The State of Aftermarket Distribution: Staying Involved Is Key to Survival

The State of Aftermarket Distribution: Staying Involved Is Key to Survival

Technology, consolidation and e-commerce are changing the landscape. But there’s another issue that could become an even bigger threat for independent distributors.

Parts proliferation. Amazon. Access to data. Consolidation. Technology.

These are all issues that weigh heavily on the minds of leaders in distribution today. However, when Counterman spoke with Bobby Segal, CEO of Sanel Auto Parts, and current chairman of the Automotive Warehouse Distributors Association (AWDA), to get his thoughts on the most pressing issues in distribution today, it wasn’t any of these issues that worried him.

His biggest concern for distribution? It’s not what you think.

Segal reflected on the massive consolidation that has taken place in distribution over the past several decades, visually exemplified by the shrinking – and eventual disappearance – of the old printed member directories AWDA used to produce annually. Over the years, outright consolidation morphed into member rollups and buyouts or attempting to take a company public, followed by a growing interest from private equity and of course, the introduction of new online players like Amazon and RockAuto.

Regardless of these external changes over the years, the focus for his Concord, New Hampshire-based family business always has been on being the best.

“From our perspective at our company, we’re not about being the largest,” Segal says. “We’re about being profitable, sustainable. That’s what we’re focused on.”

Outside of his own business, as chairman of AWDA, Segal says AWDA members have the opportunity to truly learn from one another if they stay open, and pay attention.

“The smaller entities, the ones who are active, are running sustainable models and doing some really unique things in their marketplaces. Because a lot of them are smaller, they’re nimble and they have the relationships. That’s one of the benefits of AWDA; these are the best of the best who are participating. I’m always learning something new from other AWDA members who are doing some really neat things.”

Stay Involved

Segal is a passionate advocate for industry involvement in legislative issues, and he believes this should be at the top of the priority list for every distributor that wants to survive.

This brings us to the million-dollar question: As chairman of AWDA, what is Segal’s biggest concern for the industry today?

Apathy.

“My concern is the people who don’t realize they are going out of business because they don’t feel that they have the time to participate,” says Segal. “They can participate. Thinking that they are so small that they aren’t relevant, that apathy is a threat. People don’t realize how powerful one business can be. Our elected officials are interested.”

Even with all of the major legislative issues at stake today – China, steel and auto parts tariffs and a potential trade war – Segal says access to repair information is still this industry’s No. 1 issue.

“It’s making sure our customers are not locked out of the ability to service cars and we are able to supply the technicians with the parts they need,” Segal adds.

When asked about his outlook for the distribution business for the second half of 2018, Segal had a bigger, more widespread concern.

“You hear people all around the country [saying] that their business is up or down, depending on the macroeconomic events that impact their local economies, but I guess the concern would be the price of gasoline and how that would impact miles driven,” Segal says. “Cars don’t break if they sit. For the second half of the year, that is what I see as the biggest threat.”

Editor’s note: This is the cover story in the June 2018 issue of Counterman.

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