Driving Parts Profit: How a Michigan Parts Manager Used Online Sales to Transform Revenue
Known for having its roots in tradition, even the automotive parts industry is shifting towards online sales. Joe Kwasneski, a seasoned retail manager who runs online parts sales at Serra Automotive Lake Orion, Michigan is on the front lines of the transition from brick-and-mortar to online parts sales. His dealership, known for its extensive reach, impressive wholesale revenue, and exceptional service, has embraced online sales to redefine profitability and customer satisfaction.
Serra Automotive’s parts department has a storied history of dominating in wholesale parts distribution, covering a large area including greater Detroit, Lansing, Ann Arbor, and beyond. Serra Automotive’s parts department has established itself as a leader in the industry but Joe and Chris Hojnacki, the wholesale parts manager wanted more.
This led to the decision to add online parts sales to the operation. They knew this was the way to expand their market reach and increase profitability.
“We were looking for a way to add profitable revenue to the fixed ops side and that’s why we got into online sales,” Joe revealed.
This strategic shift has allowed the dealership to offer competitive pricing, superior customer service, and an extensive inventory to customers far and wide.
Challenges That Led to Selling Parts Online
When Joe started considering selling his parts online, he’d been facing challenges with his parts department’s reach. One of the primary issues was the limitation in distribution and geographical coverage. “We distribute parts across southeastern and western Detroit, all the way out to Lansing and Ann Arbor. We used to go all the way out to even Grand Rapids, Holland, and Muskegon Ludington,” Joe explained. However, limiting their distribution range to Jackson and Lansing was more profitable.
Logistical challenges also played a crucial role. Managing a fleet of around 12 drivers and covering large areas, including Oakland, Washington, and Saginaw counties, added complexity to their operations. “We covered a lot of miles,” Joe noted, highlighting the strain on their resources.
Profitability concerns were another factor in Joe’s decision. While they performed well in wholesale parts sales, expanding their market reach without compromising profit margins was a delicate balance. Joe stated, “We started looking at online sales as a way to add profitability without spreading our resources thin.”
Joe’s Motivation
The path forward was clear: selling parts online would allow Joe to increase profitable sales and lengthen the dealership’s market reach without bearing the strain from far-away wholesale relationships. Joe chose to partner with RevolutionParts, which offered a comprehensive set of tools designed specifically for OEM parts departments. By venturing into online sales, the dealership aimed to tap into a broader market and offer competitive pricing, leveraging their strong wholesale foundation.
This strategic move was not just about increasing sales volume but also about maintaining and improving their market position. The dealership’s robust online presence now complements its wholesale operations, enabling them to serve a more extensive customer base and stay ahead of the competition with two increasingly strong arms of their parts business.
Joe’s Online Parts Advantage
Joe’s parts department distinguishes itself in the online parts market through exceptional customer service strategies. He puts extra effort into timely and transparent communication with customers, especially regarding order status and inventory checks. “Sometimes before I even tell them their order is in progress, I let them know that I don’t have it in my inventory and it’ll be 24 hours before I get it, but as soon as I get it, their order will be shipped three-day UPS,” Joe explained. This proactive approach helps manage customer expectations and creates trust.
Pricing Strategy
Another significant advantage Joe has built into his parts strategy is competitive pricing. Joe highlighted this approach as he discussed how he remains competitive and profitable.
“I don’t have to make as much per part because we’re doing so well in the volume area. We get discounts between our wholesale and online sales, which allows us to be more competitive and sell more and more.”
By combining exceptional customer service with competitive pricing, Joe’s dealership has carved out a significant competitive advantage in the online parts market. These strategies attract new customers and foster loyalty in existing ones, driving sustained success.
Revenue Goals
Joe’s openness to competitive pricing and hunger to grow his revenue had him posting impressive monthly numbers from the beginning. “When we first started a few years ago we did about $40,000 per month,” Joe recalled. Over time, these figures double, with monthly revenues reaching around $80,000. Despite this growth, Joe remains ambitious, setting higher and higher targets for continued expansion. Joe aims to elevate the dealership’s monthly revenue from $80,000 to $100,000.
One key strategy to get there includes the potential engagement with eBay. Joe noted, “We’re currently entertaining getting into eBay and Amazon.” By diversifying their sales platforms, the dealership aims to capture a broader audience and increase overall sales volume.
Key Metrics
In an effort to meet his ambitious goals, Joe closely monitors key performance metrics of his online store including days of fulfillment, cancellations, and handling back orders through the RevolutionParts platform. Joe’s success relies on his commitment to timely order processing, “I stay on top of tracking overall days of fulfillment, cancellations, how long it takes for backorder products,” he stated.
Managing backorders is an important part of his strategy. Joe prefers to allow customers to place orders even if the parts are on backorder, as Chrysler fills orders in the sequence they are received. He explains, “At least if it’s on backorder, Chrysler fills the orders in which they’re received. So the customer has a chance of getting it.”
By focusing on these performance metrics and prioritizing order fulfillment, Joe positions his parts department to achieve revenue goals and further strengthen their online presence.
Obsolescence and Inventory Management Made Easy
Joe has tapped into next-level obsolescence management by selling online. Instead of letting aging inventory pile up, he leverages the global online marketplace to find buyers. This strategy, in tandem with Chrysler’s buy-back program, allows Joe to create shelf-space for fast-moving parts and release capital previously tied up in obsolete parts.
Finding a Profit Margin on Aging Parts
The wholesale parts department stays on top of their inventory and addresses parts that are not selling on a weekly basis. Focusing attention on proper inventory turns and addressing obsolete parts is another factor in maintaining profit margins. Joe added, “for dealerships needing assistance with dynamic pricing on aged parts, RevolutionParts has a great tool that saves time and maintains accurate pricing as parts age.”
Conclusion
Online parts sales have taken Joe’s parts department to the next level and made an important impact on Serra Automotive’s overall success. The move has empowered him to expand his customer reach and add to his overall profit. By adding the online business to his already thriving wholesale revenue, Joe manages to offer competitive pricing, maintain excellent customer service, and promise timely deliveries. As Joe succinctly put it, “We just looked at online sales as a way to add to our profitability and sales, and that’s exactly what it did.”
Joe strongly encourages other dealers to adopt online sales, emphasizing the untapped potential and additional revenue it can generate. “If you’re not selling online, you’re leaving money on the table,” he asserted. The investment in setting up an online sales channel is pennies compared to the potential returns. “For what it takes to start up the online business, it’s definitely worth it,” Joe advised.
Joe values his partnership with RevolutionParts for the simplified order processing, easy customer communication, and efficient logistics management tools.
“RevolutionParts makes it easy. There are just so many things that RevolutionParts provides for you that it’s a very easy process to pick up extra money that you normally wouldn’t be doing in sales if you didn’t take part in it.”
By leveraging modern tools and strategies, dealerships like Serra Automotive can also benefit from this growing sales channel and create a competitive edge in the increasingly digital OEM parts marketplace.
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