Parts number is the fundamental element in spare parts market. Deep understanding in parts number is essential for counterhand to run their business smoothly. Experienced counterhand able to tell the application model, utility group, estimated yearly sales qty, inventory status, holding cost etc. by took a glance on the parts number. In another way, they able to spell out the correct parts number by looking on the parts dismantled from vehicles without refer to catalogue. Sound marvelous to managers in Principals, but is common ability among counterhand. They are not fit to sit at counter if they don't have the ability.
As discussed in previous articles, there are interchangeable numbers, OEM number, factory number, white brands number, counterfeit number, suitable/flexible numbers, and even own created number and Genuine OEM number. Counterhand keep this information in their handbook as their core competitive advantage. These knowledge help them to growth business, deter competitor and cultivate higher margin. How?
We discuss this thru the case study below, piston ring for L6 engine:
Assume this is the information in their hand book and in their mind. A customer come to their counter ask for Genuine piston ring for 1 piston (loose), they don't keep stock because of high holding cost. How counterhand use these information to close the deal? First scenario: They will told customer the selling prices is $260.00 (transports charges included) but needs to wait for 3 to 4 days for stock arrival. If customer willing to wait, deal done. But most of the time customer won't wait because downtime is another cost.
Second scenario: Counterhand will introduce OEM A to customer, customer reluctant to buy because only 1 piston ring is required, the balance 5 pcs is useless to keep and the selling prices is much more higher compare to loose pack. Here come the interesting point, if counterhand confident that this customer is unable to source from others parts shop, counterhand will insist the set-packing is the only available parts in market as per current market situation. So instead of $260.00, counterhand manage to growth the sales to $880.00. It is good for counterhand;sales increase, and commission increase.
Third scenario: Rival parts shop is nearby, and they are dealer of OEM B. Counterhand know it, so they propose to customer that stock OEM B is available at another store, the prices is $180.00. Once customer agree the prices, counterhand will buy back from rival at $150 and sell to customer in $180 without being noticed by customer that the goods is from nearby shop. This is important tactic to avoid their customer switch to rival parts shop. Fourth Scenario: Counterhand don't know OEM B exist in market. Therefore hard sell OEM A at $880.00. Customer not afford to buy, visit to parts shop near by and get piston ring OEM B at $150.00 for 1 piston. Counterhand lost this customer permanently because deemed unprofessional in parts knowledge.
Fifth Scenario: Customer insist buy Genuine parts and insist get it immediately, if counterhand fail to fulfill this request...all future order will switch to another spare parts shop. So counterhand buy 1 pcs imitation parts at $180.00 from competitor and sell at $250.00. Sixth Scenario: Customer insist buy Genuine parts and insist get it immediately, counterhand unable to fulfill. Customer visit to competitor shop and get a Genuine parts at $180.00 without notice it is counterfeit. Counterhand lost this customer permanently because deemed selling genuine parts at huge margin. So we can see the parts market is dominant by OEM and counterfeit parts. Genuine parts from Principals is neglected by parts market ... not because high prices, but wrong price positioning in market.
Why it is wrong prices positioning but not higher prices?
Because the quantity of brokers and margin involved in the supply chain of Genuine parts, OEM parts and imitation parts are almost same. Who will get competitive prices depend on how much order committed to OE manufacturer and negotiation skill. Due to insufficient market information, parts manager at Principals unable to commit and negotiate for competitive campaign prices thru headquarter at oversea while importer of OEM able to negotiate thru oversea trading house for better prices because of sufficient information gathered from market. For OE manufacturer, the sales is either go to Principals (at Malaysia) or parallel importer (at Malaysia), so they will provide better prices to those who can commit higher volume thru broker (trading house or oversea headquarter) . For Principal to compete with OEM and parallel importer, build up information source from counterhand is an essential facility to stay competitive in market.
How to build up this facility?
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