By Nathan Rigby, VP Sales and Marketing at One Click Retail

In Q1 2018, European car sales recorded the weakest quarter in 5 years. As the boom in new car sales comes to an end, the automotive aftermarket – including car care, parts, tools and accessories – will grow to meet the needs of an aging fleet of vehicles.

Amazon is prepared to meet this demand. In 2016, the company launched its own car research site and parts marketplace, allowing shoppers to punch in the make and model of their vehicle and view all available parts. This year, Amazon has been developing a new version of their Alexa-powered Echo speaker designed specifically for cars.

These strategies will attract more car owners to Amazon and encourage consumers to associate Amazon with automotive products. The company is already selling vehicles in Italy and their latest investments put them one step closer to selling cars in the company’s larger European markets of Germany, the UK and France as well. Until then, Amazon’s sales of aftermarket products in Europe is going strong, earning over €250 million in estimated first-party sales last year, with year-over-year growth in the double digits. Let’s have a look at the top trends driving Amazon’s Automotive market in Europe.

 

By Nathan Rigby, VP Sales and Marketing at One Click Retail In Q1 2018, European car sales recorded the weakest quarter in 5 years. As the boom in new car sales comes to an end, the automotive aftermarket – including car care, parts, tools and accessories – will grow to meet the needs of an aging fleet of vehicles. Amazon is prepared to meet this demand. In 2016, the company launched its own car research site and parts marketplace, allowing shoppers to punch in the make and model of their vehicle and view all available parts. This year, Amazon has been developing a new version of their Alexa-powered Echo speaker designed specifically for cars. These strategies will attract more car owners to Amazon and encourage consumers to associate Amazon with automotive products. The company is already selling vehicles in Italy and their latest investments put them one step closer to selling cars in the company's larger European markets of Germany, the UK and France as well. Until then, Amazon's sales of aftermarket products in Europe is going strong, earning over €250 million in estimated first-party sales last year, with year-over-year growth in the double digits. Let's have a look at the top trends driving Amazon's Automotive market in Europe.

 

When comparing Amazon’s European Automotive market to the performance of Amazon.com, we see one striking difference. In the US, Auto Parts make up nearly 50% of product group sales, while in Europe, the category share is less than half of that.

There are many factors at play which may affect this disparity. In the US, the average age of vehicles on the road is at an all-time high. In many European countries, “roadworthy” regulations are more strict than in most US states, so drivers tend to take their cars off the road sooner. Another factor is the maturity of active living and public transportation in Europe encouraging consumers to limit their use of vehicles, while in much of America “car culture” remains a powerful market force. Additionally, it may be the simple fact that Amazon’s market penetration isn’t as high in Europe as in the US and therefore many European consumers are not as comfortable purchasing auto parts online.

What’s less likely to drive the disparity is the DIY trend. In other product groups, DIY seems to be just as popular in Europe as in America, so we wouldn’t expect Europeans to be less comfortable modifying their vehicles than Americans. In all markets, car owners are opting to perform basic maintenance themselves rather than going to an expensive mechanic.

DIY skills are more accessible than ever thanks to a wealth of online tutorials, forums and YouTube guides, and it’s easy for self-taught consumers to quickly open a new browser tab, go to Amazon and buy the parts and tools they’re going to need. This is especially pronounced among millennials, so we expect that Amazon’s sales of Auto Parts in Europe, like in the US, will continue to climb.

Automotive in Europe: The Amazon Effect

Car Care

Owners of older cars tend to invest in parts and maintenance, while newer car owners spend more on appearance products and accessories. This trend has driven Car Care, Chemicals & Fluids to be the largest Automotive category in both Germany and the UK. This popular category, which includes polishes, oils, coolants, and solvents, is also the fastest growing category in both the UK and France and is on track to rank as the largest category in France in 2018.

In all three countries, this category is led by the Castrol brand, the #3 Automotive brand overall in Germany. This is consistent with a trend we see throughout nearly all product groups on Amazon: the rapid growth of consumable products.

The second largest category in Europe, Automotive Equipment and Tools, also contains many consumable items but is led by on-the-road maintenance items such as air compressors and jump starters. Unlike consumable items, these tools tend to be one-time purchases, and therefore this category experiences a much slower growth rate than the leading category.

With the post-recession boom in European car sales now coming to an end, the average age of vehicles on the road is rising, driving growth in Car Care and associated categories. Brands in this space can benefit from selling on Amazon, not only because of the growing consumer demand, but also because Amazon is an increasingly attractive retailer for professional buyers. Mechanics and auto shop owners are finding that Amazon’s competitive pricing algorithm, economy of scale, and free shipping make it a reasonable alternative to traditional B2B suppliers in a growing number of product categories.

Automotive in Europe: The Amazon Effect

 

Thule

Despite ranking low on the list of top categories, Transporting & Storage is very present among the bestselling items in each European country. This is single-handedly caused by the success of Thule, a brand that produces a variety of storage and transportation accessories for vehicles, specializing in bike carrying systems.

Thule is the largest Automotive brand overall in Europe. Though it operates in a relatively small category, its share of that category is very high: 75% in the UK, 65% in Germany and 60% in France. Many of the other leading brands in this space have success by having presence across a broad range of categories, which drives total sales even when ranking lower in individual category. The advantage of specializing in a narrow space, as Thule does, is that one brand can dominate the search results pages and maintain very high visibility among a focused target audience, making it very challenging for competitors to disrupt their market share.

2017 was the year when Amazon’s importance to the Automotive market became clear. The company’s diverse investments in this space, including vehicle sales in Italy and private brand items under the AmazonBasics label, have caused the industry to prick up their ears. With European car sales dropping off in Q1 2018, an aging fleet of vehicles will continue to drive aftermarket sales and, like in so many other industries, the most growth is taking place online. As Amazon continues to expand its position in this space, it will be key retail partner for brands in the years to come.

 

 

One Click Retail is the industry’s most accurate source of sales data for the world’s top eCommerce marketplaces. Using a combination of website indexing, machine learning and proprietary software, OCR estimates weekly online sales figures with market leading accuracy in order to deliver the best insights, analytics and strategies to their brand manufacturer clients. To catch a glimpse of how OCR gives brands critical edge on online platforms with our unique data and expertise, subscribe to our weekly eCommerce insights blog, and follow us on Twitter and LinkedIn.

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