Online sales of auto parts and accessories in the United States have exceeded $16 billion in 2020. That was a nearly 30% increase from 2019 when sales were at $12.3 billion. Statistics indicate that 2021 will see around $17.7 billion in sales and reach $21.4 billion by 2023.
In addition, the majority of auto parts and accessory websites have more than 65% of their traffic on mobile devices. One of the patterns in internet shopping that will continue is this. To this end, many have looked to start their own eCommerce business on Amazon. Amazon is the biggest online retailer of auto parts and accessories, with an industry share exceeding 60%.
It can be challenging to know how much it costs to sell auto parts on Amazon. As a reseller or manufacturer of automotive aftermarket products, what do you need to consider when setting prices? What are your fulfillment costs? How does Amazon FBA work?
Because there are so many different types of listings—new items versus used ones; fulfilled by Amazon (FBA) shipments versus merchant-fulfilled ones—and because sellers have different needs for their Amazon business, it’s not possible to give an exact number. This article will discuss some of the administrative and management costs of selling auto parts on Amazon as a retailer.
The Challenge of Selling Auto Parts Online
With a wide range of goods for sale and the transition to internet auto part sales well underway, it’s an excellent time for internet merchants to get involved. But, like in every sector, you must not enter blind to the dangers. There will undoubtedly be obstacles. The best approach to ensure your success is by being aware of the hazards and having methods for dealing with them.
It’s also crucial to remember that each market is unique. So, whether you sell on Amazon, eBay, Walmart, or in the United States, United Kingdom, Germany, Australia, or somewhere else around the world, the items available and priced may vary significantly. This might be due to cultural differences in demand and purchasing habits; alternatively, it could be due to local sellers’ access and pricing of goods.
Amazon is one of the largest eCommerce marketplaces globally, and Amazon’s U.S. site sells over 200 million products every year. However, Amazon has a presence across Europe, Asia-Pacific regions, and more; Amazon provides an international business opportunity for everyone willing to take it on!
What Are the Costs Of Selling on Amazon?
While selling auto parts and accessories on Amazon relieves the retailer from some costs that would, otherwise, be needed, like is the case with a brick-and-mortar store, there are still several costs that need to be considered. Amazon offers several different types of fees for Amazon sellers.
The Amazon fee structure is very complicated. Amazon can charge a lot when running an Amazon store, especially when considering that Amazon’s price-per-click has been rising. In addition to these costs, there are also marketing expenses that need to be considered and advertising on Amazon Seller Central, which can add up quickly.
The first step toward offering your products through Amazon is creating a seller account and registering with Fulfillment by Amazon (FBA). This gives you access to Amazon Prime customers who expect quick shipping times along with free returns policy.
The second part includes setting up your inventory correctly so that processing purchase orders can be automated, reducing any time spent manually preparing shipments to Amazon warehouses.
There are also Amazon fees and fulfillment costs that must be considered. Amazon charges a referral fee per product sold, which is usually between 15% and 20%. Amazon also charges a monthly storage fee for inventory that isn’t being sold. The amount varies based on the size of your item and Amazon may charge a pick-and-pack fee. Amazon also charges fees for some services like Amazon Web Services. There are also charges for product-specific fees like Amazon Marketing Services and Amazon Webstore.
The third part of selling on Amazon is Amazon Sponsored Ads. Amazon has a very sophisticated advertising platform that lets you promote your products to specific audiences and it can be expensive, especially when Amazon’s price-per-click is considered.
Auto parts retailers should also consider the merchandising tool-specific subscription fees for those who want to use them. They include product photography expenses, web hosting costs for your website or blog post content storage space on another platform like Medium or LinkedIn, customer service time spent communicating with buyers via email, and other tools/chat systems.
These costs can quickly add up, and Amazon sellers need to consider them carefully if they want their Amazon store to be profitable.
Managing Costs of Selling Auto Parts and Accessories on Amazon
Unlike all other industries, the automotive aftermarket sector needs to consider fitment data and its accuracy if they wish to increase their sales and remain competitive on Amazon and all other sales channels. Fitment data is the type of information that lets potential buyers know whether or not the particular part or accessory will fit their vehicle model.
Having incorrect fitment information is a serious problem that poses significant difficulties for buyers and sellers with faulty product titles and incomplete coverage of their inventory items. This is due to missing vehicle models, manufacturers’ part numbers (MPNs), and other such issues.
In addition, it can be incredibly time-consuming to add the right fitment data for each component and make sure that it remains up-to-date. Manage Amazon listings well often necessitates the use of specialized tools. In order to be successful, relying on your Parts Manager to generate and manage listings, alter shipping costs, and track sales will take a lot of effort. On top of managing all the current orders that come in via phone and the service department, it’s likely that your Parts Manager is already too busy to put your complete inventory online.
If you were to do it yourself, it’s important to keep in mind that it can take, on average, between 2 to 4 listings per hour to add all of the correct information properly. If you were to have, say, 3,000 products in your inventory, that would come to around 750 hours (5 months) to complete everything.
To get those 3,000 parts and accessories on Amazon would take your Parts Manager almost half the year, not including any holidays. This doesn’t include adjustments to the listings, parts sold, or new inventory that comes in. To manage your Amazon auto parts stores with this much workforce, you may need to hire additional team members. Hiring another salaried employee to handle your eCommerce site might set you back anything from $50,000 to $70,000 a year. This price doesn’t account for your listing fees on Amazon.
How To Lower Your Costs and Increase Sales At The Same Time?
Numerous strategies will help you get more sales, such as using targeted keywords in your titles and product description, using quality product images, providing excellent customer service, focusing on car parts and accessories that sell, and more. However, none of these strategies also help you lower your costs at the same time.
The best way to tackle both at the same time is to focus your attention on properly managing your fitment data. The good news is that Amazon has a large selection of catalogs in which their merchants can utilize their fitment data. You won’t have to supply your own information if your components are already listed in Amazon’s records.
Some components, on the other hand, might be lacking. Custom-made elements may be missing from any official list, so you’ll have to input the data yourself. You can either do it via research (looking up its fitment data on your own) or seek assistance from a fitment data source.
Regardless, as an automotive parts dealer, you must keep your fitment data on Amazon up-to-date and ensure that it is accurate, properly formatted, and as comprehensive as possible. It’s also better if you include extensive compatibility information.
The Auto Care Association’s Vehicle Configuration database is Amazon’s main source of vehicle information. It would be ideal if your data was also maintained in the VCdb and updated on a monthly basis, in line with it.
Because Amazon has hundreds of millions of potential consumers, businesses flock to it. The prospect for income and sales volume on this internet marketplace is enormous. It’s also simple to start an automobile parts shop.
Create an Amazon account and sign up for its Professional Selling plan once you’ve determined what sort of components you’ll sell (new or refurbished, genuine or replacement, or even third-party). To access specific categories such as the Automotive & Powersports category, refurbished parts, and genuine brand parts, you’ll need to get Amazon’s approval.
To get approval, you must fulfill all of Amazon’s basic and picture standards. When you’re ready to launch your store, make sure you submit the correct fitment information in the proper format. Accurate and complete data is a critical ingredient in any successful automobile parts company. It ensures that your consumers do not receive the wrong part, and will not look elsewhere for greater knowledge.
If you’ve been reading this far and are still unsure about the difference between a spin class, spinning, or indoor cycling, please contact myFitment. It isn’t easy to navigate Amazon’s depths, and we’d be delighted to assist you in coming out on top!
