Auto parts is one of the few B2B industries that has long had a robust eCommerce sector. Since the dot-com era, auto parts distribution has seen steady online sales growth.
Today, an estimated $14 billion of those sales happened online in 2019. Post COVID-19, the market share of eCommerce is growing at a much faster rate. Auto parts is an $106 billion dollar market in the US that remains extremely fragmented, which means that eCommerce – and marketplaces in particular – have a lot of room to grow.
Amazon is the elephant in the room in auto parts. Amazon does an estimated $8 billion in auto parts sales across B2B and B2C. Per our recent Amazon Business report, Amazon has 16 million listed products in auto parts, making it Amazon Business’s second largest vertical after MRO supplies. Amazon takes a hybrid approach, combining first-party sales with third-party sellers on its marketplace. Today, Amazon does between 30-45% of auto parts sales via its marketplace, according to analyst estimates and Applico research.
The fragmentation in auto parts distribution makes the market ripe for a dominant marketplace like Amazon. A large, fragmented supply base makes it possible for the marketplace to build its network bottom up, providing value to small sellers first. Consumers get price transparency and access to a wider variety of products while producers get access to scale, as well as potentially software tools provided by the marketplace that reduce costs.
However, Amazon isn’t alone. There are a number of other auto parts marketplace startups in the US with substantial traction, with a few operating on a scale that suggests they can stand up to Amazon – through Amazon is growing faster.
This report covers the major vertical specific auto parts marketplace and eCommerce sites in the US. Several of these businesses have been around for more than a decade, while a few new upstarts are also gaining meaningful traction in the last few years.
In eCommerce, US Auto Parts has operated since 1995, while marketplace Rock Auto has been running since 1999. Then there are more recent additions to the landscape like Wheelwell, founded in 2014, which has succeeded by taking a unique social-focused approach.
However, while there are many successful players in the auto parts landscape today, this state of affairs isn’t likely to last. Expect consolidation in the years ahead, as 1-2 of these vertical specific auto parts marketplaces are able to thrive alongside an increasingly dominant Amazon.
A dominant Amazon with no major vertical-specific marketplace players in auto parts would be a worst case scenario for incumbents.
But incumbents in auto parts can still play an important role in ensuring Amazon doesn’t crush the competition by partnering with leading marketplaces. For example, Amazon’s fulfillment infrastructure gives it a major advantage in auto parts, where delivery times are a key factor for customers. Incumbents can combine their logistics footprints with a marketplace startup to give it a significant leg up against Amazon and other marketplace competitors.
Stockout sales are another source of “dry powder” that incumbents can bring to a marketplace to help juice the demand side. Given that at least 30% of Amazon’s sales come from third-party sellers, there is likely substantial room for collaboration in this model for auto parts incumbents.
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