Despite the high competition, the sale of auto parts is a profitable line of business. This market shows annual growth of 20%. Opening a store with a large assortment of products will be a good investment for a stable profit for an entrepreneur-car enthusiast. Moreover, to run a successful business, you may not need to deploy a large store with a large number of auto parts. It will be enough to establish good communication and cooperation with suppliers, and to provide customers with the opportunity to select and place an order through the Internet site. In today’s article , we will consider how to open an auto parts store and what nuances of activity a novice entrepreneur may encounter.
First steps
Starting any business requires careful preparation, well-thought-out actions and a well-developed business plan. An auto parts store is no exception to the general rule. This business is primarily for men. But even if you have a good driving record or have previously worked in a car repair service, you should still learn. After all, trade is a new business and requires different skills.
Before opening an auto parts store, you need to decide what exactly you will sell: spare parts for foreign or domestic cars, or just covers, mats, etc.
It is also worth paying attention to competitors: what is sold in your area, at what price, what is in greater demand. The competition in this niche is quite high, so you need to think carefully about the business plan and how you can attract a buyer. The business of selling auto parts can be successfully combined with another business related to cars, for example, a car wash or tire fitting.
Auto parts store on the territory of the auto market
In general, there are three main business options for selling auto parts. The first is the location of the store on the territory of auto markets. In large cities, most of the trade related to cars is conducted precisely at car markets, while the entrepreneur whose sales point is located at the car market has the advantage that only potential customers visit him. That is, traffic is high and only the target audience is available. The disadvantages include a huge concentration of competitors from all sides, who also want to make money. This does not allow to overestimate the cost of parts, and business has to be conducted in conditions of struggle and hard survival.
However, most auto parts stores in auto markets have existed for a relatively long time and are not going to close. It will be especially lucky if there are no spare parts available on the market for some brands of cars that motorists have. First of all, we are talking about the Chinese auto industry – it is still a problem to find spare parts for them in small cities: this is due to the fact that Chinese cars have recently started to be delivered to Ukraine in large batches.
On the territory of the car market, you can simply rent a typical small store with its own warehouse and sales area. Perhaps it will be possible to put up several showcases, but buyers are usually not interested in this – they go for a specific item and do not look around enthusiastically in the store. As an option, this is trading with a parking tray, but this is mainly done by sellers of stickers and cheap accessories, expensive spare parts will certainly not be bought in this way – there is zero trust in such sellers. But it is cheaper in terms of rent.
Opening of a specialized store outside the car market
The second option is the opening of a specialized store outside the auto market, directly in the city, which eliminates the presence of competitors nearby. In this case, you will have to spend extra money on advertising, find a place with a lot of traffic and provide a wide range of products. Rent in the central areas of the city can be much higher, while being on the outskirts will lead to a small number of visitors.
The best solution is to locate near large car service centers or garages. Owners of car service stations will generally become good partners, if you manage to attract them to your store, then they will buy often and a lot. But they are usually only interested in the price, they are looking for the cheapest part.
A car shop, which is simply located in the city, should additionally have a list of related goods, which is completely optional for a point on the car market – next to it there are special shops for motor oils, batteries and other universal items that are bought right there. For an autonomous auto parts store, such goods will become a good source of income and will attract a non-target buyer who, in the event of a breakdown of his car, is more likely to turn to the place where he already purchased.
Online auto parts store
The third option is an online auto parts store. Although it requires significant investments, it allows you to cover the entire country. It is easiest to do this kind of work in big cities. It is there that it is cheapest to order foreign parts, after which to deal with their implementation. Although, it is not at all difficult to organize your own online auto parts store even in a small regional center. The main requirement is the availability of branches of delivery companies .
he assortment range of such stores is an order of magnitude larger than that of a regular outlet and covers several manufacturers and all their models. It is optimal when the site works all over the country, sending parts to customers with a cash on delivery, and at the same time has its own store in its city. In addition, an online auto parts store requires a sufficiently spacious warehouse. It is also worth thinking about hiring a courier who will work in his own or company car. And, of course, the site itself is needed – its development, further support and promotion require certain capital investments. At the same time, the site should be convenient for the user and have the possibility of spot selection of spare parts – by VIN code and consultations of sellers based on complete information about the car. This is very often neglected by online auto parts stores, but in vain.
Among the advantages of an online auto parts store:
Convenience. For many consumers, it is more convenient to order a part on the Internet than to go to the market, spend time choosing and take spare parts to the garage. After ordering a product on the Internet, you can immediately read the description, compare the characteristics, without leaving your home. In this case, no one pushes anyone and does not give unnecessary advice. In addition, delivery can be ordered to any place.
