Elephant at the door?

[mgibb112]

Great read. I’m new to this site and this the first topic I linked on to. It’s quite obvious that there are  smart owners here that really take time to solve real life issues facing us owners today. I appreciate you.Here’s my thought.  We can not let Amazon, customers, or any parts distributors dictate if we are going to be profitable..bottom line. If customers want to supply parts, then clear policies need to be put in place that spell out the risks and hopefully deter consumers from doing so. If they still want to proceed, that can not mean we then lose our overall profit margin to keep them happy. Losing profitability will cost you your business.

Our profit centers are parts, labor, and shop supplies….no matter how you cut it up. There has to be a healthy balance. Lose one, and the others have to make it up….somehow, some way. If your parts margins heavily decrease, then your labor margins need to heavily increase.  The one advantage that we have today is our skill sets. If  Amazon could figure out a way to undercut or disrupt that too,  we all may be working someday in a new Amazon Auto Service Center , 7 days a week to make their margin.  The only way to combat this new and real challenge is to collectively make it unattractive to consumers with substantially higher labor rates and fully displaced liability (if possible), or find a new profit center. Good luck on the latter. I don’t think new car dealers are going to budge. It’s up to us to hold the line or risk changing how we do business in the future, which will ultimately lead to fully disclosed shop rates of $200+/hour labor rates. In addition, we will be dealing with partially disassembled cars on our lifts or in our parking lots waiting on replacement parts ( at a storage fee of course) , owners scrambling to find those replacement parts and alternative transportation, and more billable diagnostic time when cars still aren’t fixed. We won’t be writing checks to our local parts dealers, as Amazon will have put them out of business. I know I am rambling, but my point is this. As long as we hold margins, it doesn’t matter. We have a skill set that you can’t buy online and very expensive tools,software, shops, etc.. Most people are not going to invest the time and money that we have into  obtaining that side of our business, and corporate America has struggled trying to disrupt or control it.  We may just have to expose the real costs and listen to the new complaints. Welcome to Millenia!

[Richard Black]

I remember a few years back a sign posted at pep Boys showed the labor rates for repairs and the $20 per hour added rates for customer supplied parts. Even if they just bought them at the front counter applied.

[Richard Black]

In construction, Customers who are remodeling a kitchen buy the appliances and the cabinets and plumbing, sink ect. A contractor has them understand in writing, when he comes to install everything, if a cabinet is damaged or even if it is damaged during installation, it is the customers problem. The labor will be charged again, any delays in the scheduled work will be charged for at billable hours. Any rescheduling will be placed on the waiting list. So if the sink came scratched, or the contractor accidently scratches it, the job stops, the installer is still paid and the customer has the problem to obtain a replacement. It’s when the contractor handles the entire remodel, all the problems are part of his job, not the customer.  As said earlier, when a car repair is held up from the wrong part the customer supplied, it’s time to charge for rental time in the bay. I wouldn’t mind going to the next car repair while the clock is still running on the stuck one,

[Jose Garcia]

Whenever there is change, touting how great your business is and how poor the customers are doesn’t put the business in a posture to profit from the change.

Customers are buying parts online, the quality of such parts range from catastrophic junk to quality far superior to OEM.  Businesses married to old profit models are going to grow stagnant or lose customers as the marketplace continues to evolve.  Service businesses grow by maximizing positive exchanges with the public; not by harboring resentment of “consumers.”  Change in any marketplace goes hand in hand with opportunity.   Raising hourly rates and installing parts at cost is one method.  What are the others? Exploring contracts to offer customer parts warranties for sale at the shop through a third party, like SquareTrade for example, there are others.  Negotiate with the insurer to receive a percentage of warranty sales, the warranty includes parts and labor; if the part fails the shop isn’t eating any unreimbursed labor expenses, and neither is the customer.  The shop has an additional revenue stream as a percentage of warranty sales.  Say the shop has a policy “we don’t do customer parts  – unless – customer purchases a parts and labor warranty on that repair only.”  Obviously the concept is raw, but my point is that there are unexplored opportunities to profit from the internet customer supplied parts market place change. Just saying no isn’t going to keep a shop competitive, you’re putting off an entire market segment.  The real world isn’t as tidy and ideal as we’d like it to be, Americans are in debt up to their eyeballs, they’re looking for every possible bargain.   At the same time, small business owners have a payroll to meet, business development costs, training, certification, taxes, overhead, etc. Give customers their bargain on their parts.  Keep them happy with a warrantied repair.  Avoid losing time and money on returns.  Add another revenue stream from the sale of single service warranties.