How to Start an Online Auto Parts Business

The online auto parts industry is a multi-billion dollar giant, and the market for car components is hotter than ever. Knowing how to start an online auto parts business could lead to a dynamic and successful online venture. Turn your passion into profit with the following steps.

1. Conduct Market Research

You’ll need to perform market research before you start selling auto parts online. This will help you work out if it’s best to sell new or used auto parts, and which parts and brands to sell in your online store.

Market Research for New Auto Parts

Complete the following steps when researching the market for new auto parts.

1. Pinpoint your target market: Find out who your future customers are and their buying habits. Conduct surveys or use market research reports to gather this information.
2. Research demand: Analyse trends within the industry to determine the demand for specific auto parts. Identify the most popular brands and models that require parts.
3. Analyse your competition: Determine who your competitors are, how they operate, their pricing, and any gaps in the market you can fill.
4. Establish a pricing strategy: Decide on an acceptable price range. Factor in overheads, shipping, warehousing, and any other costs involved.

Additional Steps for Selling Used Auto Parts

Selling used parts will require all the steps above plus some additional diligence.

• Identify sources of auto parts: Visit local markets, auctions, salvage yards, and junkyards, and view online listings.

• Determine the quality of the parts: Set the prices of second-hand parts to reflect their quality and usability.

2. Choose Your Niche

Choosing a niche to specialise in establishes you as an expert in that particular corner of the industry. It also allows you to create more targeted marketing campaigns that appeal to customers already in the market for your items.

Specialising in certain items differentiates you from your competitors and makes you the go-to merchant for a specific need or preference. Another advantage is financial; customers seeking one particular product are often willing to pay a premium for that exact product.

Take time to pick a viable niche for your online store. Research customer demand, your competition, and how profitable your idea could be.

Common niches include:

• Vehicle or model-specific accessories
• Rare or vintage parts
• Performance parts

3. Register Your Business

Different European countries may require business owners to take different steps to register their businesses. The process may involve any of the following:

• Register your business name: Check on official registers if your business name is available. Then register it formally.
• Choose a business location: Your online business requires a physical address to receive business-related documents. This will usually be the same address you use for filing taxes.
• Select a business structure: The way you structure your business impacts how you file taxes, how the business is run, and whether your personal assets are at risk if you face a lawsuit or your business fails.
• Register your business with all required agencies: You may be required to fill in paperwork to register your business nationally, within your state, or locally.
• Register your tax details: This may take different forms depending on your business’s location.

4. Develop a Business Plan

Developing a business plan is a crucial step for any serious business. A business plan enables you to establish your vision, set achievable goals, and identify opportunities you can exploit. It will also help you anticipate challenges you may have along the way.

Your business plan should be a comprehensive document that details every aspect of your business. Include the following information:

• Product offering: Which products are you going to sell and where will you get your parts from?
• Marketing and sales strategy: How will you reach your target market and keep these people interested in your brand?
• Operations: What will the day-to-day operations of your business look like? Include details about the supply chain, inventory management, staffing, and shipping.

• Market analysis: Describe your target audience, competition, and trends you want to tap into.

• Financial plan: What startup costs do you anticipate? Set out your projected revenue, expenses, and cash flow.

A well-crafted business plan can help you obtain financing, attract investors, and guide your decision-making.

5. Choose an Online Platform

If you don’t want to create your own website or lack funds to make one from scratch, an online auto marketplace is a great compromise. Marketplaces like Amazon and eBay are a great place to start as they drive a huge amount of traffic and offer marketing tools to promote your products.

eBay

eBay allows merchants to list up to 250 SKU codes free of cost each month on the most basic plan. However, if your store has significantly more items, you will have to sign up for one of eBay’s premium plans. Each of these has limits and commissions for selling items on the platform.

The final costs will depend on the value of the items you sell and the type of account you have. When you create your business plan, take time to calculate the costs carefully so you know exactly what to factor in.

Remember that eBay doesn’t handle any of the logistics of running an auto parts business. Warehousing, shipping, packaging, and distribution must be handled by the merchant.

Amazon

You’ll need a Professional Seller account if you want to sell on Amazon. This plan costs 39 euros a month (plus IVA) which allows you to sell an unlimited number of SKUs. This is on top of the fixed commission fee they charge on each item. This typically ranges from 8-15%.

Merchants wishing to sell their goods on Amazon go through a vetting process before being approved. You’ll have to meet certain standards regarding your images, the information you provide, and more.

Is It Worth Selling Vehicle Parts on Online Marketplaces?

It may be worth selling auto parts on online marketplaces—at least while you’re finding your feet. Amazon and eBay have an incredible reach that other sites can’t match. This increases the likelihood of new customers coming across your brand.

