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Jumping on the E-Commerce Bandwagon

Though the dotcoms have had a rough few years, doing business over the Internet isn’t a bust. Quite the contrary. Though it’s wise to look before you leap, repairers who take advantage early will claim a huge share of the market and reduce their costs. Repairers who refuse to get on and stand in the way of progress may simply get run over.<

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We’re now just passing the two-year mark since many high-profile companies introduced the idea of utilizing the Internet to revolutionize our industry (and many others). Wall Street refers to this time frame as the “dotcom” period – when many promises were made but few were kept.

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A year or so ago, many of us began wondering when the “promised” products would become available to revolutionize our industry. Few materialized. Consequently, the stock market crash reflected this lack of tangible revenue-generating solutions. Investors began to prefer profitable ventures that made sense, rather than burning millions of dollars each month to make people aware of the “possibilities.”

Though I may sound like I’m against e-commerce, this is far from the truth (and I assure you that my 401k profile reflects this). I believe 100 percent in technology and that new ideas will change our industry.

How will new ideas change us? Let me count the ways. Let’s take a look, for example, at how parts handling will change:

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  • Parts will be delivered to our door when needed without going through the telephone or fax.
  • Parts ordering will be automated so when the job is scheduled, parts will be identified and scheduled for delivery.
  • If recycled parts are warranted, they’ll also be scheduled, and digital images will be sent to verify condition.
  • When parts arrive, parts prices will already have been verified in our management system so we only have to verify that we received them.
  • The status of the vehicle will be automatically updated on the Web when the parts arrive.
  • Supplements for parts increases will automatically be tracked and produced when a final bill is sent.
  • Funds for the job will be transmitted within days directly to the bank, and your accounting system will be updated to reflect the payments.

And these are just the parts handling changes that are in store.

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But before these – and other – changes can occur, there will be failures. This is one of the greatest dangers in attempting to be a market leader – as evidenced by the many Internet vendors who had great ideas but couldn’t execute them. But the thing to remember here is that it’s a double-edged sword. You can get cut during this “live and learn” period, but if you’re too slow to get involved in e-commerce – or refuse to get involved at all – you may be cutting off your nose to spite your face.

So what types of e-commerce options are available and just what obstacles still need overcome before we can put our failures behind us? Let’s take a look …

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E-Commerce Categories
E-commerce solutions can be broken down into three basic categories:

  1. Business to Customer (B2C)
  2. Business to Business (B2B)
  3. Business to Employee (B2E)

Sometimes companies will concentrate on a single category, or they may offer solutions that will be included in more than one category. They can also accomplish this with a single product or program, or they offer individual products that fall into one or more of the three main categories.

Let’s take a look at all three of these in more detail.

Business to Customer
B2C offerings are currently the most common and were once thought to be the “get rich” idea of the 1990s. This offering is designed to sell a business’ products and services directly to the end user, who are normally retail customers.

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A recently published article in “Business 2.0” magazine, citing a Forrester Research Inc. study, projected consumer Internet sales to grow to $108 billion by 2003. Knowing that years ago B2C sales figures were minimal but are now projected to reach $108 billion causes many companies to wish to be the next Amazon, eBay or mega shopping site. And why not? Selling over the Internet can and has significantly reduced what it costs businesses to sell products.

And B2C offerings are a part of our global industry in many areas, i.e. aftermarket parts (not crash parts per se, but wheels, accessories, etc.). Currently, aftermarket sales have surpassed $142 billion worldwide. Definitely a far cry from the small corner accessory shops that lined the streets in the 1960s and ’70s. The Internet has made availability simple: If ordered by 5 p.m. today, it’ll be there tomorrow – all without leaving your home or computer.

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What about B2C and collision repair? There are thousands of sites that can be considered at least partly B2C in our industry. They include such offerings as:

  • CollisionServices.com – provider of body shop supplies, equipment and forms for our industry.
  • NAPAOnline.com – provider of auto-related parts, supplies, and accessories.
  • OnTool.com – provider of services and tools.
  • SnapOn.com – provider of tools and equipment.

Most of these types of offerings include a “shopping cart” system allowing anyone (normally with a credit card) to window shop, research products and purchase merchandise directly from the company without sales personnel or representatives bothering them. This can be very enticing to many people.

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There are also some very industry-specific offerings with a slightly different spin. Some may argue that they fit more within the next category, B2B, but they also interact directly with your customers, which qualifies them as a B2C offering as well.

