In this exclusive Q&A, John R. Washbish, president and CEO of the Aftermarket Auto Parts Alliance, provides an update on the program group’s first-half initiatives and looks ahead to the second half of 2018.
CM: We’re at the halfway point of 2018. Could you reflect on the Alliance’s accomplishments and highlights from the first half of the year?
JW: Business has been pretty good in the first half of the year, so we’ve been pretty happy with the business atmosphere. And in the last couple months, things have really stepped up. Of course when business is good, everybody has a smile on their face and is anxious to push things out the door.
One of the things that’s really helped our shareholders is MyPlace4Parts, a proprietary e-commerce tool that we developed to connect with the installer base. What we know and what our data reflects is that any time we can take our e-commerce tool and integrate that with the installer’s shop management system, when he comes into our tool, he never leaves us. He has everything that he needs to invoice his customer, to understand how to price the job, to understand how to repair the vehicle and to source the parts from us, all at the same time. And every month this year, we’ve had record year-over-year sales with MyPlace4Parts.
Also on the information technology front, we provide a service called our data warehouse. It’s a service for our shareholders that goes through the jobber – both the stores that we own, as well as independent jobbers. The data warehouse offers a host of tools, and it’s all about helping our shareholders have the right parts in the right place at the right time. The more often we do that, the better off we are, because we know the only fill rate that’s acceptable to the installer is 100 percent.
As our data team has perfected our data warehouse capabilities, we’re getting really good at working not only on a regional basis but also right down to an individual zip code, because we know it’s not just about the vehicle registrations – you have to have any idea of when that part’s going to fail. So, for example, if we look at a particular zip code, if we know there are no Subarus there, then we don’t need any Subaru parts. But if we know that there are Subarus in that zip code, and there’s an increasing anxiety level with starters failing, then we need to make sure we have starters in stock for that Subaru.
And over the years as our data team has perfected this data warehouse, we’re really getting good at having the right part in the right place at the right time. That ultimately has resulted in improving our fill rates, which is more sales. It also has increased our level of vendor cooperation, because our vendors all participate in this data warehouse and we give them the same feeds, so we allow them to look into our inventory all the way down to the point of installation.
So they can track that movement, and most of our vendors know when we’re going to buy the part long before we even order it, because they see we’ve sold it. We’re happy to report that we’re getting better vendor participation at extracting that information and putting it to work.
CM: What kind of challenges and opportunities are you seeing in the aftermarket distribution space this year? Any surprises?
JW: There are a couple things. One of the challenges, obviously, is the market continues to be incredibly competitive. And because everybody is aware of the fact that the do-it-yourself market could be declining because of the complexity of the vehicle repair, that’s taken some of those people who formerly spent most of their time on the retail side of the fence and they’re over here shopping more on the professional installer side. So we have more competition for that business segment, which we’re very good at. And we see that [competition] increasing, not going away.
The other piece is you’re seeing increased competition from the Amazon, RockAuto, U.S. Auto Parts Network types of websites. Nobody has figured out [how to deliver parts from online sales] in 30 minutes or less yet. But for those planned repairs, even our professional technicians occasionally might prefer to use one of those sites.
So that’s one of those stories that can cut two ways. On one side, [the online sellers] might sell something to your customer. But on the other side of the equation, if you choose to be a fulfillment partner for Amazon or RockAuto or whatever, there are some sales opportunities there. The challenge is making sure that you do it in a way that you have a sustainable gross profit, because obviously you don’t want to do something silly where you’re just shipping parts but not making any money.
As far as the opportunities, one of the things that we do so very well in most cases is getting a 100-percent fill rate in 30 minutes or less. And as I mentioned with our e-commerce tool and shop management integration opportunity, once we put a relationship together, it stays together.
The other thing that is boding well for us is right now is in 2018 we’re having our Aftermarket Jackpot Convention, which will be in Las Vegas in conjunction with the AAPEX and SEMA shows. The last time we did this was in 2015, when we had 4,000 guests. We put together a nice earnback program for the 2018 convention, and we’re looking for upwards of 5,000 technicians and/or jobber wholesale personnel who will be attending this event. That’s going to push some business our way over the next few months, as guys do earnbacks to get that trip to Vegas, so we’re really excited about that.
The other opportunity is our business in China. In 2014, Auto Value went to China and we established the China Aftermarket Auto Parts Alliance. We’re up to 23 distributor members there now. We have 10 Chinese technicians and their spouses coming to our convention, so we’ll have quite a Chinese contingent here. And then from our international association, TEMOT, in Germany, we’re going to have a number of Europeans coming to our convention.
This ties into our total international movement. We’ve signed two new shareholders in Latin America in the last two years, we have a couple more that are very close to signing, and we’ll continue to expand rapidly in Latin and South America. At our summer meeting in Phoenix, two of our most switched-on Latin American shareholders were members from Honduras and Columbia, because they’re taking American programs and rolling them out in their countries with tremendous success, and their competitors don’t have anything like this. So that’s pretty exciting for us going forward.
CM: What does the Alliance have planned for the second half of 2018?
JW: We’ll have another big sweepstakes coming in the fall, and we’re calling it the “Orlando Experience.” It will be a trip for four people, because a number of our technicians have told us it would be nice if they could do something with their kids. So we built a promotion with that in mind. There also will be $45,000 in ancillary prizes given away, in addition to the 50 technicians and their families who will win this Orlando experience.
Also, we’ll have our annual sales and marketing forum this September in San Antonio. That’s when we bring in all of our shareholders’ marketing experts and salespeople for three days of training. There’s not a lot of emphasis put on training the outside salesperson for the distributor as well as for the auto parts store. But when we talk to technicians, they tell us they really appreciate a sales call as long as there’s a message. So we’re putting an increased emphasis on [sales training], and we think the event in San Antonio will be a good catalyst for increased sales throughout the organization.
CM: Is there anything you’d like to add?
JW: I always like to put a plug in for the University of the Aftermarket Foundation. The Alliance has been tremendously supportive of the University of the Aftermarket Foundation, because the foundation, as you know, gives away thousands of dollars a year in scholarships for young people who are coming into our aftermarket. We’re sincere believers in education – not only for the technicians but also the counter people and all the people in the value chain, and we think it’s important for the industry to recognize that and to help all of us provide a better training and educational platform. We think the University of the Aftermarket Foundation is a great way to do that.
Also, we’re huge supporters of the Auto Care Association Political Action Committee (ACPAC). It’s important that our voice is heard on Capitol Hill. I’m very proud to report that the Aftermarket Auto Parts Alliance headquarters as well as the Alliance Parts Warehouse have 100-percent participation with the ACPAC. That means that every salaried employee has made a contribution or pledge to the Auto Care Association Political Action Committee. I don’t know that there’s any other program group that can speak to that [level of participation].
We have to give our industry association, which is the Auto Care Association, as much support as we can, not only financially, but I think it’s equally important that when we visit with our senators and representatives and tell them about the aftermarket industry, we need to convey how many votes we represent. We like to sit down and say, “Hey, this many people contributed and these are all voters.” Any time we can beat that drum on behalf of the University of the Aftermarket Foundation, it’s a great foundation because it’s providing education and continuing training for those of us in the automotive and heavy-duty aftermarkets.