August 28th, 2017 by jasonlancaster
Selling auto parts on eBay or Amazon (or other marketplaces) offers a lot of promise. Amazon and eBay sellers who’ve mastered these systems can sell millions of dollars worth of parts every year. Even though the margins are often small, a small percentage of a big number is usually a good thing.
Of course, there are pitfalls too. When you’re selling on the world’s largest auto parts ecommerce website, a small mistake can cost thousands of dollars. There are marketplace rules that must be strictly followed, feedback requirements that can be onerous, and of course, stiff competition.
Our goal with this post is to help parts retailers understand the pros and cons of selling auto parts on Amazon, eBay, or some of the other marketplaces like them.
There are just a couple of good reasons to sell auto parts and accessories on sites like Amazon and eBay, but they are admittedly compelling.
At Amazon and eBay, you’d find 183 million and 96 million unique visitors per month respectively. But that’s just part of the story:
There are other marketplaces too – Walmart.com is growing steadily, for example – but for now, these two sites are where auto parts customers are shopping.
When a website has tens of millions of visitors each month, it’s easy to understand the potential for volume and revenue.
As you can see, there is a huge potential for volume. Even earning just a tiny slice of the sales on a site like eBay or Amazon works out to a significant sum.
Before your company goes and sets up an eBay store or Amazon Seller Central account, there are some things to consider.
The potential for volume combined with a low barrier of entry inevitably makes for a low margin business. Put another way:
Anyone can sell products on Amazon or eBay, assuming they can fill out the application and pay for a store or SellerCentral account. This means that there’s a constant supply of new competitors joining the marketplaces.
Most new sellers won’t survive – they won’t understand the rules, won’t pay close enough attention to ratings or feedback, and won’t invest in tools that make selling parts and accessories easy. But a handful will figure it out, and then every seller’s slice of the pie will get a little smaller.
Marketplace websites all tend to have the same philosophy: They can’t replace customers, but they can always replace sellers. This means that, when there’s a dispute between a seller and a consumer, the rules favor the consumer:
Etc. There are dozens of stories like these, all of which reflect a philosophy that puts the customer first. Seller ratings are used as a hammer by the marketplace sites, as a low rating limits sales and can eventually result in account suspension.
The biggest “con” to selling parts on a marketplace? Even if your company is really, really successful at selling parts or accessories on a marketplace site, you won’t have much to show for it.
Of all the negatives to selling parts on sites like eBay or Amazon, this is by far the biggest.
While we can’t answer this question, we can offer some food for thought.
First, understand that selling another company’s parts on another company’s website is going to be tough sledding eventually. Reselling parts your company is buying from a distributor on a marketplace that literally anyone can join? That’s going to be a business with very little margin for error…especially if we look more than a few months ahead.
Second, consider the value of knowing who your customers are. What’s the lifetime value of a customer that just bought a set of running boards? If they just spent $500 with your company, is there a chance your company could sell them more parts later by marketing to them directly?
Most auto parts online retailers get 50-75% of their revenue from repeat customers. A strategy that ignores marketing to previous customers is going to be tough to execute.
Third, can your company build a brand on these marketplace websites? If your company is selling branded products, and your brand starts to get traction on Amazon or eBay, that can be a very good thing. People who buy a set of “RPM brand shocks” (not a real thing) on Amazon might be inclined to search for “RPM brand shocks” next time they’re in the market for parts. That might lead them to the RPM brand website, as opposed to a marketplace.
Finally, what is your primary business – selling parts or mastering marketplace rules? The most successful marketplace sellers have one thing in common: They know the ins and outs of the marketplace. They know every rule and every policy. They understand how every tool works. They are great at perfecting listings, maximizing feedback, etc. Now, this isn’t to say that these sellers don’t also know about parts, but the sad fact is that a lot of the top sellers on eBay and Amazon aren’t experts when it comes to auto parts and accessories.
Summing up, marketplace websites like Amazon and eBay bring a lot of value to consumers. However, we’d argue that they don’t bring a lot of value to sellers. If your company is going to sell parts on Amazon or eBay, it’s a good idea to have a plan to sell parts outside of these marketplaces too. Invest in your own auto parts website, focus on a niche, and build a brand.
This way, if/when the day comes that your company stops selling parts on Amazon or eBay, it can.