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By Counterman
You can get pretty much anything delivered if you want it badly enough. In the parts business, we’ve been doing it for decades, but delivery on demand has crept its way back into grocery and prepared foods, hardware, and many other industries. It’s not a new concept, only more efficient and widespread than it was at the turn of the 20th century, and even the 21st!
Instacart and other grocery services may seem like a modern marvel, but most grocery stores during the first half of the 20th century offered delivery, as did the local pharmacy, dairy, and a host of other businesses. The rise of suburbia (and the supermarket) after WWII threw a curveball into that business model as people became more mobile and spread out from urban centers.
Pizza delivery, especially the Domino’s “30 minutes or less” guarantee, has had a drastic effect on our own delivery operations. For traffic safety reasons, Domino’s no longer guarantees half-hour delivery, but the effectiveness of their advertising campaign still resonates with the public some 30 years later. At the parts counter, as well as with food delivery services like Doordash and GrubHub, there’s still an unspoken expectation that our items will be arriving at fixed intervals after the order is placed.
Fortunately, we don’t deal in perishable merchandise, so a delayed delivery doesn’t ruin the product. That doesn’t stop the phone from ringing off the hook with the dreaded “where’s my stuff?” calls, so we still need to keep up our pace to serve our commercial clientele. As soon as the call ends, or the online order is sent, we are “on the clock,” even if it is only the customer’s internal clock.
Auto parts deliveries generally fall into two categories; “hot shot” and “routed.” Dispatching these orders and staffing a delivery team depends greatly on your market, geography, and each customer’s expectations. If you recall the fable of the tortoise and the hare, the moral of the story was that “slow and steady wins the race.” Routed deliveries are the tortoise, quietly making steady progress in a direct path that ultimately got him to the finish line. The post office, UPS and Amazon all successfully make use of delivery routes. You can generally count on regular deliveries from each of these providers within a specific daily window, and most recipients are content to schedule work around these time slots. Stock orders, parts ordered in advance of a scheduled appointment, and customers at the edge of our service areas are prime candidates for route delivery. For emergency orders, vehicles tying up a lift, and those instances where we have to correct previous cataloguing, picking or delivery mistakes, we must rely on the hot shot delivery.
The hare in our fable is a “hot shot” in many ways, sprinting here and there at a frenetic pace, expending considerable energy and even showing off a little for the crowd. Hot shot deliveries showcase our store’s commitment to serving our customer’s needs, but it can be physically, emotionally and financially draining. No wonder the hare decided to catch a quick nap! It’s easy to get caught up in the moment when it comes to hot shot delivery. If a “top 20” customer asks (or demands) us to drop everything and run, the first instinct for many is to dispatch the part with the first available delivery driver. This can quickly spiral into a shortage of available drivers (or even counter staff) as they scatter to the four winds, each with a single item or order. The problem is only compounded when multiple drivers are dispatched to the same general area, or, in some cases, the same customer! We need to coordinate the chaos to give our customers the best service possible.
For those stores with a dedicated outside salesperson, their daily or weekly sales routes are an established roadmap that can be used as a template for routed delivery. While a salesperson might spend all day maintaining relationships and making sales along a particular route, delivery personnel need only a fraction of that time to cover the same mileage and drop off the requested parts and supplies. Scheduled delivery twice or even three times a day is a real possibility in many markets, with a minimum of vehicles and drivers on the road at any given time. We can also maximize the profitability of route delivery by calling customers along the intended route ahead of time to identify any “last minute” needs before the driver even starts their engine.
Driver scheduling and dispatch requires a balance of “speedy” and “steady” to coordinate the chaos inherent in a successful store operation. Everyone admires the speed and agility of the running rabbit, but sometimes we also need a herd of turtles to get the job done. Knowing how to use both types of delivery effectively maximizes productivity and profits!
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By Counterman
You can get pretty much anything delivered if you want it badly enough. In the parts business, we’ve been doing it for decades, but delivery on demand has crept its way back into grocery and prepared foods, hardware, and many other industries. It’s not a new concept, only more efficient and widespread than it was at the turn of the 20th century, and even the 21st!
