Wednesday, 23 January 2013 11:59

PartsTrader Costs “$800 in Unseen Business a Month” Says Michigan Parts Wholesaler

Tom Kellogg—the wholesale director for the Zeigler Automotive Group’s 13 franchises in Grandville, MI—has been using PartsTrader the past several months as one of the first test markets in State Farm’s PartsTrader program.

Kellogg has been with Zeigler since 2003 and in the industry since 1975. He says he wishes programs like PartsTrader would just go away.

“We all know that PartsTrader isn’t the greatest thing out there,” said Kellogg. “I don’t know what I am going to do to stop it, because from what I understand, it’s pretty much here to stay. We’ve got to figure out how to work around it. Not enough writing was done on it. It’s just going to be the pathway of all things in the future to come. It’s PartsTrader today, and tomorrow it’s going to parts for you, parts for them, and pretty soon there’s a plethora of third-party people involved in our business,” he said.

“The ‘beautiful part’ is they are going to allow me to do business with the same people I’ve been doing business with for the past 10 years and there’s a fee. I don’t know how that’s better for me. So far, I can’t get anything out of PartsTrader or CollisionLink/OE Connection because they are under a non-disclosure agreement,” Kellogg added.

Kellogg is unhappy with how PartsTrader has affected his business.

“It’s absolutely terrible. It gets me very small visibility. We are a multi-program dealer. I deal with wholesale parts. It’s imperative I see the entire estimate. I can’t see the entire estimate the way PartsTrader works, and so far they haven’t been too keen on my suggestions on how to become more visible. We just want to be 100% visible. We want every opportunity to sell our parts.”

Kellogg continued, “In our business, or in any business, you want full visibility. But they (PartsTrader) narrow what can be seen in their program. If you send over the estimate through CollisionLink, I get to see everything, all the things you are looking for a quote on—aftermarket pricing, everything you can possible do— and we get to submit a quote on that. When it comes through as a PartsTrader order, all I get is ‘quoted new’ or  ‘quoted aftermarket.’ Well, the rules of the Mopar Conquest Program are that I have to have an estimate. Do I quote it as an aftermarket part, a competitive part, or a new part? If they are not asking for an aftermarket part, all I can do is quote it as new. Once I made the bid and they come back and say “Hey, I had to go aftermarket” and I could say “Hey, I wish you’d give me a shot,” they aren’t going to retype all that information in again. They’re gonna say they already got the part ordered.”

Kellogg said he loses about 50 or 60 claims a month now and estimates his loss of gross income at $800 a month because of PartsTrader.

He’s hoping that in the future, PartsTrader will bought out by OE Connection as they have a current non-disclosure agreement between the two of them, and it’s his opinion that a sale between the two is a possibility. The current system through OE Connection has full visibility.

While Kellogg’s main complaint is not having complete visibility for an estimate on PartsTrader, he also says, it’s “duplicating something over and over again, and having a bunch of ankle biters, not in the wholesale business, turning the business into a pricing war because they are not sitting on large inventory” trying to undercut him.

He bases his business on larger shops and MSOs because they already understand that discounting isn’t everything.

While PartsTrader is a thorn in his side, Kellogg admits it hasn’t been the biggest game-changer in the business over the past several years. “It’s just another hurdle. It’s a puddle. It hasn’t become a giant pothole yet.”

But, he said, if wishes could come true, he’d wish it away. He’s worried about other insurance companies following suit. “I am worried about what’s coming down the line. Who’s next?”

He added, “The fear I have with  PartsTrader, and if you understand how State Farm works—State Farm does a $3.6 billion [annually in parts] business—they have to pay sales tax on what it is they do at retail level. So if they get a bunch of idiots who don’t understand this business, who are selling parts to everyone, and they get them to lower the manufactured suggested retail price, then they may only have to pay taxes on $2.6 billion off retail, which would decrease their taxable liability by a billion dollars. And it would also ruin our business. I don’t want to see that happen. But I think this is one reason why they are doing it. That’s my opinion.”

Kellogg said he sees how the ‘PartsTrader effect’ is trickling down to affect other businesses. “I just don’t know how to make it go away, but I wish that it would. Anytime when you start decreasing our revenue, we have to let something go, like advertising or people. There is always a ramification for everything,” Kellogg said.