Digitalisation has been reshaping the automotive industry for some time, and the pandemic has accelerated numerous projects and driven businesses into unchartered digital territories. The car aftermarket business model finds itself in a particular transformative moment, with the emergence of new digital sales channels and new customer behaviour being the main change drivers.
The spare parts distribution model has changed over the last decade, with the players adopting an omnichannel approach to respond to customers’ requirements. Inter Cars, a leading distributor of spare parts for passenger cars and trucks, put a formal start of its digital transformation journey in 2015, and it has been an ongoing initiative ever since. The company made its debut in the aftermarket segment over 30 years ago, initially in Poland and eventually expanding to 20 markets across Europe. The company is the largest spare parts distributor in CEE, the second in Europe and number eight globally. Now, with an omnichannel approach, the company is preparing for the future to keep its competitive edge and thrive in a new digital economy business model. In 2015, several projects triggered the digitalization process at Inter Cars, starting with its flagship project – Inter Cars’ new B2B e-commerce system, the e-Catalog.
“The B2B e-commerce platform is practically responsible for 99% of our revenue – whether the customer alone is self-serving or the sales operator is using it to support the customer,” explains Momchil Kovachev, Chief Digital Officer (CDO) Inter Cars.
Also, to meet the actual demands of e-commerce and tackle the automotive aftermarket challenges, Inter Cars initiated a significant redesign of its Product Information Management system and integration layer. The current product database in the e-Catalog is more than 8 million active SKUs and growing.
The omnichannel approach
Currently, Inter Cars provides an omnichannel service to its customers, with a presence both online and onsite, in repair shops and other physical channels, but the market is going more and more in the direction of self-service, meaning that more workshops are identifying and ordering the parts needed alone.
“Over the last ten years, I have seen a clear trend for customers to self-service and compare the offering between the different suppliers over the e-commerce channel. Workshops and parts shops usually have several catalogues open in different browser tabs and copy/paste the article. In some Nordic markets, we can see marketplaces have been established, which is not the case in the CEE. For me, the e-commerce tool is still a competitive advantage for each spare parts distributor, and we are investing in ours heavily.” – Momchil Kovachev, Chief Digital Officer (CDO) Inter Cars.
The B2B e-commerce solution is available in all the company’s markets. The company aims to offer a solution for the professionals in their daily activities – identification of parts, repair data, placing orders and after-sales services. The features are unified between the markets. However, notes Momchil Kovachev, there are some geographical specifics. For example, the percentage of self-service in the Baltics is significantly higher than in Poland and the Balkan area. Some markets have centralized services for searching the vehicle by the registration plate. “It would be great to see our Balkan region catching up with this. In Poland, for reference, the registration papers have QR codes which can be used for machine-reading and faster vehicle identification.” And although the focus is on the B2B segment and Inter Cars remain true to the long-lasting partnerships with the workshops, in some markets, the company is searching for synergetic ways of interacting with the retail user by providing standard value-added services with the workshop. “This is the case with the Motointegrator platform, launched in Romania but has been used on several CEE markets over the last years. Another example of those efforts is our Fleet services available in several markets. There are product groups we will avoid listing on B2C channels and others that are adequate – let’s take accessories, for example. For western Europe, we have opened B2C e-commerce businesses to grow our market share further – this is the case with Germany, France, Netherlands and Austria. We will surely increase our presence with B2C shops in WE further.”
Reconfiguring the supply chain
Digitalization has significantly impacted the business’s supply chain and logistics side. The first essential element to change was switching from displaying the availability of items at given locations to displaying delivery time to the customers and allowing them to select which delivery route to take for their order. “This provided better planning options for the workshops but increased the requirements for our warehouses and endpoints – the branches. Furthermore, we have tightly integrated with most of our suppliers’ stock. This information is available in an adequate way in our e-commerce solution, and we support it over automated backorder processing mechanisms. Today, for the workshop, it is easy to see a slow-mover available for three business days and order it. The complexity of ordering it within some order cut-off time, courier parcel tracking and cross-docking over several warehouses in CEE is invisible to the customer. We are constantly updating our objectives based on market feedback, technological trends and our business strategy,” argues Inter Cars’ CDO.
Top trends that define the automotive aftermarket sector
Speaking about trends that will reshape the aftermarket sector, Momchil Kovachev says that in a 5-year time horizon, access to data for the workshops will become crucial.
“Modern vehicles require deep understanding and knowledge of their sophisticated systems. The integration with repair data providers in our IC e-Catalog is our answer. On the other hand, more and more vehicles have online connectivity to their onboard diagnostic data, putting the authorized dealerships in a favourable position compared to the free automotive aftermarket workshops.”
Another trend he sees on the market, or rather a challenge for the industry, especially in the Balkan region, is the lack of new coming mechanics in the workshops. Inter Cars tries to ease the situation through the Young Car Mechanic initiative, an international competition for students of technical high schools. The main objective is to spread awareness among young people on the occupation of a car mechanic, share experience and learning methods and find young talents in the field of mechanics and servicing motor vehicles. A third important trend, Momchil notes, is related to the expectation of vehicle owners/drivers. ”End customers are comparing the services in different industries, and this is raising the expectations of our industry.”
Regarding the electrification of the vehicle fleet – he doesn’t expect significant moves in the 5-year horizon, although the change on the manufacturers’ side is already clear. “We are operating in the independent automotive aftermarket in CEE. The average vehicle car park is well over ten years old. If the trend for switching to electric vehicles is going to be as massive as described currently, we will have roughly five years to adjust and adapt. Theoretically, engine parts, exhaust and maintenance should decrease in favour of other product groups. We are partnering with the parts manufacturers, which are delivering the technology to the vehicle manufacturers. I am more interested in vehicle ownership change from private individuals to lease or shared service. In all those areas, Inter Cars is running pilot projects and is investigating the possible business cases.”
