Maintaining your own car is not an easy task. Of course, a car is a convenient way to travel, for some it is also status and prestige, but any car requires appropriate care. It is a known fact that car manufacturers earn the most not on the sale of new cars, but on the supply of spare parts and components for them.
We will not name which brands of cars especially need spare parts, but any car will need repairs sooner or later. This can be normal wear and tear after operation, as well as a traffic accident. But in any case, while the cars are driving, their owners will buy parts for them. In this material, we will just consider such an option for our own business as the sale of auto parts.
Prospects and competition
In any settlement there are car owners, and sooner or later they all turn to auto parts stores. There has not yet been invented an eternal car that is not subject to wear and tear, so the demand for car parts will always be very large. Even now, in a rather difficult time from an economic point of view, the demand for auto parts is not falling, but even growing, because in times of crisis, people prefer to repair a used car better than buying a new one. Therefore, opening your own outlet for the sale of auto parts has prospects even in small towns, they are not available only in remote rural areas.
The competition, of course, is very high, but the conduct of this kind of business is mostly not carried out in an optimal way. If you study the local market for automotive parts in any city, then good service can be found in official centers or large dealers, but the price of spare parts in such stores is very high. The rest of the entrepreneurs do not particularly bother with increasing their competitiveness – they buy parts every day, the profit is not bad, why change something then? But there is something to change.
If you have a desire to open your own auto parts store, then you need to consider, first of all, improving the level of service, which will give a huge advantage over other players in the market. Focusing on the client in such a business will allow you to take a leading position among competitors simply because no one is doing this much today. Thus, we can conclude that the competition is great, but it is relatively easy to get by with more modern methods of doing business.
How to open an auto parts store
There are many options for opening an auto parts store. They all come down to the same principle – buy from a wholesaler cheaper and sell at a higher price at retail, but a novice entrepreneur is free to choose the features of trade and can cover different market segments.
To start running such a business, you should register as a business entity. It will be enough to register as an individual entrepreneur and choose a simplified taxation system.
After registration, the first thing to do is to decide on the car manufacturers whose spare parts are planned to be supplied. There is no need to try to cover all existing car brands. There are only a few major global automotive concerns in the world, but there are a lot of brands. Most of them belong to huge holdings, but spare parts for both Russian cars and cars of popular European brands are relevant for Ukraine.
Of course, it is possible to cover absolutely all manufacturers, even supplying spare parts for Indian and Iranian cars, but in addition to huge investments, you will need to deal directly with enormous amounts of information and cooperate with the limit of suppliers. Therefore, it is optimal to concentrate on one popular manufacturer, country of production, or simply select a few brands whose cars are most common. Work with cars of rare brands is unlikely to be occupied, since the purchased parts will be dead weight in the warehouse, because in the entire city of a million people there will probably not be even a dozen car owners, for example, the Holden brand.
The best thing to do is to carefully study the market and determine the parts for which cars are offered the least. This will allow you to quickly find your consumer, investing less money and effort in advertising. A promising direction for the sale of spare parts, for example, for the Chinese automobile industry – there are more and more such cars, but although there are corresponding stores, they are not in large numbers. And, of course, you need to rely on cash, because in order to trade parts for BMW, you need to purchase a consignment of goods worth more than when working with the AvtoVAZ model range.
What is also remarkable in such a business is a large range of possible start-up capital; if desired, a very small store can be opened by investing about 50 thousand hryvnias in it. If investments increase, then, as a rule, profits also grow, so you can count on such an undertaking with different amounts of start-up capital.
An important issue will be finding a place. There are probably three possibilities. Let’s examine each of them in more detail.
Auto parts store in the car market
The first is the location of the store on the territory of car markets. In large cities, most of the trade related to cars is carried out precisely in car markets, while an entrepreneur whose outlet is located in a car market has the advantage that only potential customers visit it. That is, the traffic is high and there is, basically, only the target audience. Of the minuses – a huge concentration of competitors from all sides, also seeking to earn. This does not allow overpricing of parts, and the business has to deal with struggle and hard survival. However, most auto parts stores in the car markets have been around for a relatively long time and are not going to close.
