We have discussed about Auto Spare Parts Business in our another article. You may read that article later. In this article we will discuss about its profitability and growth potential in this industry.
This business doesn’t need any specific degree to commence but you have to understand the nitty gritty of this field. You have to understand the specifications of different spare parts. You may need to advise your customers what to buy and what to not.
Profitability of Spare Parts Business
This business is very lucrative and has high profit margins. Profitability of a business depends on following points.
- Your business location
- Availability of quality products and variety
- Minimize extra expenses of business
- Purchasing of stock at good prices
1. Business Location
Location plays a vital role in profitability of a business. If you are operation in a market where walk in customers are large in numbers, it means you can increase your sales and high sales results in high profits. Similarly if you are located out side of a market, it can effect your sales. Its very difficult to survive for any business with low sales.
2. Quality Products
Quality of Spare Parts is mandatory for repeated sales. You have to offer good quality products and services to your customers to retain then. Otherwise you will lose your customer base. Loyal customers feed your business. You have to maintain quality of products and after sales services. Hence this is the only secret to gain loyal and repeated customer base for high profits.
3. Minimixe Extra Expenses
In beginning of a business you should control your expenses. Otherwise you will face problems in handling your business. People make a common mistake by increasing their extra expenses. For Example, they purchase unnecessary items for their offices. First of all, business owners need to make cost cutting strategy. Secondly, only spend on highly important things for your business. Once you have established your venture enough, you can purchase less necessary supplies for your office and store outlet.
4. Purchase Inventory at Good Price
When it comes to purchase inventories for your auto parts store, always try to purchase in bulk quantity. It will help you to get good price from wholesalers and manufacturers of auto parts. Eventually, you will have good margins on parts for selling them on retail. Explore big markets of wholesalers, approach directly to the manufacturers of spare parts. Compare prices with other suppliers to get right price for your purchases. But never compromise on quality for price. Because quality products are life blood for your business.
Different Models of Spare Parts Business
Auto spare parts business can be started in different models. Few of them are mentioned below.
- Retail store in auto parts market
- Retail store and workshop
- Online spare parts store
You can set up a retail store in auto parts market and start selling to customers in your locality. Once you have established good customer base for your store, this business will turn profitable for you.
Retail Store with Workshop
Furthermore, If you have enough amount of investment, you can start your own workshop along with retail auto spare parts store. This business model can increase your profitability. Auto parts store with its own workshop allows the vehicle owners to purchase parts and fix it at one place. Customers prefer such auto stores to purchase parts which have workshops nearby. Therefore, it can be a good opportunity for entrepreneurs to grow in this industry.
Online Spare Parts Store
Internet has its own worth, and it is increasing day by day. Concept of e commerce is getting common now a days. People prefer to shop online rather physically going outside and shop. Customers select products online, and online store owners ship their products through courier at their door step. This is a very good opportunity if you don’t want to operate a physical brick and mortar store.
An online store can be started from home. You don’t need huge capital to start this business model. The setup cost is very low. You only have to pay a nominal amount for domain and hosting.
How to Grow Auto Parts Business
You can grow your spare parts store by providing good service and quality products.
Stand out of the crowd
First of all, you have to stand out of the crowd. Definitely, it will take time. But once you have set your standards to provide genuine parts with good after sales services, customer will prefer you for his purchase.
Make things easy
Secondly, make things easy for your customers. For example, you can start a telephonic service to place urgent orders. In this era of internet, you can launch a website for your store. Customers can easily access you on internet. They can see your catalog with complete product details, they can place order online regardless of your normal 9 to f working hours.
Facilitate your customers
Moreover, facilitate your customers with convenient delivery options. Provide them special service. Always try to explore new prospects for your business. Contact with potential clients who can purchase from you in bulk quantity.
Promote your business
Promotions plays a vital role to increase sales of the business. Run promotional campaigns from time to time. Gain attention of your potential customers by offering them trending products in your industry as well.
Build relationship on B2B level
You should maintain a good relationship with other businesses which directly relate to your business. For example, car detailing shops need parts to serve their customers. Why not to purchase these parts from you? It can happen, if you keep in touch with these shops to maintain business to business relation. You can provide special discounts to them. This is a good approach to increase your sales.
Maintain PR with customers
Spare your time to maintain a personal relation with your customers. Keep in touch with them. Occasionally, call them or drop a text message. Ask them about their vehicle maintenance. Inform them about new gadgets. Be nice to them every time you talk to them. It will help to repeat your sales. Finally, it is beneficial for your sales volume and growth.
There can be some other techniques to increase sales and grow the spare parts business. i will discuss it in some other post. I hope you will find this article informative. Share it with your like minded people.