October 2, 2017 at 1:52 pm #29187
Last week I was invited to attend a Service council strategy conference for my primary parts supplier. Twenty or so shop owners in the room, picked by field staff to represent the several hundred or so service centers they currently have. Impressive group. Progressive thinkers.
The CEO and top execs from the various sales, operations, IT and marketing departments were in attendance . One of the subjects that they had obviously put a lot of time and thought into prior to the meeting was a strategy on how to compete with Amazon(specifically) and thir belief that we would all be affected as Amazon was entering the auto repair arena.
They proposed a general concept on how they could get ahead of the trend by offering parts directly to the consumer with a service component tied into it. The customer purchases the parts from this supplier, either by bringing them with them or having them sent directly to the service provider for install.
The whole concept went over like a lead balloon. Their were only a couple individuals in the room that thought this was any future or impending threat to our business’s. Most had little intention of entertaining the idea seriously(currently?).
Their proposal is pretty much a copy of what Amazon is doing with it’s “Amazon Home Services” component, which includes auto parts installation(either mobile or “instore”).
Comments from those that watch Amazon closely revolve around the fact that consumers spend 2/3’s more on “services” in their lifetime than they do on “stuff”. Amazon wants their piece or maybe everyone’s piece of the service pie.
The elephant is at the door and i am not convinced he will bother knocking and ask to come in.
See attached for some of the current Amazon automotive service offerings and links to how it works.
Some other info not as easily found info:
Additional guidelines for service providers
The following guidelines apply to service providers:
The service provider must perform the service as outlined in the scope of work on the service detail page on the date the service was purchased. The service provider may not solicit additional product, parts or service orders before, during or after the service call.
If the buyer requests services, parts, or products outside of the defined scope of work, then the service provider may fulfill that request and charge the buyer directly.
Pros can get new jobs in two different ways:
Offer-Based Jobs: These jobs are purchased by Customers on Amazon by selecting a specific Pro and submitting three (3) appointment preferences. For these jobs, Pros set the price estimate upfront. Pros receive these jobs via email and work with the Customer to confirm a final appointment day and time.
Claim-based Jobs: These jobs are purchased by Customers on Amazon but Customers do no not select a specific Pro. Instead, Amazon surfaces a single price using localized price estimates based on the range of competitive prices that providers offer for each service and collects a single appointment preference from the Customer. These jobs are then sent to all the Pros offering that service within the Customers ZIP code. Pros receive these jobs via notifications through the Selling Services on Amazon app or the Seller Central home page.
Note: Claim-based jobs are only available for Appliance Technician, Assembler, Carpet Cleaner, Computer Technician, Electrician, Floor Cleaner, Garage Door Specialist, Handyman, Home Cleaner, Home Inspector, Home Organizer, Home Theater Specialist, Home Security Specialist, Holiday Lights Specialist, HVAC Specialist, Irrigation Specialist, Junk Removal Specialist, Locksmith, Mobile Device Technician, Mover, Painter, Pest Control Specialist, Plumber, Pressure Washer, Roofer and Window Cleaner.
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You must be logged in to access attached files.October 3, 2017 at 8:19 am #29206
While i can see this type of “service” offered by amazon appealing to some people, most of us have not built our businesses on a “auto repair is a commodity” type of model. Most customers come to us because they trust us and see the true value provided for something that 80% of our customers have no clue about. While i can see this affecting the price shoppers, i dont think this type of approach will affect the good shops out there.October 9, 2017 at 4:54 pm #29361
I believe it is a mistake to take Amazon lightly. Considering their purchasing power, marketing and distribution assets, Amazon is in a unique competitive position. While I don’t disagree that some customers have a relationship with their shop, there is also evidence showing that over 1/2 of the average shop’s customer base is made up of 1-time customers. There is further evidence that these customers tend to select their service provider based on cost and convenience, an arena where Amazon excels.October 9, 2017 at 7:00 pm #29365
Amazon is treating auto service like a commodity which it is not! Who is making recommendations for vehicle service and maintenance a trusted auto professional or a vehicle owner? The fact that there are so many restrictions on services bought on Amazon is clearly a RED FLAG. Amazon is catering to the younger generations. If we are to compete we need to sell ourselves and the advantages of dealing with people who know vehicles. If we try to compete on price with Amazon we will lose. Lets approach this from a different point. Amazon has no service outlets. We do and they are very well established. As a service provider, who would agree to the terms Amazon wants to establish? Vehicle owners are not educated enough to know what services they need and when to get them. This is our strength. This is where we should compete.October 10, 2017 at 2:20 pm #29399
I believe my approach to this is that I’d rather be sleeping with the enemy and have some idea of what to expect. So we got our first call today. Was asking about having a $90 pair(both for $90) of front wheel bearings installed on his 2010 T&C. Wondered how the whole thing worked. I am in a town of 3000 with two stoplights and the system has been turned on for less than a week. Don’t know where we are going with this, but were learning. Consumer to installer agreement attached. I suspect Amazon will nix us when they see it.