It will be especially lucky if there are no spare parts for some brands of cars available to motorists on the market (again, the Chinese auto industry is still a problem in small cities to find spare parts for them, this is due to the fact that Chinese cars have relatively recently become large. shipped in batches to our country).
On the territory of the car market, you can simply rent a typical small store with its own warehouse and retail space. Perhaps it will be possible to put up several showcases, but as a rule, buyers are not interested in this – they go for a specific detail and do not look back enthusiastically in the store.
As an option, this is a trade with a parking tray, but this is mainly done by sellers of stickers and cheap accessories, they will probably not buy expensive spare parts in this way – there is zero trust in such sellers. But it is cheaper in terms of rent.
Opening a specialized store outside the car market
The second option is to open a specialized store outside the car market, directly in the city, which eliminates the presence of competitors within walking distance for the buyer. In this case, you will have to spend extra money on advertising, find a place with high 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 be located near large car services or car repair shops. Owners of car service stations in general will be good partners, if you manage to attract them to your store, they will buy often and a lot. But as a rule, they are only interested in the price, they are looking for the cheapest item.
A car shop that is simply located in the city should additionally have a list of related products, which is not necessary for a point in the car market – next to it there are special shops for car oil, batteries and other universal things that are bought there. For a lonely auto parts store, such goods will become a good source of income and attract a non-target buyer, who, in the event of a breakdown of his car, is more likely to turn to where he has already been purchased.
Online auto parts store
The third option is the most complex, requiring significant investment, but also allowing you to cover not only your city, but even a region or an entire country. This is an online auto parts store. The easiest way to do this is in large cities, especially in the capital. It is there that it is cheapest to order foreign parts, and then start selling them. Although, it is not at all difficult to organize your online auto parts store in a small regional center. The main requirement is the presence of branches of carrier companies.
The range of such stores is an order of magnitude larger than an ordinary outlet and covers several manufacturers and all their models. It is optimal when the site operates throughout the country, sending details to customers by advance non-cash payment, and has its own store in its city.
Additionally, an online auto parts store will require a significant storage space. It is also worth considering attracting a courier, who must either have his own car or work for a worker, but he will have to be bought.
And, of course, the site itself will be required, its development, further support and promotion require certain investments.
At the same time, the site should be user-friendly and have the ability to select spare parts – by VIN code and by specialists based on complete information about the car. This is very often neglected by online auto parts stores.
Many modifications of the same model very often lead to a situation where the part did not fit. And if the buyer can return to a regular store for an exchange, then he cannot leave for a foreign city. Accepting spare parts for exchange by shipment is expensive for an entrepreneur and takes a long time for a client who probably won’t come back again. Therefore, it is better at first to do the work in such a way as to exclude such situations.
Another difficulty is the development of a database of spare parts, without which the conduct of online trading will be much more complicated. You can buy it (but it is unlikely to cost a thousand hryvnias), or you can spend time and fold it yourself.
Staff and start-up costs
Whichever option you choose, at first you can work in the store on your own, and when you open a large outlet, you can attract another person or get by with the help of your family.
In the case of online sales, additional staff will be required to maintain the site and work with the clientele – this is about 5 more people, depending on the number of visitors and the range of products supplied. It is better to transfer accounting issues to outsourcing or, again, do it yourself if you have the appropriate knowledge.
As for the purchase of parts, then, as mentioned above, it all depends on the starting capital. The most popular spare parts for a small shop can be bought and kept within 50 thousand hryvnias.
In a simple outlet, it will not be possible to sell dimensional goods – both the size is large and the cost is high, and they are not bought too often. If it is possible to find direct suppliers, then it will be possible to reduce the final cost of the consumer by half compared to competitors, but wholesalers, as a rule, cooperate only with buyers who buy large lots.
Therefore, a large warehouse or an online store for its opening should be supplied with goods as much as possible. The mark-up for the sale of car parts is on average 50%, which is added to the price by each intermediary – it is easy to guess that the client buys the goods at a deliberately high cost. Therefore, online stores sell goods at a big discount – they work with direct suppliers.
Summing up, we can conclude that despite the rather high competition in such a type of business as auto parts trading, with the right and deliberate approach to business, you can simply enter this business and start earning good money.