How to Start an Online Auto Parts Business?

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How to Start an Online Auto Parts Business?

A major trend in the past year, mainly due to the global health crisis, has been a dramatic shift to eCommerce markets in practically any industry. The US automotive aftermarket online revenue is up 30% since 2019. It means that there is no better time than now to start an online auto parts business.

While consumers may be used to visiting junkyards and local stores to find the right parts for their cars, there are undeniable benefits to browsing an online auto parts catalog instead. You can do it from the comfort of your home, at your leisure, enjoying your favorite drink at the same time. A simple click brings the car part to your doorstep without any effort on your part. 

Starting an online auto parts business can be challenging if you’re going in blind. Here’s what you need to know to lay down a good foundation for your automotive eCommerce business.

Define Your Niche

The automotive aftermarket industry is vast. Sure, you want to sell spare parts, but you might want to consider narrowing down your offer. You may like to offer only performance parts or only replacement parts. Here are some examples of what your online auto parts store can specialize in: 

  • External automotive parts: hubcaps, grills, bumpers, etc. 
  • Internal parts: transmissions, cylinders, spark plugs, fuel pump, etc.
  • Tools: wrenches, jacks, etc.

Decide whether you’re going to sell OEM parts or third-party ones. OEM stands for Original Equipment Manufacturer (meaning parts from the exact manufacturer that makes the same part for the car company). Third-party car parts are from sources that don’t produce them for the car company.

Do some research and see if you can identify a gap between demand and supply. Perhaps there’s a significant demand for specific aftermarket parts, but not many sellers are offering them. This could be your ideal niche. 

Lay Out a Business Plan

Consider the audience you’re selling to. Are you going to be a B2B (business to business) wholesaler, selling auto parts to small vendors? Or are you going the B2C (business to customer) route and looking to sell directly to individuals who want to repair or improve their vehicles?

Sketch out your supply chain and find the right suppliers for the car parts and accessories you’ll be selling. If you want to store these parts, you will need to consider warehousing space and prices. Not only that, but you will also have to handle packing and shipping, and inventory management aside from storage.

Many online auto parts businesses that are just starting opt for dropshipping. Dropshipping means that the product the buyer orders online is shipped directly to them from the supplier. You don’t have to store anything, and you still keep the difference in cost of the vehicle parts between the supplier and your online marketplace. 

One of the downsides of dropshipping is that, even though you can provide your buyers with a tracking number of their order, you can’t guarantee delivery times because the shipping is not up to you. 

Set Up Your Business

Any online retailer (or any online business for that matter) must complete specific steps before they can officially begin operating. 

  • Obtaining a Tax ID Number: You can’t legally operate without a federal tax ID, and you also can’t pay taxes without it. You can get one on the Internal Revenue Service website. The application is free, and it shouldn’t take longer than two business days.
  • Registering Your Business: Depending on where you live, you probably have to register your automobile spare parts business with the local authorities, such as the city or county office. Check what your requirements are regarding this. 

Select an eCommerce Platform

Online shoppers are not content with checking only one eCommerce site. Because of the convenience of internet shopping, they have the time to compare prices, reviews, delivery times, and much more. 

When deciding on the eCommerce solution for your business, you can choose between the two most common avenues for selling spare parts online: 

  • Your Website: Even though it takes a bit of work – such as buying your domain name, designing the website, or choosing a WordPress theme and similar – having your own online auto parts store has its advantages. You will be building your brand, and you will have more control over how your consumers perceive your business. Additionally, you will avoid the multitude of fees that other platforms such as eBay and Amazon tack on. You can set up the prices however you want!

Managing your website and online auto parts catalog can be challenging, especially because you need to pay attention to the Aftermarket Catalog Exchange Standard (ACES) and Product Information Exchange Standard (PIES). It would be best to choose an eCommerce software provider that works by these standards and can do all the heavy lifting for you. 

  • eBay and Amazon: Marketplaces such as Amazon and eBay are decidedly more hassle-free. You don’t have to get a domain name or design/code a whole website (or have someone else do it for you). These two platforms also have special features for automotive sellers. 

However, an established eCommerce store’s apparent downside is that you have to pay fees for each purchase or listing you put up. You also won’t have many options for connecting with your buyers or building your brand. 

While at the beginning it might be too big of a strain on your budget to utilize more than one channel, no rule says you have to choose one or the other. If you create your own eCommerce website, go for a solution that can simply integrate your catalog data into eBay and Amazon as well. Once your spare parts business grows big enough, you can take advantage of more than one online sales platform.

Develop a Marketing Strategy

It is not enough to start your business, set up an online shop, and hope that customers will come to you. You also need to market your business to your target audience. Consider these tactics to drive traffic to your online automotive business:

  • Pay Per Click: A great way to jumpstart your online presence, PPC ads can be costly but will bring many potential customers to your auto parts eCommerce website.
  • Social Media: Advertising your business on Twitter, Facebook, Instagram, and similar social media platforms can be a good idea.
  • Search Engine Optimization (SEO): If you have a website, without good search engine optimization, it cannot rank high in search engine results. Consider hiring an SEO expert (or learning at least the basics of it yourself) so that you can increase your organic traffic as much as possible. 

Conclusion

Just like with any other business, becoming an online auto parts seller is not an easy feat. You need to find a profitable niche where you will meet customer demand, develop a solid business model that will bring in revenue sooner rather than later, register your business with all the essential institutions, and acquire your tax ID number. 

Selecting an online platform for your auto parts and car accessories catalog is an important step. You can either build your own website or choose existing online marketplaces such as eBay or Amazon. If your budget can handle it, you can even go for all three (or more!). 

Finally, don’t forget to invest some time (and money) into marketing. You need to get the word out that there’s a new car parts business on the internet. Otherwise, not many will check it out. Acquiring customers and repeat customers is difficult, but there’s no reason you won’t succeed if you work at it. 

At Illumaware, we can help you with one crucial part of your business – building and maintaining your online vehicle parts catalog. Contact us for more information and any questions you may have about the topic.