Wednesday, 31 October 2001 09:00

Is you is, or is you aint my baby?

Written by Dick Strom

Electronic communication and commerce developments of the past decade have created some exciting and strange bedfellows in our industry. Used wisely, and not abused, some of these can help us put out a better product in a shorter time frame. But the dot-coms that have sprung up faster than hallucinatory fungi on horse pucky threaten to dot-decimate many smaller players, especially those unable or unwilling to conform to the control of those bent on pulling the cyber-strings. As with everything else in this life, "following the money trail" always leads us to realize someone else's desire to control and profit from us - or eliminate us. 

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Anyone attending trade shows over the last few years can't miss the huge growth of dot-coms. A Tom Slear column concluded that there is NO GREATER RISK (than being left behind). In that column Bob Juniper, who has successfully profited from aggressive advertising of his many Ohio collision shops, stated, "The Internet will transform everything - the way we live, the way we work, the way we get things done"…(collision repairers) will have to change the way they market their businesses, or be dot-comed out of business."

Echoing Juniper in the same article, Dennis Howard of the Insurance Consumer Advocate Network (I-CAN) added that the future will be a new era of marketing, where consumers exist on the other side of a network rather than a counter… and that the changes will be revolutionary rather than evolutionary…"The Internet is the way customers will get to know shops (in the future)," Howard concluded.

Autobody News carried an article in which Erick Bickett of Fix Auto, one of the earliest proponents of Internet claims handling, predicted, "The Internet is going to level the playing field… Internet technology will reduce prices.. and body shops in general are going to be all big winners (through shops' having greater access to products and services)."

Outspoken Texas shop owner Roy Smalley, with an economics background, believes dot-com companies, along with insurers, will continue to strip profitability from collision repair shops, driving shops out of business and weakening existing shops. "This deal with the Internet is not going to save [repairers] any money… rather, it is going to cause them to spend a lot of money (because) the only way to decrease the cost of claims is by streamlining the delivery of service." He added that which all shop owners know and fear; that people at the top, especially insurers, "don't realize what is going on down on the manufacturing floor. They don't realize what it takes and they are so far removed (from the reality of the shop because) there is no communication back and forth between the bottom and the top. They don't understand what is going on. All they understand is the numbers."

Serving shops or insurers?

Bickett added that one of the dangers of dot-com companies entering the collision repair business is that they will tailor their (services) to insurers… [which we all know will be the case].

Well known and respected Long Island, N.Y. shop owner and editor, Henry Hancock, editorialized his fears concerning dot-com parts ordering deficiencies. "I recently ordered parts from a local dealer I've dealt with for years. The next day I received all the correct parts, and when further dismantling revealed the need for additional odds and ends, clips, brackets and the like, I ordered these and received them the following day. I've been doing business with this supplier for years - his company is a supporting member of our autobody association, and over the years we've developed a personal, professional relationship.

What about discounts, and returns?

"On all parts from local suppliers I receive a standard discount, plus an occasional promotional added discount. When I return unused parts, they accept them and credit my account, no questions asked… and give me 30 days to pay for the parts. So what advantage can a dot-com company provide? Will signing on with a dot-company cost me a monthly fee or give me a better discount? Will I receive the parts faster? Will I have more time to pay for the parts? Will the dot-supplier support my association and industry? Do they have a no-hassle return policy? Who will pay for shipping on out-of-state orders and for returned parts? What happens if they ship me the wrong part, or it arrives damaged? What's in dot-com purchasing for me?"

But how do others react to Internet shopping for crash parts? The most critical cog in this parts supply-chain equation, after all, is the repairer who has to live with parts purchased, and warrant repairs on all parts he purchases and installs. Are repairers ready and willing to be jerked into Internet-overdrive?

To find out, I recently e-mailed a questionnaire to an extensive list of repairers, insurer reps, trade magazines, AutoBody Online, and the like, to gain as wide a range of views as possible. I asked questions such as What have been your experiences with dot-com crash parts purchasing? What could dot-com suppliers do to improve the process? Is anything of value lost in dot-com parts purchasing? The following viewpoints characteristically summarize their responses.

Likes searches for salvage parts

"I use the dot-com sites to locate parts, then I call the places listed. There are several salvage yard Websites on which I do parts searches before I call them. I don't use dot-coms for OEM parts because the OEM dealers I use provide great service and there is no price savings for buying these on-line."

