SAN ANTONIO — “We bought a stamp that says ‘No returns’ and why we got it is beyond me,” revealed Dick Shell of a Crow-Burlingame store in Monroe, La., during the Aftermarket Auto Parts Alliance’s annual council meeting, where Aftermarket Business and sister publication Motor Age were granted exclusive access to the group’s top jobbers and service dealers.

Aftermarket Auto Parts Alliance, Inc. is the parent company of Auto Value/Bumper to Bumper, one of the largest auto parts distribution and marketing organizations in the world. 

The topic of high return rates was just one of many discussed during the solutions-driven Jobber Advisory Council at the Alliance headquarters in San Antonio, Texas.

Returns represent an issue for the entire industry, and for this jobber group of 11 they range between 12 and 18 percent of total sales, with most suggesting that their top customers are the biggest offenders. Shell said only 10 to 15 percent of his returns are true defects. The remaining 85 percent are good parts that were either no longer needed or were ordered wrong.

“I don’t have a problem if it’s a warranty and not a ‘let’s put this one on and see if it works’ problem,” added Skip Byrem with Star Auto Parts in San Jacinto, Calif. Most of these jobbers, like many, struggle with how to handle high return rates, as they don’t want to send their key customers to competitors by being too stringent.

Retaining customers in a volatile and competitive marketplace is key, so the same sensitivity given to return rates is also extended to fuel delivery surcharges, said the jobbers in attendance. A couple have added a surcharge, and a few more are thinking of adding one into the cost of goods sold. Steve Marks, senior vice president of marketing and advertising for the Alliance, said, “Recently, we had a town hall meeting and many shops said they know we have to increase prices because of fuel, but they don’t want to see it as a separate item on the invoice.”

Cutting errors out of inventory

New technology is finding its way into many warehouses and jobber locations and is indeed helping the aftermarket get the right part to the right person at the right time. But John Tillema, owner of Lincolnway Auto Supply in Valparaiso, Ind., says that most of the problems he has are with checking in parts. “If it’s pulled wrong, it’s billed wrong and put on the shelf wrong.”

Bar code scanners are being utilized more often to cut down on errors, yet some mistakes are out of the jobbers’ hands, according to Al Schultz of Piston Ring Service in Selkirk, Manitoba, who says that on several occasions, jobbers are relying on someone else to bring parts to them. “A whole tub doesn’t show up sometimes. I have the paperwork but the carrier forgot to bring it.”

However, being part of a program group does help with managing your inventory, said Bob York of Skowhegan, Maine-based Motor Supply Company. “It gives us more information to draw from.”

Schultz added that, “The Alliance has a strong, knowledgeable purchasing team, in partnership with our suppliers, ensuring that we in aftermarket sales have the latest parts available for the demands placed on us by our installer-based customers.”

Though the majority of purchases among this council are made from member warehouses, sometimes they have to go outside the program group to buy products. “The most common reason would be because the warehouse didn’t stock it,” said Derek Niemitalo of National Bushing & Parts in Fergus Falls, Minn., who added that though they cater to the light truck and passenger car market, they do a variety of other sales, including agricultural and heavy duty and therefore have to buy outside their warehouse for those items.

Though only 10 percent of his purchases are from outside his primary supplier, York suggested that different brands and quality do play a role. Plus, “the brands we sell not from the warehouse are lines that we had prior to making [them] our primary supplier.”

Marks pointed out the Alliance will continue to urge their warehouses to buy from common approved vendors since “the more we support our vendors, the more important we are to them.”

Some jobbers shared a slight hesitation about this brand strategy since there is comfort selling certain brands, while others suggested that their customers aren’t concerned about what brand they’re getting, as long as it’s reliable.

A reality check on information access

These jobbers expressed a real concern for access to real-time information. “You’d think someone would have access to a real-time system that is connected,” suggested Mike Ward, owner of John-John Auto Parts in Santa Rosa Beach, Fla. Frustrations abounded regarding inventory management and being able to stay atop of the latest product information.

“Guys complain there are holes in the catalogs, so they go to the different manufacturers’ websites to get the most up-to-date information,” said Eric Dykstra of Kenowa Auto Supply in Grandville, Mich. 

