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The Online Aftermarket in China

2018-09-30 11:04 Sunday

  1. What is the status of auto aftermarket e‐commerce in China?

    Players in all aftermarket channels are involved, or looking  to become involved in e‐commerce. There are three primary channels in the Chinese auto aftermarket: the independent aftermarket, which includes the company I work for Autozi, original equipent service (OES), which are service chain  stores, and  4S groups, essentially  dealers  that  represent multiple  brands. All  three major channels are heavily invested in providing online platforms.

    In  addition,  there  are  local  components/parts  companies  that  have  established  e‐commerce platforms, and prominent e‐commerce players, including JD.com, that have expanded into the auto aftermarket, both through B2C and B2B models. Lastly, there are electrical appliance chain stores that have become involved in aftermarket e‐commerce, like Gome; for such companies, auto parts are a small portion of their total business.

  2. Are there any regulatory or market challenges associated with aftermarket e‐commerce?

    From the perspective of e‐commerce platforms, there are no major regulatory issues. However, certain categories of suppliers, notably motor oil and tire companies, do face certain challenges. In summary, the platforms purchase from suppliers and sell the products to garages or end users.

    The suppliers I mentioned, motor oil and tire companies, are extremely cautious about authorizing e‐commerce platforms to sell their brands. This is because they have mature, nationwide markets for their products, and could disrupt existing customers or distributors. Therefore, in most cases, suppliers depend on traditional distribution channels rather than e‐platforms.

  3. What are some general characteristics of aftermarket customers that buy goods and services online?

    The Chinese aftermarket is less mature than that of developed countries in Europe and the Unite d States. The do‐it‐yourself (DIY) segment is a very small portion of aftermarket sales. Except for extremely basic parts, like wiper blades, which can be easily installed by the customer, there is little DIY activity.

    There are two additional service models; when service is not included with purchase of the product, and when service is included with purchase. When service is not included, the customer will pay a fee  to  a  third‐party  garage,  or  similar  business.  Some  online  platforms  do  not  have  a  service network in place, and choose to only sell the product itself to the customer. Other companies have offline  service  networks,  and  when  selling  motor  oil  for  instance,  the  purchase  will  include customized car servicing, in which the customer chooses the part and location.

  4. Are  there  any  product  categories  that  project  to  have  particularly  strong  growth  in  the Chinese auto aftermarket?

    The  majority  of  growth  is  in  consumable  parts,  parts  that  are  replaced  according  to  mileage. Examples  of  these  include,  motor  oil,  batteries,  brake  pads,  spark  plugs,  lamps,  wiper  blades, coolants and various chemicals. Due to their predictability, consumable parts are easiest to forecast. Online platforms can use statistical data to project future demand.

  5. Could you describe some of your professional experience in the auto aftermarket?

    My background was as a mechanical engineer, and I started working in the aftermarket industry back in 1994. Since then I have worked for two leading global turbocharger brands, Honeywell and BorgWarner, as well as two prominent braking companies, Continental’s ATE brand and ZF‐TRW Automotive.  I  began  working  at  Honeywell,  and  was  one  of  the  first  local,  Shanghainese professionals to manage a Hong Kong market. I worked at TRW Automotive for eight years, helping set  up  their  aftermarket  business  in  China,  and  was  involved  in  all  aspects  of  that  business. Currently I work for Autozi, an e‐commerce platform, as Vice President of Brands & Products.

  6. You currently work for Autozi, an online aftermarket platform. What are the products and services offered by Autozi? What is unique about Autozi’s platform?

    Autozi offers a full range of consumable parts, the category I mentioned earlier. We are unique in that  we  do  not  have  stores,  only  an  online  presence.  Our  business  model  includes  two  levels: warehouses for our products, and the e‐commerce platform to sell the products. Our customers are garages; the purchase and payment of goods is handled entirely online. The platform is geared toward businesses that know what they would like to buy, and helps them search for parts based on  car  model,  vehicle  identification  number  (VIN),  OEM  #,  parts  manufacturer  #,  and  other methods.

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