E-Commerce, Exports to Turbocharge the Vehicle Accessory Industry

Ahead of the 2018 SEMA Show, let’s look at the greatest opportunities for aspiring automotive leaders.

The Specialty Equipment Market Association likes to say its members don’t sell products that customers need. SEMA members sell products that customers crave, products designed to customize or enhance the performance, handling and appearance of their vehicles, both new and old.

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E-commerce and exports are major opportunities for small businesses in the auto industry.

Exhaust, suspension and body kits. Spoilers. Custom wheels. Horsepower-enhancing engine modifications. Restoration parts for classic vehicles. Sound systems. Luggage racks.

Founded 55 years ago by a legendary circle of vehicle tinkerers and custom-car pioneers, including Dean Moon and Roy Richter, SEMA’s members have always been vehicle lovers who sell gearhead products to other vehicle lovers.

There are a lot of vehicle lovers out there. In 2018, industry-wide retail sales are expected to approach $45 billion.

And yet, SEMA members’ sales have increased modestly – growing at a compound annual rate of just under 4 percent over the past five years, according to the group’s data – despite a booming economy, low unemployment and high consumer confidence in the United States, the industry’s No.1 market by far.

So as SEMA members gather this week in Las Vegas for the trade group’s annual show, many are looking for ways to turbocharge their revenue. And many are focusing on two areas that appear to offer companies in the industry – many of them small businesses – the promise of a big payoff: e-commerce and international sales.

Both areas are attractive. Both are best entered with care.

The New Products Showcase is the No. 1 destination for SEMA Show buyer and media attendees.

A bright spot

E-commerce happens to be one of the specialty equipment industry’s bright spots, with online sales growing four to five times faster than overall retail sales.

And this is 2018. So the barriers to getting your business online are pretty low. Even companies going online for the first time will find plenty of partners out there who can quickly develop and deploy your online store. And there are plenty of other partners who will help drive customers to your e-commerce site.

But as the annual UPS Pulse of the Online Shopper™ Study shows, the online market is changing fast. It does not stand still. It challenges digital incumbents, as well as newcomers.

As part of the study, UPS looked specifically at online parts and accessories shoppers. The study revealed that online parts and equipment shoppers have high and rapidly rising expectations when it comes to the customer experience.

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The online market does not stand still. It challenges digital incumbents, as well as newcomers.

So for starters, if you’re thinking about taking your specialty equipment business online, you’re going to need more than a website. You may need your own retail app.

No matter what, you’ll need a site that is smartphone compatible because many buyers in the space now expect to conduct the entire transaction on their mobile device.

The challenges don’t end there. As your customers use their smartphones to check your offerings (and swipe back and forth between the offerings of all your competitors), your website or app has to offer them inventory transparency and guaranteed delivery options.

Is that delivery free? How about returns?

Both are a big deal to many online shoppers (for the UPS Pulse of the Online Shopper Study findings on automotive parts and accessories shoppers, click here).

Going international

Taking your specialty equipment business international also presents a tremendous opportunity.

The world beckons. Growing household income outside North America, and the rise of a global middle class, has lifted car ownership levels all over the world.

North America is where the specialty equipment business was born and grew to be what it is today. Its future is elsewhere.

The numbers tell the tale. Of the more than 86 million light vehicles sold last year, according to the auto research firm JATO, less than a quarter – 20.9 million – were sold in North America.

China, of course, is now the world’s largest vehicle market with 25.8 million sold last year. But India, Brazil, Thailand, Argentina, Australia and Russia are fast-growing vehicle markets as well – and all might be worth a SWOT analysis by specialty parts makers with overseas hopes.

Yet while every business will identify different strengths, weaknesses, opportunities and threats as they analyze a potential overseas market, most businesses, especially small businesses, will share something in the weakness department: inexperience with the complex international regulations, tariffs, penalties and paperwork exporting involves.

Every country has its own regulatory peculiarities and policy obstacles that can add cost and time to digital trade and trip up businesses entering a new market without consulting – and memorizing – the roadmap.

Click here to read the Executive Summary.

Longitudes recently published a piece by my UPS colleague Nadir Moreno, highlighting the challenges in Brazil, one of the world’s fast-growing auto markets. Among them? A fickle customs system where minor errors or omissions in paperwork can trigger interminable delays in processing. In other countries, those mistakes can generate hefty fines to boot.

SEMA also provides resources for members looking for assistance as they consider potential overseas markets.

Mastering e-commerce and exports

UPS can also help. We know a thing or two about e-commerce – from ordering to fulfillment to delivery to returns – and we offer a host of services and flexible shipping to empower your online business.

We also know international shipping and have the tools and expertise to help you navigate regulations, clear customs and get your shipments to your customers no matter where they are in the world.

And if exporting creates cash-flow issues by tying up working capital, UPS Capital has a variety of financial, insurance and payment products to assist you in your journey.

For SEMA members – and any automotive business looking to turbocharge their results – now is the time to tap into the power of e-commerce and exports.

Can you really afford to sit on the sidelines any longer?

Photos courtesy of SEMA.

Darryl Barber is Marketing Manager for UPS's automotive segment.

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