Auto Parts – It’s Time for a Change

Since the late 1990’s some might say the early online auto parts pioneers were just plain crazy.  Heck, if my fax machine works, why do I need email?  If my print catalogs work, why do I need to have an Internet site?  And who in their right mind would trust to ever use a credit card on a computer, no less?

Well, through that crazy time, some very bold individuals decided why not automotive.  Their boldness laid the groundwork for us today.  It all started with two multi-million dollar automotive B2C, business to consumer, retail Internet startups, CarParts.com and Wrenchead.com, who paved the way for an industry to sell parts and accessories on a scale that the automotive industry never thought in their wildest dreams would ever happen.

Not long ago, 1 out of every 4 American’s worked in the Auto Industry.  Since Wall Street thought that size matters, an incredible effort was put together, which resulted in a mad rush to be the first to conquer the automotive parts and accessory business online.  Back in 1998, out on the west coast, a start up managed to acquire $50 million dollars from a huge Internet investment company, CMGI.  They then launched a beta site with a very unique Internet URL, CarParts.com that was focused on aftermarket accessories, but had nothing else, no employees, no suppliers, nothing.  By mid 1999, with almost 100 people, and having moved twice, they were doing over a million per month in sales.  The industry was shocked, and it was clear something was happening.

During the same time, out on the East Coast, another star was born with the same kind of financial backing, called Wrenchead.com, a site focused on replacement parts.  It had board members like CBS and Goldman Sachs.  This site took a different approach, and focused on branding their name.  The television advertising that Wrenchead did for the Daytona 500 in February 2000 was so heavy, that it resulted in the single largest page views ever recorded for an automotive retail Internet company at that time.  But like all good things, they come to an end.  The Wall Street technology crash in that year changed everything.  It was no longer sexy to be an online retailer, you needed to be a technology company if you still wanted to go for the gold, and have an initial public offering done to be a public company, traded on Wall Street.

But, Wall Street had other ideas; just being profitable wasn’t good enough.  Soon thereafter, Wrenchead sold its retail site to NAPA Auto Parts.  The big surprise was, NAPA turned around and shut it down shortly thereafter.  Why you may ask would they do that, well, it was a way to kill a perceived competitor at the time.  Not long after, an arrangement was made for the retail site of CarParts to be sold to JC Whitney, who struggled with what to do with it, since running an Internet operation was completely different than running a highly structured print cataloging business.

When it was all said and done, $100 million dollars had been spent.  Crazy yes, industry changing absolutely, will we ever be the same, no.  If either original party had held on to what they had, who knows how big it would have been today, or how much more it would have changed the automotive landscape overall.

In the following year it was clear, being a technology company wasn’t going to work either, and the era of smaller entrepreneurial companies begins, 2002 – 2006, while the technology world was recovering from the tech crash.

During these years, technology innovations began to appear, and Web 1.0 as it was called, began to evolve.  During this time we saw the acceptance of relational databases and template driven websites.  No longer were hordes of people required to build and run a website, which truly opened the door for the small business owner to jump in.

And jump in, they did.  In 2007, it seemed like everyone had a website, and the new buzz word was Web 2.0.  But just when we all thought Web 2.0 was going to take hold in the automotive online retail world, the economy comes crashing down.  By the fall of 2008 it was clear anything could happen.

Since then, all three major market segments, Accessories, Performance, and Replacement, have seen websites come and go.  The years leading up to 2012 have been now focused on Web 2.0 and the final integration of social media into our lives.

With all this activity, the demand requirements for successful retail websites have risen as well, making it difficult for entrepreneurial companies to compete.  With 2011 coming to a close, it’s clear that 2012 promises to be the start of a new era of huge well known companies jumping in to selling automotive parts and accessories online.  I expect that we’re all going to see a lot of activity from traditional parts chain groups and major mass merchant retailers who already have been using attribute selling and layered navigation, and with application indexes, very soon.  After all, it’s their turn now!