories in the United States reached $17.7 billion last year. According to predictions, vehicle components and accessories eCommerce sales will top $20 billion by the end of 2022 and $22 billion by 2023. This year is anticipated to continue the trend of fast growth that was observed over the past several years, with cross-device and cross-channel conversions playing an important role. Amazon alone has sold $8.3 billion worth of automobile parts (not including third-party sales) in 2020.
For these reasons, selling automobile components and automobiles themselves have become more internet-oriented.
The Benefits of An Online Auto Parts Store
An auto part store can make a significant amount of money online. In fact, many online auto parts stores are very profitable. There are several reasons for this, the most important of which being the following:
- Larger Customer Base – An online auto part store can reach a much larger customer base than a physical store. This is because your store is open 24 hours a day, seven days a week. You also don’t have any geographical limitations.
- Increased Selection – When selling auto parts online, you have access to a much larger selection than you would if you were selling through brick-and-mortar stores. This allows customers to find the exact part they need without having to search through numerous racks or shelves in a physical store.
- Lower Overhead – An online store does not require as much overhead as a bricks-and-mortar store. You don’t need to pay for a physical location, employees, or inventory. This can save you a great deal of money in the long run.
- Convenience – Online auto part stores are convenient for customers. They can purchase parts and accessories at any time of the day or night without leaving their home or office. In addition, many online stores offer free shipping on orders over a certain amount.
How Profitable are Online Auto Parts Stores?
Online selling of automobile parts and accessories may be a fantastic method to make additional money or even start a full-time business. How much can you earn selling car components online, then? Car part retailers may make anything from $500 to $50,000 each month by selling spare parts and accessories on the internet. Of course, the amount earned will differ depending on the sort of auto parts you sell, your sales platform, and your marketing efforts.
If you want to sell car parts and accessories online, we recommend either Amazon or eBay. These platforms have a large audience of potential purchasers and vehicle owners and various selling tools to assist you in getting started.
Focusing on More Than Just The Profit Margins
On eCommerce platforms, the goal is not just the profit margin; it’s also about gross profit and absorption rate. Online retail is a volume game, which means you can take advantage of special offers and bonuses that aren’t available at a physical store.
For one thing, more sales imply a greater number of buyers. And that means there are plenty of ways for you to provide great customer service and keep consumers coming back to you. Shoppers are savvier than ever before, with a wider range of choices available, so making a good first impression on them is critical.
Another benefit of high-volume selling is OEM kickbacks. The majority of the aftermarket parts managers’ total income from online sales comes from OEM back-end manufacturer incentives. You won’t be able to sell enough products at your physical counter to satisfy volume criteria, but you may do so online and get a large reward. As a result, selling online may be an excellent method to add to your brick-and-mortar vehicle component store or consider it a standalone business strategy.
If you’d like to learn more about selling auto parts and accessories online, contact us at Illumaware for additional information. We’d be delighted to assist you in establishing a business that will thrive quickly!