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Old 03-17-2016, 01:13 AM   #1
BBBoy323i
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I want to become a local aftermarket parts distributor

Hey guys, hope you can help me out. I want to become a local aftermarket parts distributor. I aim to specialize in European cars, BMW, Audi/VW, and Mercedes. I feel that there may be a need for this in my area, especially considering shipping prices for oversize items. I'm looking to set it up like this, they order the part through me, I buy it from the vendor (hopefully at a discount) and set up shipping. There's a company in my area called ship to Hawaii who has their own shipping system. Still thinking of whether to do it from home or lease a space. Do you guys think this is feasible? Thanks
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Old 03-17-2016, 01:15 AM   #2
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Hopefully? This sounds like a win win. In before...
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Old 03-17-2016, 01:33 AM   #3
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You would probably have to get super specific tuner companies that aren't already represented in Hawaii to really stand out.

For the general tuning parts companies like H&R, Brembo, etc it doesn't matter if a shop specializes in non-European, they can order the European parts no problem. It all comes down to how thin a margin are you willing to take to be competitive. Also getting companies that aren't represented by established tuning shops there would be key too. Like if a shop only has Brembo, you get an account with AP Racing.
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Old 03-17-2016, 01:54 AM   #4
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You would probably have to get super specific tuner companies that aren't already represented in Hawaii to really stand out.



For the general tuning parts companies like H&R, Brembo, etc it doesn't matter if a shop specializes in non-European, they can order the European parts no problem. It all comes down to how thin a margin are you willing to take to be competitive. Also getting companies that aren't represented by established tuning shops there would be key too. Like if a shop only has Brembo, you get an account with AP Racing.

I am willing to take on a thin margin. I'm thinking of companies such as racing dynamics, Hartge, AC schnitzer, Hamann, etc to differentiate myself from other shops. I have a friend who knows the owner of racing dynamics, Mason engineering, and Ireland engineering.
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Old 03-17-2016, 02:02 AM   #5
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I get you, but if I was still living in HI and I wanted BMW tuning co parts, I would most likely call a shop in LA and pay no sales tax then deal with the shipping costs. You have to research that aspect too to see if it still works with local sales tax involved.

Easiest thing would to get your business license, get the accounts you want and then bring those accounts to an established tuning shop that may help with costs for a commission
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Old 03-17-2016, 02:15 AM   #6
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I get you, but if I was still living in HI and I wanted BMW tuning co parts, I would most likely call a shop in LA and pay no sales tax then deal with the shipping costs. You have to research that aspect too to see if it works.
Thanks for the advice, I would have to do some research on that. However, Hawaii does have pretty low sales tax in general, I don't believe that would offset shipping costs too much.
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Old 03-17-2016, 02:23 AM   #7
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Thanks for the advice, I would have to do some research on that. However, Hawaii does have pretty low sales tax in general, I don't believe that would offset shipping costs too much.
4.5% + Shipping vs 0% + Shipping
Buying/shipping bulk helps but the last thing you want to do is be stuck holding inventory and having the space needed to store it
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Old 03-17-2016, 02:41 AM   #8
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4.5% + Shipping vs 0% + Shipping
Buying/shipping bulk helps but the last thing you want to do is be stuck holding inventory and having the space needed to store it

That's true. I need to talk to some vendors and see what kind of deal we can work out.
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Old 03-17-2016, 09:39 AM   #9
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I've been out of the aftermarket parts biz for a while, but here's how it was 15ish years ago.

The parts mfgs want to sell to stocking dealers that place a large ($10K, $50K, $100K) stocking order to open their account and then place a required minimum monthly order ($1K, $5K, $15K) to maintain their dealer status. It is those dealers that can buy direct from the mfgs and get the steepest discounts (thereby being able to sell at the lowest price or make the most money selling at msrp). These are "warehouse distributors" or wds.

The mfgs don't want to deal with small onesie twosie orders, and especially not from dealers that only do business with them that way. It's inefficient and a PITA for them. So they'll refer those buyers to one of their wds to buy stuff. The wd will sell to them, but at a price about halfway between msrp and wd, often referred to as "jobber".

With mfgs that strictly control retail pricing, this model works. Both wds and jobbers can make money selling the mfgs parts. The wd makes more on retail sales, but they also are the ones with the big expensive warehouse and call center and shipping staff. They also take the burden of dealing with many customers off the mfg. The jobber can often make additional money on installation.

With mfgs that don't strictly control retail pricing, their parts end up whored out on every website and in every magazine, the competitive retail price is driven down so low that there's no margin for a wd to even have a jobber price, and it basically becomes impossible for a jobber to make any money because your customer can buy the item for the same price you can.

You need to look around HI and try to see if there are good reasons why no one is already doing what you're suggesting, and whether your plan has a way to overcome those reasons.
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Old 03-17-2016, 12:21 PM   #10
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I've been out of the aftermarket parts biz for a while, but here's how it was 15ish years ago.



