Lang Aftermarket iReport: 2 business models reshaping how & where consumers have their vehicles serviced

“Two Do-It-For-Me (DIFM) business models, based on increasing customer convenience, are changing how parts are purchased and where vehicles are serviced: mobile auto service and online parts shopping coupled with installation networks. These two innovations in the DIFM light vehicle market are gaining share both globally and domestically and reshaping repair outlet (site) competition and disrupting traditional DIFM value chains.

“Both of these business models embody O2O (online to offline) transactions that increase DIFM convenience and expand the range of vehicle products and services purchased online.”

– Jim Lang, Lang Aftermarket iReport

Two fast-growing O2O (online to offline) business models are increasing customer convenience in the light vehicle Do-For-For-Me (DIFM) market and disrupting the competitive dynamics and value chains of that market.

Mobile Auto Service

Mobile auto service is less than 5% in most categories, excepting windshield repair where 60-70% of non-collision service is mobile. However, both the number of players and market size are growing rapidly.

Mobile auto service offers consumers on-site auto repair and maintenance. Major players include Your Mechanic, Amazon Home Services, Yoshi and, most recently, Pep Boys.

Your Mechanic and Amazon Home Services offer an expanding range of on-site vehicle repairs in a growing number of markets across the U.S.

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Pep Boys has recently entered the mobile auto repair market with its Mobile Crew program that provides on-site preventative maintenance and repairs.

Yoshi is a fuel delivery service that also provides vehicle fluid maintenance and some parts replacement such as cabin filters, windshield wipers, etc. Yoshi is presently active in over 25 markets across the country and has aggressive plans for expansion.

Online Parts Shopping and Installation Networks

Another type of O2O DIFM model couples online parts shopping with installer networks.

Tires were one of the first product groups targeted by this business model.

Tire Rack has topped $1 billion in annual sales and has expanded its online sales beyond tires to include wheels and undercar products such as suspension parts, shock absorbers, etc.

eBay sells batteries online that can be installed by a network of installers. eBay is expanding into other products with this O2O DIFM model.

Amazon is also pursuing this DIFM approach, recently announcing that tires purchased on its website can be installed at Sears outlets across the country and other authorized outlets.

According the AASA and RB’s upcoming Study on ‘New Retail’ “offerings in the aftermarket today are primarily exclusive to basic maintenance and light repair (addressing approximately 35% of the DIFM market)…However, the ongoing enhancement of vehicle diagnostics availability, intelligent components, and linkage to big-data could expand the addressable market to encompass more than 50% of DIFM offerings by 2030)”.

O2O DIFM

These DIFM business models, which provide auto service convenience beyond that available from conventional brick and mortar outlets, are O2O (offline to online) enterprises.

With mobile auto service, consumers order repairs online (using apps) that are performed by mobile technicians (offline).

In the model pioneered by Tire Rack, consumers purchase vehicle products online and have them installed by a network of outlets (offline).

Consumer Benefits

These two O2O DIFM models provide consumers with a wide range of benefits including convenience, cost and time savings, as well as eliminating the hassle that is common to the Install-It-For-Me market.

Convenience

One of the greatest benefits of these two O2O auto repair models is the convenience of ordering parts and services online and avoiding the trip to a brick and mortar parts store. Mobile service offers the added convenience of on-site auto repair, enabling consumers to choose the time and place of repair.

Cost and Time Savings

Many businesses involved in this new convenient auto service claim they provide parts and services less expensively than brick and mortar repair outlets and also save consumers time.

No Hassle Installation

Finally, using network installers eliminates the hassle of Install-It-For-Me, in which consumers purchase vehicle parts online and take them to an outlet (which is not affiliated with the site where they purchased parts) with the hope that the outlet will install them.

Six Major Takeaways

• Based on increasing customer convenience, two business models are reshaping how and where consumers have their vehicles serviced: mobile auto service and online parts shopping coupled with installation networks.

• These two models embody O2O (online-to-offline) transactions. In the case of mobile auto service, consumers schedule the service online (using an app) which is then provided (offline) at the site they chose. Purchasing products online and having them installed by a network of outlets is another O2O DIFM model.

• These two emerging O2O auto repair models provide consumers with a wide range of benefits ranging from convenience, cost and time savings, more informed purchases to eliminating the hassle common to other types of Install-It-For-Me market transactions that do not include a network of installers. O2O DIFM models are disrupting how aftermarket products are purchased, the DIFM value chain, and how consumers select where vehicles are serviced.

• In the case of purchasing parts online coupled with installer networks, consumers rather than installers select product brands. This is a major change from the conventional DIFM market in which most brand decisions are made by installers, and it could have significant implications for the brand marketing of auto parts.

• Ongoing enhancement of vehicle diagnostics and linkage to big-data could increase the scope of repair and maintenance for the O2O DIFM from 35% to nearly 50% by 2030.

• Both of these O2O DIFM models provide the opportunity for parts to be delivered to repair points on a just-in-time basis.

Roland Berger, one of the leading global consultancy firms, and AASA will share the groundbreaking analysis of how these new distribution and service models will impact the aftermarket – and what strategies aftermarket businesses need to adopt now to succeed at the upcoming 2019 AASA Vision Conference on Wednesday, April 3rd, at The Henry, Dearborn, Michigan. Barry Neal, a partner at Roland Berger, will be sharing key outcomes and perspectives from the upcoming joint RB/AASA study “Digital Transformation: The ‘New Retail’ Future of the Aftermarket (and How to Win).”

Copyright 2019 by Lang Marketing Resources, Inc.

NOTE: Special thanks to publisher Jim Lang for granting us permission to publish the Lang Aftermarket iReport.