Instacart and other grocery services may seem like a modern marvel, but most grocery stores during the first half of the 20th century offered delivery, as did the local pharmacy, dairy, and a host of other businesses. The rise of suburbia (and the supermarket) after WWII threw a curveball into that business model as people became more mobile and spread out from urban centers.
Pizza delivery, especially the Domino’s “30 minutes or less” guarantee, has had a drastic effect on our own delivery operations. For traffic safety reasons, Domino’s no longer guarantees half-hour delivery, but the effectiveness of their advertising campaign still resonates with the public some 30 years later. At the parts counter, as well as with food delivery services like Doordash and GrubHub, there’s still an unspoken expectation that our items will be arriving at fixed intervals after the order is placed.
Fortunately, we don’t deal in perishable merchandise, so a delayed delivery doesn’t ruin the product. That doesn’t stop the phone from ringing off the hook with the dreaded “where’s my stuff?” calls, so we still need to keep up our pace to serve our commercial clientele. As soon as the call ends, or the online order is sent, we are “on the clock,” even if it is only the customer’s internal clock.
Auto parts deliveries generally fall into two categories; “hot shot” and “routed.” Dispatching these orders and staffing a delivery team depends greatly on your market, geography, and each customer’s expectations. If you recall the fable of the tortoise and the hare, the moral of the story was that “slow and steady wins the race.” Routed deliveries are the tortoise, quietly making steady progress in a direct path that ultimately got him to the finish line. The post office, UPS and Amazon all successfully make use of delivery routes. You can generally count on regular deliveries from each of these providers within a specific daily window, and most recipients are content to schedule work around these time slots. Stock orders, parts ordered in advance of a scheduled appointment, and customers at the edge of our service areas are prime candidates for route delivery. For emergency orders, vehicles tying up a lift, and those instances where we have to correct previous cataloguing, picking or delivery mistakes, we must rely on the hot shot delivery.
The hare in our fable is a “hot shot” in many ways, sprinting here and there at a frenetic pace, expending considerable energy and even showing off a little for the crowd. Hot shot deliveries showcase our store’s commitment to serving our customer’s needs, but it can be physically, emotionally and financially draining. No wonder the hare decided to catch a quick nap! It’s easy to get caught up in the moment when it comes to hot shot delivery. If a “top 20” customer asks (or demands) us to drop everything and run, the first instinct for many is to dispatch the part with the first available delivery driver. This can quickly spiral into a shortage of available drivers (or even counter staff) as they scatter to the four winds, each with a single item or order. The problem is only compounded when multiple drivers are dispatched to the same general area, or, in some cases, the same customer! We need to coordinate the chaos to give our customers the best service possible.
For those stores with a dedicated outside salesperson, their daily or weekly sales routes are an established roadmap that can be used as a template for routed delivery. While a salesperson might spend all day maintaining relationships and making sales along a particular route, delivery personnel need only a fraction of that time to cover the same mileage and drop off the requested parts and supplies. Scheduled delivery twice or even three times a day is a real possibility in many markets, with a minimum of vehicles and drivers on the road at any given time. We can also maximize the profitability of route delivery by calling customers along the intended route ahead of time to identify any “last minute” needs before the driver even starts their engine.
Driver scheduling and dispatch requires a balance of “speedy” and “steady” to coordinate the chaos inherent in a successful store operation. Everyone admires the speed and agility of the running rabbit, but sometimes we also need a herd of turtles to get the job done. Knowing how to use both types of delivery effectively maximizes productivity and profits!
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By TieRod
Hello everyone, new here. I am curious if anyone has sold parts on eBay or Amazon as a business. I don't just mean selling a few brake pads that you never used or something like that...lol. I mean a real functioning business where you are buying from a wholesaler or direct and then setting up your product online for sale. With that comes replenishment, margins, tax, etc. So I'm curious to know if this is working for anyone and how you got started, what software you are using, best practices, etc.