These include vehicle status programs, which keep customers up-to-date as to the status of their vehicles. (Though these offerings are minimal today, they’re expected to increase within a year.) Progress.com currently offers this service and Mitchell International’s emitchell.com will soon follow. A few management systems have also begun to offer this uploading capability to allow customers to view their vehicle’s status.

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Also, CSI companies will be developing and offering the option of web-based CSI interviews. Instead of calling customers to survey them, they’ll offer customers the ability to go to the Internet to fill out the shop survey.

Business to Business
Most analysts agree that B2B offerings will be the biggest boon. The Forrester Research Inc. study that projected consumer Internet sales to grow to $108 billion by 2003 also predicted that B2B sales during the same period could grow as large as $1 trillion.

B2B offerings involve your business with a product, service or program from another business. These offerings can be as simple as you connecting online to a business’ inventory of products for purchase as a wholesale account. They can also be as robust as managing your payroll, accounting, estimating, digital imaging, insurance assignments, parts ordering and tracking, etc.

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When outsiders – and insiders – first looked at the revenue potential in our industry with e-commerce B2B offerings, they looked at supply chain integration as the grand slam. Heck, at the time, our industry was full of proprietary software products. Heck, we could barely bring another vendor’s estimate into our management system cleanly. (Can we now?) Not to mention, generally one of the biggest frustrations to shop owners is getting and managing parts.

This is where the new industry dotcoms focused last year because many of their pricing models include them as middlemen who received, most often, transaction fees from the businesses they direct the services to – and not us, the users of the service. Because our industry generates $10 billion per year in parts and materials transactions and a small fee of 1 percent will generate millions of dollars in constant revenue yearly, it’s no wonder our industry has been attractive to investors and supply chain product offerings.

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The dollars, however, are staggering when it comes to transactions for parts and other supply chain integration with paint vendors. And without complete supply chain integration, many dotcoms had problems being able to fill orders properly.

What’s the problem?

They can’t currently integrate with the dealer’s, the manufacturer’s or the shop’s management system (in most cases). This means shops and dealers must have other software and probably more hardware (computer) to process the order, forcing them to perform double entry. It’s still certainly better than faxing or telephone calls, but for the dotcoms to prove their worth, their processes need to be seamless. Only then will the transaction fee they charge be worth it. The same holds true for recycled and aftermarket parts and paint.

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Without a doubt, improvement to our industry’s supply chain is still badly needed, and it needs to benefit all parties in the chain: the manufacturer, the distributor and the users (us) – not just the middlemen.

This wasn’t believed to be possible until ADP, CCC and Reynolds and Reynolds formed ChoiceParts.com and, earlier this year, filed an antitrust suit against Ford, GM and DaimlerChrysler to open access to the data necessary to make this possible. ChoiceParts allows ADP and CCC management systems to integrate into the parts-ordering program (Reynolds and Reynolds) used by the dealers. The intent of the eventual product offering is to connect our industry (the user) directly to the manufacturing and distributing of parts for the best pricing and delivery time. This connection will benefit all up-line in the supply chain, as well as inventory management and production needs. For example, dealers will have better control of their inventory needs, the warehouse will have a better idea of the dealer’s needs and the manufacturer will have a better idea of the warehouse’s needs. This is called supply chain integration. The final piece will interface our estimating and/or management systems into the ordering process, which can be automated and is less “paper and entry” dependent.

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A few of the other companies currently offering online parts ordering (but not necessarily integration) include:

  • www.Car-Part.com (recycled parts);
  • www.OEConnection.com
  • www.parts.com;
  • www.istarsystems.com;
  • www.nextpart.com (recycled parts);
  • www.point5.net;
  • www.AutoVistaNet.com

Until all this integration stuff gets sorted out, most companies will shift to the transaction of the claim as their revenue – which brings us to online claims processing, another B2B offering frequently used by our industry.

Until very recently, we exclusively used proprietary networks to upload and download insurer assignments, our estimates, supplements, final bills and digital images. Now many companies are fighting for these claims transaction fees. From this, we hope user-friendly products will emerge that include the integration of the management system needs to handle supplements, parts price changes and other inconsistent business rules established by insurers.

