The aftermarket auto part industry has grown into a fiercely competitive arena. The aftermarket industry of our parents and grandparents was dominated by a few premium, best-in-class brands. The product quality of the top brands served as their marketing, differentiation and price justification. As long as their product quality remained top notch, they could enjoy reliable sales.
This security fell away as globalization changed all American manufacturing markets. Brands began to compete with foreign products often sold at a steep discount compared to the prices set by entrenched players. Fast forward to today, and the landscape has changed dramatically.
Now, U.S. aftermarket brands must contend with upstart companies that have access to cheaper manufacturing and viable patents. Additionally, they face the constant threat of foreign factories producing knockoff or even counterfeit versions of their premium parts.
The peaceful age of the aftermarket world has passed. Despite this transformation, numerous auto industry manufacturers have not yet updated their pricing practices to thrive in the modern market. Now, even the most illustrious brands are forced to level up their go-to-market strategy and have a constant view of how they relate to competitors on product offerings, features and price points.
In the same way that a car needs wheels to function, auto part brands need competitive intelligence to drive a successful pricing strategy. To illustrate the value of competitive data, consider these key use cases.
Evaluate Where Your Products are Winning or Losing at Retailers
In 2023, the retail distribution segment for aftermarket parts held 55.5% of total sales. Over half of aftermarket parts are sold by retailers like O’Reilly or AutoZone, meaning that the competitive intelligence drill should first be pointed at key retailers. There are two aspects to this.
The first is having visibility into the prices at which a retailer is listing your brand’s products. What do you calculate their margins to be? Is that consistent across parts? How often are your products on promotion? How will you use that knowledge in your next meeting with your retailer counterpart?
The second is understanding the competitive positioning of your key products at that retailer compared to your top competitors’ offerings. For instance, Cardone Industries and Wagner Brake compete fiercely in the brake caliper repair kit category. If competitive data revealed that Wagner’s prices in the category were 20% less expensive than Cardone’s on O’Reilly’s website,that would mean Wagner would likely secure a sale to a price sensitive buyer. However, if Wagner Brake seeks to maintain a brand image that promises higher quality products for a premium price, being less expensive could be counterproductive. Competitive data provides diagnostic information that helps guide brands’ price & promotion positioning.
Win RFPs/Competitive Bids to Gain Market Share at Dealers
Auto part retailers are constantly optimizing their product assortments through line reviews and other activities. Retailers will publish requests for proposal (RFP) throughout the year and seek competitive bids to revise their brand assortment. The best way to win these bids? Knowing more about the competitors’ fill rates, brand positioning, and price points. Using competitive intelligence, brands can obtain on demand visibility into their competitors’ in-stock rates across their dealerbases alongside their price and promotional positioning.
Armed with this data, brands can strategically approach line reviews and competitive bid opportunities. For instance, demonstrating that competing brands had a 40% out-of-stock rate last quarter can significantly enhance the chances of securing more shelf space for your brand. Conversely, if a competitor brands’ frequent promotions indicate sales challenges, you can position your brand as a more reliable and profitable option.
Succeeding when unscheduled competitive bid opportunities arise requires immediate access to market data. Understanding your brand’s relative strengths and weaknesses compared to the other brands that you know are in the bid allows you to influence decision-makers effectively. If your brand only has 20% of the shelf today, what would the value be of having 40% of the shelf after a successful competitive bid?
Monitor for Startup Brands That May Grow Into Direct Competition
Your rival brands of today may not be your rivals tomorrow. This industry is a whirlwind of new brands popping up and legacy manufacturers being acquired or going out of business. By the time most entrenched brands realize they have a new competitor, they’ve already lost valuable market share. By identifying potential competitors early on, companies can mitigate the risks associated with market disruption. By proactively addressing these threats, companies can take steps to reduce costs, differentiate their products, and prepare for competitive pricing battles.
One customer of ours conducts monthly keyword searches on relevant product terms like exhaust manifolds to see which new brands and offerings retailers are carrying. Knowing when and where the “ankle-biters” are coming prevents panic & lost profit later on.
Protect your Brand Image by Finding Knockoffs on Marketplaces
No American aftermarket auto part brand is safe from unscrupulous Far East factories. I’ve heard a dozen different stories of a brand finding what appears to be their exact part on an eBay or Amazon marketplace for a fraction of their Minimum Advertised Price and, in some cases, even their cost! Not only does this dilute their brand image, but faulty knockoff parts can result in safety concerns or negative publicity. You can’t take the necessary legal actions, through programs like eBay’s VeRO (Verified Rights Owner), without knowing about it. We assist some of our auto industry customers by identifying potentially gray market listings for them; giving their Legal and Brand Protection teams a hit list to pursue. Competitive intelligence is more than just price monitoring. It can help flag knockoffs without forcing team members to manually check through the site itself, enabling brands to better address threats to their brand integrity.
Shifting Gears for the Future
Creative and enterprising auto aftermarket brands have come up with even more uses for eCommerce market data beyond these. For example, the steady increase of brands deploying direct to consumer stores offers more targets for harvesting competitive intelligence. I anticipate that the 55.5% market share currently held by aftermarket retailers will gradually decline as consumers increasingly opt for direct online purchases from brands.
With the annual SEMA/AAPEX conference approaching, consider the strategic advantage of having access to real-time retailer promotion, stock, and pricing data. By leveraging competitive intelligence, your team can position your brand as a trusted advisor, empowering its retail partners to make data-driven and profit driving decisions.
QL2 monitors a large library of auto part retail websites & marketplaces today, analyzing tens of thousands of part numbers for the benefit of manufacturers and retailers alike. Whether your business goals align with the use cases discussed or you seek to disrupt your go-to-market strategy, we are equipped to empower your efforts through on-demand market data acquisition.