You must be logged in to access attached files.October 10, 2017 at 2:32 pm #29402
Thats a great agreement. Amazon may not like it, but in this case its probably better to ask forgiveness than permission!October 11, 2017 at 9:46 am #29463
I must have been at the same meeting as rlucyk. While I understand both sides of this, I feel it comes down to the way young people shop and their lack of education on not only vehicles, but on anything that needs maintenance or repairs. I grew up when many things got fixed. There were TV repair men and repair men for just about anything. Now we throw just about everything away and buy new. Young people grew up in a world of everything being a commodity and have no reason to think auto repair is any different. I think shop owners need to educate these young people, and to do so, will likely require them having a bad experience with allowing them to bring the Amazon part and having an issue with any number of things, be it quality, fit, more parts needed, etc. The staff at Amazon that has set this up is also just as clueless. The agreement states that no other parts or services may be solicited at the time the customer comes in for the Amazon service. This is not even a little bit realistic. It is our job to advise people of other needed repairs we see, especially safety issues. Beyond that, it is highly likely the customer didn’t get everything needed for the job, and that’s assuming they even diagnosed it right. Much of the backlash at the meeting I attended was the parts vendor putting on the meeting wanted to go after online business. I see no reason why they shouldn’t. NAPA, AZ, Advance, and all the others have consumer sites they sell on. They also all sell to walk in customers. The vendor at this meeting was wanting to add installation services to be directed to their Certified Service Centers. I understand that the attendees of this meeting seen it as their own supplier was going into competition with them, along with all the other issues of wrong parts, misdiagnosed problems or any number of other things. Fact is that young people shop by price. We are not the only industry with this issue. Plumbers and electricians also have this issue with customers seeing endless options on display at all the home centers with low prices. This industry is just too focused on the parts margin. We all need a certain margin to remain in business. There is no law that says we have to make a certain amount on parts and a certain amount on labor. The easy solution is sell parts at cost and increase the labor rates. Then you no longer have to explain why the Monroe strut you’re selling for $200 is better quality than the exact same part number Monroe strut that the customer can buy for $100, from just about anywhere. It just proves to the customer that we are all liars about low price meaning low quality.October 11, 2017 at 11:58 am #29477
This lends credence to my new business model of a transmission shop forgoing the RDI process of selling. Upfront pricing online with free pickup and free delivery.
On another note, here’s a shop I consulted for a short period of time. The owner believed it’s best to “buy” E-mail addresses. Check this out:October 14, 2017 at 12:13 pm #29568
I looked into marketing my services via Amazon some time ago, and immediately dropped the idea when I learned they wanted 20% of each sale! I have bought an occasional part from them, but if they are doing like the online tire retailers and dropshipping their parts direct to you, there is no margin. So will they now also want 20%? Sounds like we need a special Amazon door rate of around 400 hr if this becomes the norm. I already use a higher door rate for extended warranty contracts, so one just for Amazon doesnt seem too far fetched!October 17, 2017 at 6:50 am #29629
I see the Amazon contract as a liability nightmare. If you cannot upsell or add additional parts who holds the liability for unsafe conditions that the car will be sent away with? My guess is our shops. That being said, I dont know that they can have that clause in the contract with us as it makes it a non binding contract? Who holds responsibility for warranty? I would imagine Amazon will warranty the part. But who pays for the labor in re-installing that part? I think this is a horrible idea and any shop that enters into a contract like this is a shop that is taking their last breaths as an auto repair shop.October 17, 2017 at 7:37 am #29631
Regarding Joseph Automotive’s comment about an Amazon door rate of $400 per hour…
While that may be a bit high, the reality is that a solidly profitable shop in the Midwest U.S requires $110 to $130 per sold hour in gross profit dollars from both labor and parts together.
So, if all parts profit is eliminated, that leaves only labor profit. A shop would need to add the cost of a tech during that sold hour to get the needed GP.
Do the math and see what the labor will need to be.
5355 Plainfield Ave. NE
Grand Rapids, MI 49525
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