Savings and a large selection. This is relevant for small cities, where car service centers do not have a large assortment of products. In the online store, you can choose the desired product and receive it on time.
Among the cons:
Not all products are profitable. The assortment of the store must be complete, and unfortunately, you have to buy goods that will not always be sold.
The market is changing rapidly. The market is constantly updated, new models are added, and accordingly new spare parts. Be sure to keep your finger on the pulse to be in demand.
Selection of premises and equipment for an auto parts store
A room with an area of 40-50 square meters would be optimal for an auto parts store. Be sure to pay attention to the terms of the contract when renting a room, how much utility payments will cost, and take into account the possible increase in the cost of rent. Do not forget to write down the possibility of extension in the contract and a long-term lease (at your request).
It is not a problem if your auto parts store is located near an already existing one, provided that you have something qualitative to stand out against its background – the range of products, their quality, better service, the possibility of delivery, price policy, etc. It is a big advantage if there is an opportunity to open your point near a service station, tire fitting, car wash, etc.
The spare parts store requires approximately the same equipment as other stores. You will need:
- racks;
- shelves and boxes;
- showcases;
- the cash register.
- payment terminal.
The number of shelves and racks will depend on how much you plan to sell.
List of products and services
A good store definitely needs specialization – it will be much easier to calculate all the necessary costs for the minimum equipment. With the correct organization of deliveries to order, it is possible to receive any part and other spare parts from the supplier in a coordinated and quick manner.
The assortment of the retail outlet should include spare and consumable parts for cars of both foreign and local production. In addition to the products presented on the windows and shelves, the store should also work on orders from the catalog. In general, the supply department should work according to the principle: the most current positions should always be in stock. Such goods include:
- motor oil;
- wheel rims;
- tires;
- filters (oil, air, fuel);
- light bulbs;
- candles;
- janitors;
- oil glands;
- metal products, washers, self-tapping screws, pistons;
- clamps, pipes;
- generator and timing belts;
- tools;
- autochemistry;
- gaskets;
- steering tips;
- mufflers;
- bearings;
- first aid kits and pumps, etc.
At the same time, the client should offer spare parts from different manufacturers at excellent prices (for example, “original” or “non-original”). The pricing policy at the beginning should be slightly lower than the average price level for spare parts in the retail outlets of your city. Thanks to a well-thought-out logistics system, orders should be delivered as soon as possible.
You will definitely need suppliers of goods. It is better, of course, to have several suppliers for each product group – the stability of your store will depend on this. If you closely cooperate with companies producing spare parts that have official offices in our country, then this will be an additional advantage for your store. Another plus is the fact that you can legally use the logo of their cars and parts that you sell. As a rule, mutual settlements with suppliers are carried out on a deferred basis (on average – up to 30 calendar days). Before concluding a contract, it is necessary to check the reputation of the supplier and his company, since the quality of his work and the timely fulfillment of the obligations will be depend and your reputation.
Marketing strategy and personnel
The success of your store, regardless of the chosen format, will directly depend on the strength of your advertising campaign, in particular at the beginning of the point’s activity. Therefore, before opening an auto parts store, be careful when writing the main steps of an advertising campaign. In our case, the main advertising and marketing measures will be:
- Advertising in the mass media, development of a business card website for your store (or a full-fledged online store);
- Advertising on billboards, distribution of flyers and business cards;
- Bonus program and loyalty program for regular customers (free oil change, etc.).
Another component of the good reputation of your auto parts store will be the coordinated and professional work of a team of sales consultants. Therefore, before opening an auto parts store, pay enough attention to the selection of sales consultants, checking their theoretical knowledge of the automotive business and their communication and sales skills. Among the main selection criteria:
- Good knowledge of the structure of the car and spare parts;
- Ability to communicate with customers;
- Sales experience (preferred).
Initial investment and profit of an auto parts store
Before opening an auto parts store, make approximate calculations of the necessary investments in this business project. Yes, opening a retail outlet will require an investment of $30,000 or more. You will have to spend an additional 5-7 thousand dollars on the development of a multifunctional website for an online auto parts store.
The main item of the entrepreneur’s expenses will be material expenses, that is, the purchase of goods for the purpose of further resale. In addition to wages, the payment of insurance premiums for employees will be a rather large expense for an entrepreneur. The level of the trade markup on the product will be 40-50% on average. The sales season comes in spring and autumn. To reach the break-even point of sales, it is necessary to sell 3000- 5000 $ worth of goods per month. The net profit based on the results of annual sales will be 10 000- 16 000 $
The profitability of the auto parts store is estimated to be 25%, and the investment will pay for itself no sooner than two years of active sales.