Thanks,
"Tie" Rod
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By Counterman
Steady. Adaptable. Resilient. Recession-proof.
These are a few of the superlatives that association leaders and members of the trade press (guilty as charged!) often use to describe the automotive aftermarket.
Sure, we may be biased. But we’re not the only ones drinking the proverbial Kool-Aid. Many of the same qualities that make the aftermarket a great place to do business also make it a tantalizing investment space for private equity.
In recent years, PE firms have been consummating deals at a steady clip. A few notable examples include Kohlberg & Co.’s majority-stake investment in Parts Authority in 2020; Hidden Harbor Capital Partners’ acquisition of Dayco in 2022; MidOcean Partners’ acquisition of Cloyes in 2022; and more recently, Kinderhook Industries’ acquisition of Auto-Wares in March.
When MidOcean acquired Cloyes (from Hidden Harbor) in February 2022, it was MidOcean’s third investment in the automotive aftermarket in a span of 15 months. At the time, MidOcean Managing Director Daniel Penn said the firm “continue[s] to see significant tailwinds” in the aftermarket.
One could argue that those tailwinds are stronger than ever today.
One of the most frequently cited tailwinds is the growing and aging light-vehicle parc. In 2022, the average age of light vehicles in the United States hit an all-time high of 12.2 years, even as the vehicle parc climbed to 283 million passenger cars and light trucks, according to S&P Global Mobility. Meanwhile, the number of eight- to 11-year-old vehicles – the so-called “sweet spot” for the aftermarket – is expected to increase incrementally through 2026, according to the 2023 Mergers & Acquisitions Outlook Report from Stifel and MEMA Aftermarket Suppliers.
One lingering impact of the pandemic – the semiconductor shortage – has provided another boost to the aftermarket. Surging demand for consumer electronics at the height of the pandemic triggered (or some might say exacerbated) a global chip shortage. The supply crunch has taken its toll on new-vehicle production, making it harder for dealers to get their hands on new inventory. The scarcity of new vehicles has goosed prices for new and used cars, trucks and SUVs. As a result, many motorists have had little choice but to hold on to their existing vehicles as long as they can.
It all supports the narrative that the automotive aftermarket is a safe haven for investment – in good times and bad.
“A lot of private-equity investors like it when there’s a stable, steady market,” explains Rick Schwartz, co-founder and managing partner of Schwartz Advisors. “Many people who haven’t dealt with private-equity firms misunderstand how PEs work. Most PEs that we deal with are interested in building businesses and creating jobs. When there’s a slow, steady, stable market, the question is, ‘Hey, if we buy a company – or even if we buy a collection of companies and roll them into one – can we somehow outpace the historical growth?’ Because if they can, that can make for a very attractive investment.”
Lightbulb Moment
Joe Sparacino, managing director, head of automotive aftermarket for Stifel, points to the Great Recession as a watershed moment when “lightbulbs went off in investors’ heads” that the automotive aftermarket was a great place to deploy their cash.
The Great Recession lasted from December 2007 to June 2009, according to the Federal Reserve, making it the longest – and deepest – recession since World War II. During the Great Recession, the unemployment rate more than doubled, and U.S. gross domestic product plummeted 4.3% from peak to trough.
Still, even with the economy in a tailspin, publicly traded parts retailers seemed to be doing just fine. O’Reilly Automotive, for example, reported a 42% year-over-year increase in full-year 2008 sales (and even scooped up specialty retailer CSK in a tough credit market). Full-year diluted earnings per share for AutoZone jumped nearly 18%, and the company announced several share buybacks in 2008.
Those examples of growth even in the most challenging economic conditions are among the reasons that the automotive aftermarket – hitherto lumped in with the rest of the auto industry – emerged as an attractive investment target for private equity.
“Consumers deferred purchasing new vehicles and therefore put more money into the vehicles they already had,” Sparacino says of the recession. “[Parts retailers] weren’t immune fully from the effects of the recession, but they did show stability through that period. And as the credit markets eased on the backside of the recession, private equity really took notice of the space, and you saw investments picking up a lot at that time.”