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A few of the companies currently offering online claims processing include:

  • www.ProcessClaims.com – translates live data via the Internet, linking the insurance and collision repair industries.
  • www.eMitchell.com – receive and process assignments from insurers in real time.
  • www.AutovistaNet.com – offers access to insurance claims assignments and digital images.
  • www.Ensera.com – receive and process assignments from insurers in real time.

Many other B2B products are available to our industry that provide valuable business products and services and aren’t related to parts and paint/materials, including:

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  • FirstEstimate.com – a Web-based estimating product with P-Page Logic.
  • HROne.com – a complete human resource management program.
  • FedEx.com – Internet shipping and tracking.
  • UPS.com – Internet shipping and tracking.
  • TheBOSS-Online.com – a complete collision industry knowledge base.
  • NetLedger.com – complete online accounting.
  • Checkfree.com – e-payments of bills.

The list could go on and on.

Business to Employees
B2E offerings are the newest on the block and will also grow significantly as some obstacles (covered in the next section) are removed. These offerings allow businesses to communicate or supply services to their employees. Most often, the services revolve around human resource management areas including evaluations, training, mentoring, coaching, establishing accountabilities and general communications.

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HROne.com, as mentioned in the B2B section, is a human resources management tool. Much of it is a business tool to manage your human resources department, but part of it manages the employee evaluation process and communication with employees, placing it in the B2E category, too.

MentorsAtWork.com, on the other hand, is more B2E than B2B. This program establishes and screens your internal mentoring candidates and prospective apprentices, and provides the forum to manage the process of training, coaching and mentoring. The program provides a systematic method of establishing skill targets and management of the interaction between the mentor and the apprentice.

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An area that’s not filled today in the B2E arena but is anticipated to grow tremendously is online training for our industry. In my May 2001 BSB article, “Log On to Learn,” I wrote about the Internet and its role in training. Even though there aren’t currently any sites that provide training solutions directly for our industry, the initiatives in the California Bay Area and Phoenix are quickly moving to provide badly needed industry training.

What’s Stopping Us?
For one, we still have hardware issues; we still need high-speed, universal broad band access (but we may be relieved by the infrastructure of satellite systems, DSL and cable). But the real issue that’s holding us back is our industry’s resistance to doing business with something we generally don’t like: a computer.

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In a recent e-commerce industry survey, the response rate to the survey itself was a mere 2.3 percent. This low number reflects the importance our industry places on e-commerce today. But relatively speaking, 25 years ago, the same response rate may have been achieved if asked about fax machines, cell phones, palm pilots or PCs. Even the few who bothered to respond to the survey stated their use of e-commerce was minimal. Claims processing and purchasing salvage parts were the most frequently used e-commerce solutions.

No doubt about it. Old habits are hard to break. Today, as a consultant, I still have a difficult time convincing the owner or parts manager that faxing part orders is a more effective method for ordering parts than making 30 to 50 phone calls every day. Convincing someone to just push a button and wait for an electronic reply may be even more difficult.

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The key is that the system for e-commerce must be easy to use and/or must integrate seamlessly in our existing systems, primarily the estimating or management systems of our choice. If the system isn’t this simple, it won’t be used, just like time clocks, scheduling programs and many features of an accounting system or management system.

In addition, consistent standards must be followed by all developers so all parties in the product offering can communicate. Work by the Collision Industry Electronic Commerce Association (CIECA; Web address: www.cieca.com) and the Collision Industry Conference (CIC; Web address: www.ciclink.com) is invaluable to establish and maintain standards so our software products and e-commerce solutions will work seamlessly together.

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As for us, we need to make a commitment to learn about how to use these systems. Generally, what you learn for one will assist you with other programs, as long as they’re written to the accepted standard. To start, take basic Windows training programs and then the office applications you use. The highest failure we’ve seen with users of industry-specific programs -such as our estimating, accounting and management systems – result from a lack of basic Windows training, not the actual program.

There’s no doubt that e-commerce will reach the dollars projected – maybe even faster that anticipated. And it’s those of you who take advantage early who’ll claim a huge share of the market while reducing costs.

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Contributing Editor Tony Passwater is president of AEII, a consulting, training and system-development company. He’s been in the industry for more than 27 years; has been a collision repair facility owner, vocational educator and I-CAR international Instructor; and has taught seminars across North America, Korea and China. He can be contacted at (317) 290-0611, ext. 101, or at ([email protected]).Visit his Web site at www.aeii.net for more information.

 

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