As the pages of the calendar flip from December to January, every dealership in the country is evaluating their numbers to determine how successful the past year was for their business. Hopefully, the dealer owners will know generally how they did before their company’s accountant starts pulling all-nighters and determining the final calculations. Congratulations to those who crushed expectations. For the dealers who came up short, hopefully 2016 will be more profitable.
No matter which outcome your dealership falls into this year, chances are good you may have left money on the table in 2015 if you were not maximizing sales in the retail shop and online. The good news is that making both of these sales channels priorities, as part of a New Year’s resolution for your business is relatively easy.
Most dealers know that increasing sales of parts and accessories online and the retail shop is a great way to increase revenue within the retail area of your parts and service departments. What may not be so apparent is how this can be accomplished. From our past experience, the best way for dealerships to enhance their parts and accessories sales in-store is through effective display set-up, pricing marketing, and merchandising.
But it’s not just about the in-store experience. Today, dealers must have a parts and accessories online store. Why? It’s because Uber and Amazon are changing customers’ buying habits. Dealers need to proactively respond to this trend and put their entire parts catalog online complete with pictures, descriptions, and an easy-to-use shopping cart with different shipping options.
Another recommendation is to put the dealership’s entire parts catalog on eBay to get more exposure to your client base. Putting the catalog online is a start, but it is not enough. Dealers also need to invest on marketing their online parts store with tools to increase SEO and PPC. For online sales and marketing, it’s all about having a dedicated E-store on the dealer’s website listing accessory inventory and pushing it out to existing and new customers through SEO, SEM, and social media marketing. Dealer principles need to let their customers and the ‘Do It Yourself’ community know that it is easy, affordable, and convenient to obtain OEM genuine parts from their trusted dealer all from the comfort of their own home or office.
Unfortunately, dealers are often too pre-occupied with selling cars and in the process can neglect their parts department. Dealer principles need to be aware of how to offset shrinking margins in their Sales Departments through increased sales in the Retail Shop. The bottom line is an effective retail shop simultaneously benefits the OEM as much as the dealer. After all, when a Retail Shop’s sales are high, an OEM also experiences an uptick in parts and accessories sales.
So what should each dealer know when it comes to maximizing their parts and accessories sales both in-store and online?
In-store: When building your in-store parts and accessories retail shop, size doesn’t matter – it’s what you do with it that will make the most impact. To establish and reach your target revenue goals, you should expect to earn at least $100 monthly revenue (at 50% profit margin) for every square foot in the shop. For example, a 300 square foot in-store retail shop should generate $30,000 in sales per month, which would produce $15,000 in total gross profit. It’s also essential that your Parts Department sell over the counter to all types of retail customers, especially the ‘Do It Yourself’ (DIY) community. We’ve found that once you sell to the DIY community, they keep coming back as a repeat customer every time they start a new project. It’s the gift that keeps on giving.
Online: There are two main reasons to sell parts online to a wide audience–to increase sales (which is the same goal as in-store), and reduce parts obsolescence. Parts obsolescence occurs inside every Parts Department; however, it is an important responsibility of Managers to take the necessary proactive steps to reduce it. Offering parts online is a good solution as tends to elongate the products’ shelf life, use, and overall demand.
Even in today’s digital world with social media, the on-demand economy, smart phones, and the IoT growing in popularity by the second, the necessity and importance of the in-dealership experience will never diminish. And that likely won’t change for a long time. Synergizing your online and in-store Parts and Sales Departments will help you reach your customer on any platform and help unify your sales across the board. If you’re not doing it now, it’s time to start. And if you are doing it already, continue to reassess your effectiveness, efficiencies, and priorities. If you’re hearing radio silence on both ends, you’re doing something wrong. When your business is operating smoothly, you will be constantly taking sales orders, restocking inventory, and adding to your revenue figures.
What dealer wouldn’t want to start off the New Year like that?