Another response: "I haven't used the dot-coms for parts ordering to date. On a limited scale, I have used the Web to locate salvage and hard-to-find items, generally, to solicit help to locate the parts. I can see some advantages (increased availability, faster service, more competitive pricing), and some disadvantages (insurers drop-shipping parts to shops with a "handling fee," damaged parts arriving COD or pre-paid, inability to build relationships with local suppliers causing losses and delays, loss of buying power with specific suppliers, dictated sources by insurers who make a percentage on the "back end," etc).


Loss of personal service

"I can see where the personal relationships many repairers have developed with local suppliers won't be possible with the dot-coms, and when problems arise that call for personalized attention, little aid will come from dot-com suppliers. Time will tell, and I'm sure we'll all be confronted with the necessity to change, but hopefully if dot-coms take over, their present deficiencies will be rectified.

"I'd like to see a rating system… a Vendor Performance Index (VPI), a Website wherein a potential buyer could access the performance rating of vendors before doing business with them, to forewarn buyers of a vendor's history of problems, which would encourage each vendor to meet and maintain a certain code of conduct."

Where's 'Duke'?

Another viewpoint: "I haven't used the dot-coms for parts ordering, preferring the one-on-one approach with experienced wholesale parts people. Every dealer has a "Duke" (someone who knows his/her parts inside and out). Ordering an exhaust part for a PT Cruiser (with 4 exhaust options) from a dot-com robot gives you one chance in four of receiving the correct part the first time. In our "Press1; Press 6; Press 9… Sorry, your party is not in" business environment, the dot-com experience will need to be greatly fine-tuned to eliminate delays.

"I'll stick with my 'Duke' with whom we have a long term relationship, and who can 'hotshot' a critical 49 cent clip so that I can ship a job on Friday. Insurers don't recognize the importance of that key guy getting us whatever we need to ship a car on time. P.S… I just spent almost two hours on the phone with Lynx yesterday trying to set up a billing for State Farm. I couldn't complete the task and had to charge the customer, and asked him to get reimbursed from State Farm.

Sounds good, but...

Another perspective: "I doubt most crash parts dot-coms will survive… unless insurers mandate them. If dot-coms can work off of our parts ordering systems with a one-step process, that would be fine, but that's not the case. Remember how computerization was supposed to save us time?… they're a great tool, but they actually created more work and the need for additional office staff. If dot-coms made our life easier, that would be great… but they won't."

A collection of quotes from other respondents: "Will insurers pay shipping costs on new OEM or mis-marked or damaged parts?… doubt it!" "Find a good local supplier and develop a relationship. Mutual cooperation will make everybody's job easier."

"I believe that this is a case of unnecessary middlemen trying to mine dollars ala' the 'smoke and magic' of the Internet. Thing is, they haven't figured out yet that they are the inconvenient and redundant answer to the question that, on a daily basis, is proven moot by dealing with local suppliers. I don't care for the 'waiting-to-make-it-right' answer… 'If it ain't broke, don't fix it' rings most true here."

E-pictures of parts can help

"E-pictures help in that you can actually see the part, reducing the problem of being sent the wrong part, but they must represent the used part with realistic 'cleanup' times. I have received (uncrated) damaged parts, as well as crated parts that require half an hour to get to (through all the packing material), plus the added expense of disposing of the crating and packing (including seat foam and worn out tires)."

"My main concern with dot-com parts is that soon insurers will write the estimate and order the parts immediately with little or no markup. Can repairers afford to give up markup on parts?"

"Will dot-coms siphon money out of our local economy?… Are they now or will they soon be in bed with insurers?"

"All our parts suppliers are partners in the growth of our business, and nothing beats having a relationship with a warm body that is committed to resolving problems."

And on a positive note

"Though dot-coms presently have a bad name, let's not write off the entire e-commerce technology as a bad thing."

"Though well intended, dot-com parts purchasing won't happen in this industry - they are an outsider looking into our industry and seeing an opportunity but having no real understanding of how it really works.

"The long-distance parts-sourcing infrastructure is not adequate to the task. Insurers are stressing 'turn-around time,' yet by sourcing parts from numerous sources they are adding more time to the equation, not less.

"It looks simple: order, and get it the next day… but the supply chain has to work perfectly to be of real benefit. The real effect of dot-com parts sourcing will be added cost and increased turnaround.

"Ordering parts from five sources requires handling five receipts rather than one (plus the added time involved in missing, damaged or mis-marked parts). It's far more efficient to order all parts at once from one source, and receive a complete order. I view the parts.com push as a case of the tail trying to wag the dog… to manage from the top down without regard to the real effect on where work has to be done. So many changes need to be made that I can't see dot-com parts sourcing succeeding on a broad scale in our future."

Dick Strom is the owner of Modern Collision Rebuild on Bainbridge Island, Washington (moderncol@aol.com).