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Suply chain, price points and woes of the Interwebs


  

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The growth of the Internet has changed the way many places do business and has certainly effected the automotive service industry as well. Much of Internet technology is good, allows information to be readily available, streamlines information and workflow. Before I came back to automotive service I spent 10 years working in web based software development, so I think all of this is a good thing. What I don't like is the business model that most automotive parts manufacturers have adopted. If I simply google most part numbers I get from local suppliers I can get them cheaper online through places like Amazon and Rockauto. There are a few serious offenders like Gates, Standard Motor, Dorman ect. Most times I can find these products significantly cheaper in terms of my cost than my stocking suppliers. Now here is the issue, I don't think that my price is to high, I think the Internet price is to low. I understand that there is value added to a local supplier. Parts are in stock, there are operational and carrying costs, all which add value and cost to the local supplier. What I don't like is that large manufacturers don't support this segment of their customer base. There should be minimum retail pricing that the manufacturer allows which should be no less than the jobber price recommended by the manufacturer, it would be great if it were something like 10% over jobber. This would protect supply chain and the aftermarket service shops while still allowing the DIY to buy off the Internet. Its a hard sell at times when we're making slim margins on parts but the customer looks online, sees a price and thinks we're screwing them. Case in point, TCK271 Gates T-belt kit, cost me $144, list is $362, Amazon sells this for $92 shipped! I sell to the customer for $217, the lowest I can go without slitting my wrists.

 

How do you deal with this problem, how often do you run into it?

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The way I handle it is to not install a customer provided part. In the end you are responsible for the part regardless. say no warranty if it comes down to it in a court you are indeed liable. Weed out the bottomfeeders and thrive. fyi I will put on ppls wipers or install there bulbs but at no cost but brake pads, timing belts or anything else nope.

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The way I handle it is to not install a customer provided part. In the end you are responsible for the part regardless. say no warranty if it comes down to it in a court you are indeed liable. Weed out the bottomfeeders and thrive. fyi I will put on ppls wipers or install there bulbs but at no cost but brake pads, timing belts or anything else nope.

 

You are right, I don't remember where but I was reading just recently that regardless of your statement and the customer's acceptance that there is no warranty, any court will hold you to an "implied warranty." Basically according to the article it comes down to you charged the customer to XXX. The customer paid you to do XXX. The customer is entitled to "fair value" of XXX. Now as I read it that only applies to your workmanship and when yo install their part you are accepting it as viable and that becomes part of your workmanship as it is your professional assessment that the part is proper. Now in Michigan we do not have to provide a warranty and if we do it must be in writing on the work order in order for it to be enforceable. But this does not absolve a shop of responsibility to a customer to provide fair value in that if you installed a water pump and it leaked on the hoist then you have to do it again at no charge. If it starts leaking three months later, well then it's their baby and they get to hassle with the part supplier, unless you screwed up and didn't tighten a hose clamp, clean the gasket surface right or such.

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IF I install customer supplied parts I have it on the work order and they initial by it that I only warrant my labor for the initial installation was done properly and according to the vehicle manufacturer's guidelines. The statement also spells out, in no uncertain terms that if the part fails after they leave the shop that there is no warranty expressed or implied regarding the part and associated labor to replace the part should it prove defective in the future. It probably would not stand up in court, but at least the judge should see that the customer knew and understood that they were accepting the risk of a faulty part. Typically I charge a higher labor rate and that drives these people away. I have however secured a few good customers by accepting their customer supplied part job when they thought they could do it but then decided it was wiser to have someone else do it. I respect people who want to do it themselves for the satisfaction, especially when they identify their limitations and stop before they make a bigger problem. The ones I have zero respect for are the one who want to get the part themselves because it's cheaper. Even had one guy ask me, "Well I'm gonna get it at NAPA, same place you do so why can't I get it and have you install it and save some money?" I told him I would be delighted to install his part, but the labor would be $ZZZ instead of $XXX. He decided he didn't like my attitude. He didn't like my attitude that I am in business to serve people who value my services, professionalism, integrity, dedication and expertise. People who value me enough to trust me to select the right parts, do the job the right way, and charge the right price for the quality and so I will still be in business next year when they need more service. Yep he didn't like my attitude. Fine, I didn't like his "You're charging me too much because I can screw it up cheaper than if you do it right" attitude either.

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My issue here is not the customer bringing parts to me. We deal with that in a different way, I usually simply ask them if they would bring eggs to a diner. The issue at hand is one of customer perspective. If a customer leaves and googles parts on their bill, or is just interested and has done so before hand and see that the price I charge them is 2 or three times what they can buy it for online, they believe that I must have gotten a better price than the online price, since I'm in the industry. They then think that I screwed them. That is the problem.

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Exactly of course a steak is cheaper at the store then the resturaunt but you cannot bring your owm. Im the same way you cant bring your own. Im nice in the way i present it ususally but I refuse to do it. Its the way I choose to do it. Is it correct? Its all a matter of opinion. Same with giving quotes over the phone I refuse to do it cause I know I cannot give an accurate $ I may give a ball park but I am not going to low ball it get it in tear it down and call with 1k more needed. After a while we have weeded out the bottom feeders and its allowed me to give better service to the better customers. When times were slow we were not and I am happy about that.

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  • 2 weeks later...

This problem has become bigger for us in San Diego. We get it regularly. The only real way I see to solve this issue is Labor rates have to increase to compensate for the loss of profit. My parts profit has gone down 5% over the past two - three years because of this (and with the parts companies increasing their costs.) I really feel like the parts companies aren't thinking ahead with their philosophy and if many auto repair shops go out of business they are going to take a hit, although their have been many parts companies that have gone out of business already.

 

I think the smart shop owners will do what they have to in order to survive and labor rates will increase naturally as a result, as our parts profits decrease. It's harder for a customer to justify labor rate than it is for them to justify why your part you sold them is $90 less online, same brand. etc. This is how plumbers, electricians, and others get away with charging more per hour than many of us do. I have been slowly ratcheting up my labor rate with very little squawking. However, raise your parts prices to your customers and watch the complaints start.

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Now matter how you slice it and dice it at the end of the month we need to be profitable. Next time somebody complains about part prices I'm going to try moving the part profit over to labor and see what happens.

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