Auto aftermarket in India beginning to think digital

After the recent demonetisation exercise, the Indian economy has undergone major restructuring which has caused disruption in many industries. In line with this, on March 22, ACMA organised a national seminar on ‘Preparing the Aftermarket for the Digital Economy’, which focused on e-retailing and scope of mobile wallets within the auto component value chain.

Recognising the need for reforming the aftermarket distribution channel through usage of digital tools, Sanjay Kumar Rakesh, Joint Secretary – Digital Payments, Ministry of Electronics and Information Technology, government of India, said, “The government is fully committed to building a digital India and lay a strong foundation for India’s transition to a cashless society. This is where mobile-wallets and technologies for new modes of transactions will play a critical role in supporting many manufacturers, distributors and retailers in expanding their business and transactions.”

Commenting on the transformation already underway in industry, ACMA president Rattan Kapur said, “Today’s generation is happy to go along with digitisation. Aftermarket channels will shift from the traditional brick-and-mortar template.” He said that in 2014, online sales totalling $20 million accounted for less than 1 percent of the aftermarket. But now the B2C market is slated to grow at a CAGR of 7 percent to $150 million by the year 2020.

YOUNG, FAST-PACED INDIA THINKS DIGITAL
There is a new and young India on the move which is fast dictating industry trends. At present there are 120 million smartphone users in the country and it is expected that the auto e-retailing sector is expected to log 10 percent year-on-year growth till 2020.

Speaking on ‘Digital in the Cognitive Era’, Sriman Kota, executive, Cognitive Engagement, Asia-Pacific, IBM, said that digitisation creates smarter consumers and allows for deeper engagement and advocacy. He said there are three key changes underway: (Consumers) Millennials who seek instant gratification; Mobility (connected cars); and Ecosystem (convergence of industries). He spoke about IBM’s Auto Data Exchange (autoDX), a business-to-business, cloud-based network designed to add efficiency to the supply chain and reduce business costs, something most aftermarket players would be interested in.

Tanmay Shah, category leader – Automotive, Amazon, spoke about the huge opportunity that digital presents to the aftermarket, particularly in a country like India. Citing the company’s reach in India, he said deliveries can be made to 19,000 pincodes in the country, pointing out how strong the postal system is in India. As regards speed of delivery, he said about 2 million deliveries can be made the very next day.

Citing figures, he showcased the rapid pace of online marketing in India. In 2015, Amazon was selling 22,000 automotive products from 6,000 sellers. At present, it has a million products and over 6,000 sellers. He revealed that in the ‘Amazon Great Indian Sale’ held between January 20-22 this year, the company sold “50,000 automotive products each day” and that many of the orders placed were from small garages from different parts of the country. Shah said product availability and genuineness are vital for success.

Shah revealed that Amazon plans to launch Automotive Part Finder, designed to enable customers to more easily shop by vehicle to find parts and accessories manufactured to fit their passenger car or two-wheeler “so that a customer can buy with peace of mind”. Interestingly, Amazon is also exploring launching a vehicle sales channel platform “aimed at hooking customers onto the aftermarket platform.”