Other advantages are:

• You can begin selling on marketplaces even with a limited range of products. You can also start selling on marketplaces while you build up your own website.
• Amazon or eBay sellers don’t need to develop their own websites or generate their own traffic.
• Marketplaces cover cybersecurity and some cover shipping.

The main disadvantages of marketplaces are:

• Merchants don’t obtain customer information like e-mail addresses. This means developing targeted e-mail campaigns to build a loyal customer base isn’t possible.
• Many customers who buy items on Amazon believe they’re buying them directly from Amazon, not from your store. You will get little recognition for your efforts when you sell on these platforms. This can also impact the chances of getting repeat purchases.
• Research the fees involved with each platform as they can eat into your profits.

6. Plan Your Website

Building a website from the ground up means you can design it with the features you want. Before approaching a website developer, create a features list. This will help the developer understand your vision and advise you on how to make your website run as smoothly as possible.

A web developer will likely suggest a fully hosted small business website builder like Shopify or WordPress with WooCommerce. These platforms allow you to build and customise your website to match your vision.

Consider the following features for your website:

Account Creation Capabilities

Successful e-commerce websites make it easy for buyers to create accounts. Ensure that your auto parts website offers a seamless account creation process and keeps account holders’ details secure.

Secure Global Payment Processing

Setting up credit card payment processing for auto parts is a must when selling car parts online. Online auto parts stores have the scope to sell to customers across the globe. International payment processing opens up your business to a world of possibilities.

Fraud Protection

Businesses with an international outlook also face the risk of fraud and declined transactions. Protecting your business against fraud must be a top priority for online businesses. Set up a merchant services account with an integrated global payment gateway that offers cutting-edge fraud scrub technology. This prevents potentially fraudulent transactions from going through.

Declined Transactions

Opening up your business to international customers makes it imperative to be able to process foreign bank cards. For example, online companies have been able to recover up to 68% of previously declined transactions by integrating Unicorn Group as an alternative payment method.

Online auto parts stores receive payments from all corners of the world in different currencies and with different payment methods. The ability to seamlessly process these payments is crucial for online businesses to maximise sales and boost their bottom lines.

Auto Parts Search Features

A search filter distinguishes each part by year, make, and model, and displays the search results to the customer. It’s important to offer different ways to search that accommodate different shopping methods:

• Offer a Year-Make-Model search option. This way the customer only sees products that are compatible with their vehicle.
• Offer a way to search by part numbers.
• Some users may want to search by keyword.
• Others may prefer to browse different items in a specific category. They can then narrow down the results using a filter.

Other Integrations to Consider

Ask a web developer about how to integrate third-party services into your website. These could include:

• Social media: Linking your website to your social media platforms is a great way to build a community around auto parts and direct interested shoppers to your website.
• Shipping: Many delivery companies offer API solutions that calculate each item’s delivery price and estimated delivery date.
• Inventory management: Tracking your sales and stock levels means products that are out of stock are automatically taken off your “shelves.” This reduces the chance of your business incurring payment reversal charges.

7. Attract Your Customers

Plan how you’re going to direct traffic to your website and set aside some funds to create and implement your marketing strategy. There are various ways to do this:

Implement Search Engine Optimisation (SEO) Best Practices

SEO is a wide-ranging term encompassing a range of on-site and off-site techniques that help your site rank better in organic search results. You may need expert help to optimise your website. Consider starting a blog to establish yourself as an expert in the automotive industry and drive traffic to your website.

Pay for Google Ads

Pay-per-click ads attract shoppers who already want to purchase auto parts. According to Google, nearly 25% of searches relating to the automobile industry are related to parts, services, and maintenance. Attracting shoppers who are already in the market for your products should be a top priority.

Targeted Advertising on Social Media

Social media can be a powerful tool for online merchants. However, your store doesn’t necessarily need an active social media presence to promote its products. Use targeted ads directed at auto parts professionals or enthusiasts who may be interested in your products.

Why Sell Auto Parts Online?

There are several compelling reasons to set up an online auto parts store. For a start, the auto parts industry is thriving and is projected to grow from $2.3 trillion in 2020 to $3.8 trillion by 2030. This represents a compounded annual growth rate of around 5%.

The industry is also thriving in Europe. The value of the European online car aftermarket is predicted to reach $36.7 billion by 2025. Being part of this booming business makes financial sense for merchants with a keen eye for in-demand auto parts and whose passion for the industry can translate into sales.

Tap into the Thriving Auto Parts Industry Today

The road to success when launching a new business is paved with continuous learning and adaptation. Stay informed about industry trends, gather market insights to refine your offerings, and leverage the power of technology to streamline your operations.

Building a secure, professional website is a huge part of this. With dedication, a strategic approach, and support from professionals in the industry, you can transform your passion for automobiles into a thriving online auto parts business.