Checking All the Boxes
While the performance of the publicly traded parts retailers may have served as a proxy for the overall health of the aftermarket, investors discovered there was a lot to like when they peeled back the curtain.
One of the fundamental factors that PE investors consider is the total addressable market, or TAM. With a TAM pushing 300 million light-duty vehicles – and an aging one at that – the $1.8 trillion global aftermarket checks off an important box, says Schwartz. “There may be some industries where a private-equity investor may get excited about a specific business, but it’s not a really big market. How much can you grow it? The big VIO and the aging VIO make [the aftermarket] an attractive space.”
The aftermarket’s unique business landscape – its preponderance of small independents and mom-and-pop shops – only added to the allure. Mix in a long, favorable stretch of low interest rates, and it’s been a tantalizing cocktail for PE investors.
“You have a lot of family-owned businesses or privately held businesses where there isn’t necessarily a next generation,” Schwartz says. “That presents a good opportunity for the business owners to exit. There’s also an opportunity [for investors] to consolidate and get some scale and reduce some of the operating expenses.”
Sparacino adds: “It’s a very fragmented industry and there are clear benefits to scale. This dynamic has drawn private-equity investments in companies that can serve as platforms for consolidation.”
Collision Course
If any segment epitomizes the aftermarket’s favorable dynamics for PE investment, it’s collision repair.
Collision repair has been a bull market for consolidation, with a handful of players – Caliber Collision, Boyd Group and Service King – leading the initial charge. “During the beginning years, the initial consolidators were working on designing and creating the modeling that we’ve watched evolve into what it is today: a large platform of corporate-owned collision centers offering nationwide service,” Laura Gay explains
link hidden, please login to view. She adds: “Independent shops – both single and small multi-shop owners (MSOs) – sell right and left for many reasons, including COVID, financials, stress, staffing challenges, remaining profitable in the face of inflation and natural attrition.”
The M&A frenzy in collision repair has taken some dramatic twists and turns in recent years.
Service King, for example, was on the brink of bankruptcy before Clearlake Capital Group acquired the company in 2022 and simultaneously merged it with Crash Champions, creating an auto body conglomerate that boasts more than 550 locations in 35 states and the District of Columbia. In 2019, Hellman & Friedman acquired Caliber Collision and merged it with ABRA (which the PE firm had owned since 2014), creating the largest auto body MSO in the industry.
The consolidation is expected to continue, and some newer PE-backed players are emerging. For example, since New Mountain Capital acquired Classic Collision in 2020, the Atlanta-based MSO has expanded from 34 locations to more than 200 today. Meanwhile, TSG Consumer Partners acquired Joe Hudson’s Collision Centers in 2019, and the auto body chain has grown from 110 to 157 locations since the deal, according to the 2023 Mergers & Acquisitions Outlook Report.
“M&A activity from these [newer] platforms is expected to continue, and mergers among two or more of these entities is possible,” the report concludes.
Private equity has taken quite a shine to the carwash segment as well. Some recent deals include Atlantic Street Capital’s acquisition of Express Zips Car Wash in 2020; Golden Gate Capital’s acquisition of Tidal Wave Auto Spa in 2021; and Percheron Capital’s acquisition of Caliber Car Wash in late 2021.
“High fragmentation, strong cash flows, acquisition-multiple arbitrage and advancements in automation are among the many characteristics that make private-equity investment in the carwash sector increasingly attractive,” the Stifel/MEMA report explains. “Since the beginning of 2020, over a dozen private-equity-backed platforms have emerged, with every platform nearly doubling or tripling total site count since initial investment.”
Looking Ahead
With so many tailwinds and so many favorable dynamics, the automotive aftermarket likely will continue to be a compelling investment target for private equity. Sparacino and Schwartz expect segments such as collision repair, carwash and general repair/service – especially tire – to stay hot. Schwartz also believes that the heavy-duty market is starting to percolate.
The steady stream of PE investment certainly is a testament to the health and vitality of the automotive aftermarket. But it’s fair to ask: Is private equity a good thing for the aftermarket?
