No shortage of auto parts - just of skill
Winning a small chunk of the auto parts "trade" market from rival Repco is the goal of Super Cheap Auto's new venture Auto Trade Direct.
But a small chunk of what is a $2.4 billion market across Australia and New Zealand could still amount to hundreds of millions of dollars in extra turnover for the Australian-owned-and-listed group.
Leading the venture from conception to launch is Paul Flay, a salaried employee, industry veteran and, that rare thing, an "internal entrepreneur".
"If we eke out 5 per cent share in trade we are doing well," Flay said.
Apart from seeing an opportunity for growth in a new market segment, the shift was spurred by private equity firms moving on auto parts rivals, he said.
Auto Trade Direct, targeted at mechanics rather than Super Cheap's traditional consumer market, was launched at the end of 2012. It will provide a parts and accessories delivery service operating from a small number of designated Super Cheap Auto "hub" stores.
Conceived and launched in New Zealand, the concept will be trialled here before being launched in Australia.
Super Cheap - part of the 585-store, A$1.9 billion turnover, ASX-listed Super Retail Group - told shareholders the trade market is a very large sector that "demands a high level of service, accuracy and knowledge".
"We believe now is the right time to enter this sector of the automotive market and we will do this with a new Super Retail Group brand focused totally on the trade market," it said in a report.
"Auto Trade Direct will trade as a standalone business, with a dedicated, passionate and knowledgeable team based in New Zealand."
Flay, who joined Super Cheap Auto in 2011 as New Zealand trade development manager with 30 years of industry experience (including time at rival Repco, which bought his business Appco Auto Parts in 1998), won the backing of Super Retail's managing director of auto retailing, David Ajala, to get his idea off the ground.
"We had to work out why we couldn't service the mechanical trade. I spent 12 months writing up processes, educating, and putting IT and logistical applications in place," he said.
The service allows automotive professionals to source all their parts through one provider via a centralised "centre of excellence" with local or regional delivery.
But lifting the internal knowledge-base was essential. The main challenge, Flay said, was finding people with real experience in auto parts.
"They're just not out there," he said.
While retail staff deal with high turnover parts, the auto trade needs much deeper levels of mechanical knowledge to ensure it gets the right parts every time.
Auto Trade Direct account managers, with a minimum of 15 years' mechanical experience, are allocated to each workshop and have access to more than 100,000 products. They have access to a catalogue system to ensure accurate delivery of parts. Any parts not already included in the catalogue can be sourced through Auto Trade Direct's supplier network.
"There is a huge shortage of skills. Mechanics who charge $120 an hour don't have time to be mucked around," Flay said.
Up to 100 people will be employed as centralised experts servicing the trade through an 0800 number. These will be the "cream of the crop", said Flay. The experts will be rewarded on success, he said.
"We will pay well and give them the resources to make their own decisions, not distracted by retail."
Flay said the key would be to have them making decisions as if Auto Trade Direct were their own business. Indeed, many come out of a background in managing their own mechanical businesses or branches.
Fulfillment is by pick-up or through courier delivery.
In the past four months, Auto Trade Direct has signed up 100 business customers and aims to sign up 3,000 to 4,000 New Zealand customers in the next six years.
Now on the agenda is an improved and interactive online presence due to be rolled out mid-year. Although most customers still prefer phone service, generational change will see online and email service delivery move steadily to the fore.
"They still like to talk to someone at the moment," Flay said.
- © Fairfax NZ News