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HD Cast talks with industry expert Bill Wade
Bill Wade talks to HD Cast about industry trends and what we might see down the road.
About Bill Wade
In a September 2020 interview on HD Cast, Bill Wade discussed trends in the automotive parts distribution industry. Wade observed that distributors are increasingly recognizing the value of adding service to their business, stating that selling parts alone is not very profitable but that installing parts in one's own garage can generate significant revenue. He also noted a reversal of roles, with dealers opening independent parts stores while aftermarket shops expand into full-service auto care. Wade addressed the impact of e-commerce, arguing that businesses that avoid selling on the internet are missing substantial opportunities. He described what he called the "Amazon effect," saying that online retailers have trained purchasers to expect next-morning delivery with prepaid shipping. Wade also highlighted growth in light truck accessories, mentioning a distributor he works with that generates about 70 million dollars in parts sales, with 20 percent coming from walk-in business in that category.
Transcript (9 segments)
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Host0:05
Hi and welcome to another segment of HD Cast. I'm Butch Hill, your host for this segment, and I'm sitting here with Bill Wade, and he's with Wade and Partners, and he's kind of an industry icon if you will. I've known Bill a long time, but Bill has always got his eye on the industry and what's going on. So Bill, let's talk about what's hot.
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Bill Wade0:30
A couple things I see really getting warm here. I think that more and more the distributors here and other distributors in this business are seeing the value of service as part of their business. It's great to sell parts, but you won't make much money at it. You sell parts to your own garage and hang them yourself, you'll make a lot of money. So I think a lot of people are tumbling to that. It's funny, at the same time our people are tumbling to that, the dealers are going the other way. They've got all of these great shops and everything like that, what are they doing? They're opening independent parts stores.
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Host1:16
I've seen that, you know, because I've been around on the merchandising side, streaming a lot of these guys and the history over the years, and when I go visit them I see exactly what you're talking about. It's kind of getting reversed on the OE side and on the aftermarket side it needs to go the other way. It's kind of like, I tell people, it's kind of like in the automotive side, just to throw an automotive comparison. You know, like if you remember the day when it was always a muffler shop or a tire shop, and now they can't survive just on mufflers or brakes or tires, so now it's full service or complete auto care. So they have had to expand into the same situation where what you're saying is kind of that resembles the heavy-duty guy here, that distributor guy, to kind of get more piece of the pie. You remember when you didn't want to get into service because you were going to piss off your customers, right?
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Bill Wade2:05
Oh yeah, you know it's like saying I don't want to sell on the internet because I'm afraid that I'm gonna upset somebody. At this point, if you're not selling on the internet, you know you really are walking right past a lot of business. Yeah, you just have to do it, I don't care if you want to do it or everybody feels unloyal. You know, I even remember going back some years a little bit, I thought a lot of suppliers, a lot of distributors were leaving money on the table when they wouldn't get into say oil or movies or something like that, and now they've kind of crossed that bridge. But I mean that and also what I'm starting to see is like engine parts, they're doing. I know there's certain guys that do that, but I'm talking about guys that you never thought would do that, or starting to take on engine compartment components and all that kind of stuff just because you got to take more piece of the pie.
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Host2:58
You know, the problem with engine parts has always been the fact that the engine distributors through such a good job, and the consequential damages for screwing it up are enormous.
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Bill Wade3:11
Yeah, but what I do see is a lot more guys that are getting into like truck accessories. Toolboxes, running boards, nerf bars, headache racks, and more than light duty, I would say the light duty and kind of even less than the medium duty light duty. But you can make a lot of money. There's quite a few distributors out there that have been doing that for a year, they've been ahead of that curve. I'm working with one right now who's doing about 70 million dollars in parts. That's pretty good. About 20 percent of that is in light truck accessories, and a lot of that is through the door, it's walk-in business.
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Host4:00
Yes, this is not a business known for its walk-in trade, so yeah, if you want to get people into your shop, that's a great way to do it. So sum it up. If you're a distributor, what do you need to put your key eye on? What do you see in the future? You know, a little crystal ball here.
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Bill Wade4:18
The things that I would look at are how is the channel going to handle the internet, how is the channel gonna handle what I call the Amazon effect. Not Amazon itself, but what has Amazon taught our purchasers to be? They're monsters. They now expect everything shows up the next morning prepaid, you know? That's the Amazon effect, not that it came from Amazon, it's just that like you said.
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Host4:49
Well, thanks Bill, thanks for your time. And there you have it, there's another segment of HD Cast. Check out the other episodes on this YouTube channel. Thank you.