Even as Amazon invites franchised dealerships to sell parts and accessories on its site — for a hefty fee — it is working with aftermarket providers to compete with dealership fixed operations on such basic products and services as tire sales and installation and brake repair.
Amazon announced in May 2018 that it was partnering with Sears Auto Center on tire-and-wheel installation. Five months later, Sears filed for bankruptcy; it has since cut by one-third the number of auto centers it operates, to 195. Amazon has expanded other high-profile partnerships with Pep Boys and Monro.
Adam Goetsch, Amazon's automotive director, says the company now has more than 1,400 installation locations spread across six partners.
Customers can order tires and brake components and have them shipped to and installed by local stores.
"Installation is paid for during checkout" from Amazon along with the price of the parts, Goetsch says.
Amazon seeks to dominate all aspects of personal transportation, says Max Zanan, president of Total Dealer Compliance, a consulting firm in New York. He says "dealerships don't take the Amazon threat seriously" about the growing competition it poses in service and parts sales.
"Retailing cars is hard because the margins are small," Zanan told Fixed Ops Journal.
"Getting into used cars is problematic because you have to stock inventory. If I was Amazon, I'd want to get deeper into parts and service because the margins are much better."
Zanan says dealerships need to pay more attention to tire sales, which he calls the key to building relationships with service customers. Replacement tires are the first major expense most vehicle owners face, he notes.
"It's a substantial investment in inventory, training and equipment to get heavily into the tire business," Zanan says. "But whoever sells the first set of tires often wins the service game. Are dealers really willing to forgo that without a fight?"
Amazon's partnerships have big advantages for the online retailer, which gets brick-and-mortar services at a low cost, says Jim Lang, a parts marketing consultant in Fort Wayne, Ind. But they often aren't as good a deal for the installers, Lang notes.
"In this online to offline scenario, the installer doesn't make anything on the part," says Lang, an adviser to CarParts.com, an online parts retailer. "That's captured by Amazon."
Although the Amazon partnerships dramatically lower the cost to the installers of acquiring customers, Lang adds, those consumers may not come back to the store.
"The platform controls the relationship between the customer and the installer," he says. "Unless you can kindle a relationship with that consumer directly, you haven't gained a new customer. Amazon may send them to the Monro a mile away next time."