The parts mfgs want to sell to stocking dealers that place a large ($10K, $50K, $100K) stocking order to open their account and then place a required minimum monthly order ($1K, $5K, $15K) to maintain their dealer status. It is those dealers that can buy direct from the mfgs and get the steepest discounts (thereby being able to sell at the lowest price or make the most money selling at msrp). These are "warehouse distributors" or wds.



The mfgs don't want to deal with small onesie twosie orders, and especially not from dealers that only do business with them that way. It's inefficient and a PITA for them. So they'll refer those buyers to one of their wds to buy stuff. The wd will sell to them, but at a price about halfway between msrp and wd, often referred to as "jobber".



With mfgs that strictly control retail pricing, this model works. Both wds and jobbers can make money selling the mfgs parts. The wd makes more on retail sales, but they also are the ones with the big expensive warehouse and call center and shipping staff. They also take the burden of dealing with many customers off the mfg. The jobber can often make additional money on installation.



With mfgs that don't strictly control retail pricing, their parts end up whored out on every website and in every magazine, the competitive retail price is driven down so low that there's no margin for a wd to even have a jobber price, and it basically becomes impossible for a jobber to make any money because your customer can buy the item for the same price you can.



You need to look around HI and try to see if there are good reasons why no one is already doing what you're suggesting, and whether your plan has a way to overcome those reasons.

Thanks for the info. I'll have to take all of that into consideration. How did your business do?
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Old 03-17-2016, 12:28 PM   #11
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Old 03-17-2016, 12:29 PM   #12
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I want to become a local aftermarket parts distributor

I'll tell you one thing. Anything to do with cars, whether it's selling them, fixing them, gassing them or selling parts is a capital intensive low margin business.
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Old 03-17-2016, 03:00 PM   #13
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Thanks for the info. I'll have to take all of that into consideration. How did your business do?
It wasn't mine, I just worked there. 11 years. The parent company had about a dozen "full service" tire stores meaning they also did brake/suspension work and light tune up/repair stuff. There was a separate handful of stores that did 4x4/off road stuff. The store I worked at did sports & luxury car/racing/sport compact/sport truck stuff. Mostly retail, but also wholesale, mail order and internet.

We could leverage the buying power of the greater company with vendors and get better pricing than a typical small boutique dealer with a single location would. But it was still a tough business to establish and exploit a competitive advantage in. We tried to have better trained guys in the store and on the phone so we could give customers good advice. And we didnt lie to customers ("oh yeah, a K&N filter will definitely give you 40 more hp, whats your credit card number?").

But some customers just don't care about that and if your website says $49.99 and someone else's says $49.95, or you say + 3 hp and the other guy says +18 hp, thats who they buy it from.

Its also hard to promote, because everyone says they have the most knowledge, best service, lowest prices, etc.
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Old 03-17-2016, 03:32 PM   #14
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I'll tell you one thing. Anything to do with cars, whether it's selling them, fixing them, gassing them or selling parts is a capital intensive low margin business.
I see, maybe I can do this as a side business or something. I definitely have to have a main source of income, and unless demand is high idk if this would work.

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It wasn't mine, I just worked there. 11 years. The parent company had about a dozen "full service" tire stores meaning they also did brake/suspension work and light tune up/repair stuff. There was a separate handful of stores that did 4x4/off road stuff. The store I worked at did sports & luxury car/racing/sport compact/sport truck stuff. Mostly retail, but also wholesale, mail order and internet.

We could leverage the buying power of the greater company with vendors and get better pricing than a typical small boutique dealer with a single location would. But it was still a tough business to establish and exploit a competitive advantage in. We tried to have better trained guys in the store and on the phone so we could give customers good advice. And we didnt lie to customers ("oh yeah, a K&N filter will definitely give you 40 more hp, whats your credit card number?").

But some customers just don't care about that and if your website says $49.99 and someone else's says $49.95, or you say + 3 hp and the other guy says +18 hp, thats who they buy it from.

Its also hard to promote, because everyone says they have the most knowledge, best service, lowest prices, etc.
Oh I see, so maybe if I could buy a franchise that does this it might work?
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Old 03-17-2016, 06:48 PM   #15
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Old 03-17-2016, 06:57 PM   #16
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Why don't you just stick to bboying?
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Old 03-17-2016, 07:31 PM   #17
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Why don't you just stick to bboying?

Haha the funny thing is I can't even dance so yeah...I'llstick to my plan of property management/real estate and figure I'd save some money for my future business.
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Old 03-17-2016, 07:40 PM   #18
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Haha the funny thing is I can't even dance so yeah...I'llstick to my plan of property management/real estate and figure I'd save some money for my future business.
OR, you can sucker someone in to be partner.
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Old 03-17-2016, 08:41 PM   #19
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OR, you can sucker someone in to be partner.
I could lol
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