By the look of it, you’re doing everything right. Your dealership’s auto parts eCommerce store offers visitors amazing user experiences, provides captivating photos, communicates with compelling descriptions, and offers high-ticket/high-margin parts.
Yet, despite all of these things, gross profit in the parts department has remained stagnant for quite some time.
It’s puzzling. And very frustrating!
After all, how do you solve a problem if you can’t find it?
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For instance, if it’s not the user experience, the photos, or the descriptions then which part of your auto parts marketing strategy needs some tweaking?
And if your auto parts advertising strategy doesn’t need any tweaking then what exactly is going on with your bottom line?!…
So it’s completely understandable if your head’s ringing right about now; however, there is good news…You no longer have to be baffled as to why your gross profit is low. It’s because of:
The Way Your Parts Are Priced Online
You can now put away the Tylenol and sleep like a baby knowing that it’s only your pricing that needs to be tweaked and not your marketing strategy.
To clarify, the real reason your gross profit is stagnant is that your customer’s buying habits have changed. When shopping online, your customers are more price-sensitive because the prices are more obvious.
The internet is a world of perfect information. eCommerce shoppers can compare prices across multiple vendors at the same time and view item listings that, in many cases, are stacked on top of each other.
For example, when shopping on Google Shopping, Amazon or eBay the listings are all stacked so shoppers are able to see the price as soon as they view the item name, image, and description; Which makes the pricing of your parts more significant for online shoppers than it does for in-store shoppers.
Thus, you have to stop thinking about your profit margin and start thinking about your gross profit; Because when it comes to auto parts eCommerce, selling in volume is the name of the game.
Since auto parts eCommerce is more of a volume play it’s recommended to optimize your parts pricing for volume sales.
You’ll be able to get away with higher prices at the dealership but not online. Remember, this is a buyer’s market and online shoppers can easily do some research, compare prices and find a better deal; To emphasize this point, Marketing Land states that “On average, consumers visit three sites before making a purchase“.
Therefore, to win at the volume game here are 5 highly effective auto parts marketing techniques you can use to increase your online sales and maximize profit.
Technique #1 Develop A Cost+ Pricing Model
Higher Sales Volume + Lower Profit Margin = More Gross Profit
The fear of reducing margins is enough to make any parts manager slam on the brakes; However, it’s the most straightforward pricing model and auto parts advertising approach to driving as many online sales as possible.
The approach to this model involves taking the cost of your merchandise and then applying the profit margin you’ve targeted. To illustrate, if a part cost you $50.00 and you’ve set a target margin of 50% then the price to the consumer will be $75.00.
($50.00/2=$25.00. $25.00 + $50.00=$75.00).
By using the cost+ pricing model and setting lower percentages on high-priced, high-margined parts you will be way more competitive in the online marketplace.
Technique #2 Set Up A Pricing Matrix With Multiple Pricing Tiers
Setting up a multi-tiered pricing matrix is a great auto parts marketing technique that gives you both efficiency and competitive advantage. Rather than going through your inventory list one part at a time you can vary your cost+ pricing model based on different price windows for all of your inventory SKUs.
Furthermore, a multi-tiered pricing matrix will help ensure that your high-ticketed parts stay competitively priced and that you aren’t losing money on smaller parts sold online; This is because a matrix keeps your lower-priced parts from being priced the same as your higher-priced parts.
Technique #3 Understand Your Brand And Customers
This technique is the center of any successful auto parts marketing strategy.
In order to stay competitive with your pricing it’s imperative that you understand the brands you are selling, the markets those brands serve, and how they will meet or exceed your customers’ expectations.
Someone who’s buying parts for their Porsche is different than someone who’s buying parts for their Hyundai; Therefore, their expectations are more than likely different and shouldn’t be communicated to in the same way. Having a clear understanding of these things will help you determine how to communicate in the most effective way possible.
And thereby allowing you to know what parts and brands to sell. As well as what your customers are willing to pay for those parts and brands.
Technique #4 Stay Competitive With Free Shipping
Your customers’ expectations are rising and free shipping has become the new standard. Yet, when it comes to selling auto parts online setting your shipping costs can be a bit tricky and really painful.
Because each part dramatically varies in size and weight, selling them online is a little more complicated than just uploading them onto your platforms.
However, there is a solution. You can easily calculate and include the cost of shipping into the price of your parts. By optimizing your prices with the cost+ model and using a multi-tiered pricing matrix you can do this efficiently for all of your inventory.
This way you can stay competitively priced by taking into account the psychology of your customers who expect a seamless shipping experience.
Technique #5 Give Back To Your Customers With Promo Codes
You have to create value for your customers. They are always on the lookout for offers that will give them more for less. In fact, according to Statista, in 2019 up to 31 billion eCoupons are predicted to be redeemed worldwide.
Thus, promo codes are an effective incentive for getting your leads to convert. And with the help of strategic and targeted email marketing automation, you’ll definitely be able to increase your sales.
However, it’s important to remember that it’s not about inundating your customers with blanket promotions; It’s about sending personalized promo codes to the right customer at the right time.
Taking care of your customers and giving back to them is the key to high-volume sales.
In 2019 it’s no longer just about the in-store experience where higher prices go unnoticed. Platforms like Amazon and eBay have changed the way people shop; They have also changed the model from low volume sales of high margin parts to a cost+ model that looks like this:
Higher sales volume + lower profit margin = more gross profit.
Therefore, it’s time to stop thinking about profit margin and start thinking about gross profit.
Start optimizing your pricing for volume selling on your website, eBay and Amazon and you’ll begin to reap the rewards of competitive pricing.
By following these 5 highly effective techniques from OEM Interactive’s auto parts marketing program you can grow your auto parts and accessories sales online and maximize profit.