Sparacino and Schwartz believe it is. “The private-equity investors leading consolidations are growth-oriented,” Sparacino says. “They’re looking to back high-quality businesses in partnership with proven management teams to build even better companies.” When PE firms partner with strong businesses and leverage their financial resources and strategic expertise,
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By NAPA
When in search of a new-to-you vehicle, consumers are largely left with two options: dealerships and private sellers. Both have pros and cons, but if you decide to skip the
link hidden, please login to view, there are a few steps you should be sure to take. Knowing how to buy a car from a private seller can reduce the overall cost of a used car purchase, but you have to do your due diligence. Here’s a few tips for how to buy a car from a private seller. Research
With the right information, you’ll reduce the risk of being taken advantage of and be in a better spot to negotiate. Assuming you already know the type of vehicle you want, search available resources like
link hidden, please login to view to get a handle on what that vehicle at different years and mileages is worth. Ask a seller a lot of questions, including the vehicle’s history, usage, maintenance, mileage, VIN, known issues and any accidents or repairs. Use the VIN to pull up a history report online from link hidden, please login to view or link hidden, please login to view to ensure the title is not salvage, rebuilt, deemed a lemon or has any other substantial red flags such as existing liens. You can also run the VIN through the link hidden, please login to view for free to check for theft or salvage records. And if you need financing, get all that hammered out before heading into talks with a seller. How to Avoid Scams
Be aware of a number of potential scams for potential car buyers. Do not place money in escrow at the seller’s behest. Do not purchase a vehicle without a title or a title that’s not in the name of the seller. Match the VIN number from the windshield tag and door sticker to the title. If a seller’s answers don’t match up to a vehicle history report, that’s a red flag. Private sellers selling multiple cars may actually be a dealership selling damaged products under the radar. Sellers should be willing to meet in person. Beware of identity theft. Ultimately, if you have a bad feeling, trust your gut and walk away.
Protect Yourself
If you like what you hear, meet in a public place in the daytime and bring a friend. Take a picture of the seller’s driver’s license and send it to another friend who knows where you are. Also, get a photo of their insurance information, and check that their ID matches the name exactly as it appears on the title and registration, checking to make sure there are no additional names, etc. If emissions inspections are required in your state, ask for proof that the vehicle has passed.
Inspections
Operational inspections should include a test drive and basic use items such as
link hidden, please login to view, horn, windows, locks, steering, link hidden, please login to view, air conditioning and heat, radio, infotainment, cruise control, and general performance at stop-and-go and highway speeds. Check tire wear for any signs of unevenness that might hint at suspension or alignment issues. Use your senses to check for unusual sounds, smells and visual cues that tell you something is off. Use a link hidden, please login to view to look under the car for any rust or damage. Pull back the carpet at the edges to look for any signs of flood damage like silt or mold. Use a link hidden, please login to view to run any codes from the link hidden, please login to view port. All OBD systems should read ready, if not then the computer memory may have been recently wiped to hide a trouble code. You can also have your local link hidden, please login to view perform a pre-purchase inspection. If the seller balks at an professional inspection, walk away. Negotiations
If all checks out, negotiate a fair price. Know that it will likely be higher than you want and lower than they want; that’s just the nature of negotiation. As a final precaution, make the purchase contingent on passing a pre-purchase inspection, which you can get at your local
link hidden, please login to view. Save this as the last step and be prepared to buy if the vehicle passes. Ensure the bill of sale and title transfer are accurately filled out, make sure you’re covered for insurance before you drive away and don’t forget to register the car in your name. Congratulations on your new-to-you vehicle! Now protect your new ride with a good set of
link hidden, please login to view and give it a unique look with link hidden, please login to view. Check out all the code
link hidden, please login to view available on link hidden, please login to view, or trust one of our 17,000 link hidden, please login to view for routine maintenance and repairs. For more information on how to buy a car from a private seller, chat with a knowledgeable expert at your link hidden, please login to view. Photos courtesy of Blair Lampe.
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