Staying afloat in troubled waters: APA members share ways to swim upstream
But there are ways to survive amid troubled times, and at this year's Automotive Parts Associates (APA) convention in San Antonio, many survival tips were shared.
For Jeremy Marchy, parts store manager for Modesto, Calif.-based Undercar Warehouse, getting by means reaching out to dealerships for business. "In our area, we have 32 dealerships," he says. "We have about 10 of those locked up."
He asked the potential dealership customers what they look for when buying parts, and warranties ranked as a high priority. The distributor has been involved in the used car business, with hopes to garner new car business in the near future.
Another way to cope with the current economic climate is to hire drivers who serve a role similar to independent contractors, says Marchy, adding this helps keep down insurance and other related costs.
Some distributors may even want to look at ways they can share transportation costs with area competitors.
Other APA attendees say their products are sold through necessity and are therefore shielded from deferred maintenance. "We're fortunate in our niche market. Our products are not (installed) by choice," says Russ Robertson, director of sales for Canadian manufacturer Richporter, which makes ignition products, among other "necessity" vehicle systems. "It's not a maintenance product. When it breaks down, you have to fix it."
Drivers are reluctant to buy new cars, which perpetuates the sale of aftermarket parts. "We're in a pretty good place right now," Robertson adds.
Other reseller woes continue to be external factors, such as electronic catalogs and their role in a company's success.
The industry still has a long way to go when it comes to using technology to its advantage, says Marchy, who has to supplement his electronic catalog with other types of software to conduct accounting and other vital business functions.
Even now, he relies on age-old paper catalogs. "I brought screen shots to one of my vendors, so I can show them exactly what's wrong," he adds.
"We're trying to be on the cusp of (technology) as much as possible, but I feel the industry's lagging way behind on it still," Marchy laments.
"Technology affects everything we do today," admits APA President Dan Freeman, who adds that one of the biggest innovations of late has been connectivity, meaning business partners can connect electronically in order to better serve their corners of the marketplace. If used properly, technology can help overcome economic factors and increase margins for businesses.
When it comes to the fuel price problem, "It's hard to account for those costs in the price of your goods when you're competitive with everybody," says Marchy. "You can't really pass that on to the customers like you think."
"The biggest change we've made is we've reduced the number of locations, and expanded the size of our locations, to take advantage of the proliferation of parts," says Jim Puckett, owner of Parts, Inc., a warehouse distributor based in Brentwood, Md.
Customers are much more sensitive to price, and these companies are striving to maintain the balance of seeking profits without passing too much extra cost down the chain.
"We have to be smarter in how we price our products and how we price our services," says Freeman. "We have to make sure that we cover our expenses and still maintain a strong gross profit margin."