Marks advised the jobbers that their technology partner, Activant, launched a new system that should fulfill this need. “It’s being tested right now and the general release is set for June 2006.”

Internet business is also beginning to blossom and this jobber council wants to encourage its use because it saves time on the phone, but “it will only be as accurate as your own store’s inventory,” Mike Smith of Advantage Auto Store in Ithaca, N.Y., reminded the group.

Jim Dykstra of Dykstra’s Auto Service estimated that in five years, it will be 50 percent of their “80/20 rule.”

But although many service dealers are used to ordering online, you’ll always have those people who want that personal contact, countered Shell, “and you don’t want to lose that personal relationship.”

Jim Harthorn, director of marketing for Auto-Wares, Inc. in Grand Rapids, Mich., the event’s host WD, uses Internet Auto Parts with virtual parts lookup for Internet parts ordering, which is set up for his jobber customers. Though the company “definitely sees online sales growing,” his concern is that the cost for jobbers may limit participation. “They gain a lot of efficiencies but the big hang-up is the fees that the jobber has to pay.”

During a group discussion among the Alliance Jobber and Service Dealer Advisory Councils, shop owners chimed in on what they’d like in an online ordering system.

“When I’m looking up front brake pads, I would love to see rotors and hoses right there on the same screen,” suggested one shop owner.

Dykstra said that at many shops, the technician is calling in the order and sometimes needs to be reminded of other items necessary for a job. A jobber’s role is to walk him though those things, he added.

Assumptions are also made about what comes with an order, said Bill Hughes of Way’s Garage. “We assume that something is always going to come with a gasket, and sometimes it doesn’t.” Being thorough will save trips for jobbers and help bolster relationships, according to these service dealers.

Tackling the training equation

Good workers start with top-notch training, but it was announced that almost half of all jobbers in a recent Alliance survey reported that they hadn’t taken advantage of any educational opportunities in a year’s timeframe.

The industry all too often gets into the habit of hiring the “he’s breathing, let’s put him behind the counter” due to the shortage of qualified counterpeople, said Byrem.

In the Alliance jobber survey, 67 percent would be interested in a recruitment program in an effort to find professionals for their stores. Jobbers in this group admitted to asking their customers about potential candidates at their competitor’s locations.

But regardless of how someone is recruited, there is still a need for training at the counter, said Niemitalo. “I’m on my guys all the time to upsell and offer additional items without being pushy.”

A few jobbers argued that they can’t get good quality employees to work for them since they can’t afford to pay them what they are worth — a problem the industry helps create due to cutthroat competition. Salary ranges including benefits packages for an expert counterperson were listed at anywhere from $44,000 to $54,000 a year.

York wonders where credible training will come from as manufacturers are forced to cut corners and as dealerships become more assertive. His concern falls heavily on the independent shop owners’ ability to compete.

“Most of my customers are really good mechanics and really lousy business people,” said Byrem.

The Alliance Service Dealer Advisory Council, which consisted of Tier 1 shop owners, was able to provide insight for the Jobber Advisory Council on better servicing shop customers. In terms of the lack of attendance at training events, one shop owner suggested that all too often, pride gets in the way. A tech doesn’t “want you to know he doesn’t know what he’s doing,” said Hughes. He suggested that maybe a more one-on-one approach would work in these instances.

Jim Dykstra said that one of the greatest needs from jobbers was training and educational tools that they can use with customers. “Our business is based on customer relationships. Help the guys by giving them the right tools to better educate the customer.”

A jobber’s last request

When asked what the most important tool the program group could provide for a jobber was, some stuck with the need for training, requesting more educational tools for use at the counter and in the shops. Another jobber wanted buying power so he could compete with the “big boys.” One storeowner opted for a comprehensive and efficient Internet-based inventory management and computer system.

Each year, Alliance members nominate jobbers and service dealers that meet specific criteria to participate in this event. For example, attendees must serve on local advisory councils where they provide direct input on day-to-day operations.

All council meetings are designed to promote candid conversations regarding the goals of the Auto Value/Bumper to Bumper program.

The two-day meeting gives the Alliance an opportunity to grasp the personal challenges that some of their jobber and certified service center members are confronting and gives members a chance to sound off with colleagues as well as their program group leaders.