Online part sales have yet to catch up in our country
South of the border automotive parts e-commerce is on a tear.
According to a recent report by automotive aftermarket data specialists Lang Marketing, online parts sales increased by 50 per cent between 2019 and 2023 bringing the market to USD$35 billion. That represents about a 14 per cent share of the total aftermarket.
A big chunk of that growth came in the COVID years when the physical business hobbled and digital sales skyrocketed. The explosive growth has since tapered off but has remained strong enough to manifest solid year-over-year increases. Do-it-yourself (DIY) sales have traditionally buoyed the online market, but higher growth is coming from the business-to-business (B2B) segment now. Indeed, the B2B share of online sales has doubled since 2016, according to the Lang report. B2B growth is expected to continue to outpace DIY growth in e-commerce in the next five years.
Given that the Canadian market often mirrors America, the e-commerce story would be similar here, right?
Wrong.
Before we get into it, I must note that data on online sales in the Canadian aftermarket is limited. My analysis — or theories — to follow are entirely based on my observations of the market and ongoing discussions with industry stakeholders.
Let’s start with the big picture. Compared to about 16 per cent in the U.S., Canada’s online share of overall retail sales was around 12 per cent in 2024, based on data from eMarketer. Not a huge gap, but things are different in automotive.
America has become an increasingly retail-driven market in the last couple of decades with the ascendance of the big four players: AutoZone, NAPA, Advance Auto Parts and O’Reilly. All these retailers have a substantial presence in online sales. Then there are marketplaces such as Amazon and eBay, along with highly successful pure players such as Rock Auto, Jegs, Summit Racing and others. All of these competitors report substantial revenue.
Canada does have NAPA and Canadian Tire/PartSource, but its other key players are distributors such as Uni-Select and Lordco, which do not have a direct e-commerce presence. It does have the tire retailers and Amazon, but other pure players such as PartsAvatar and Tdot are either too small or too niche. We are also a largely DIFM market that does not lend itself to consumer e-commerce.
E-commerce is also a great source for understanding your market position. Do you have the right products? Are you positioned correctly in the market?
According to a survey by the Automotive Industries Association of Canada, only 12 per cent of respondents purchased online parts in Canada. Top purchase categories included motor oil, washer fluid and wipers. While the AIA Canada data paints a positive picture, other anecdotal evidence suggests that online penetration is well below 10 per cent.
Suppose we assume the Canadian parts aftermarket to be about USD$11-12 billion (based on the Auto Care Factbook, service and parts estimate at about USD$24 billion). In that case, online sales will account for less than USD$1 billion overall.
So, the big question is: Does parts e-commerce matter in our market?
If you are simply thinking about revenue, probably not for most stakeholders. Unless you are selling wipers and tires, the market is still too small to have a major impact on your topline.
But there are other things to consider here. Canada has enough online pure players and traditional retailers to create price transparency for customers. Twenty-one percent of Canadians browsed for parts online before making a purchase decision, as per the AIA Canada report. My assumption would be that number is far higher when Canadians make a repair decision; that is, when they are not looking to buy a part but would simply like to know if they are being charged fairly for parts and labour.
Part websites may not generate a lot of sales, but they influence purchase decisions creating product and pricing transparency. A customer might request a garage for a specific brand if it fits their budget and quality needs. If a product is available across multiple websites, a customer might attribute availability to popularity. Therefore, a brand without an online presence may as well be operating in the dark.
E-commerce is also a great source for understanding your market position. Do you have the right products? Are you positioned correctly in the market? Industry stakeholders regularly use online data to benchmark their products and pricing strategies against their competitors.
It might be a while before Canada sees any substantial revenue from online platforms, but e-commerce is still a worthwhile pursuit.
Kumar Saha is vice president (U.S.)/managing director (Canada) of global automotive data firm Eucon. He has been advising the North American automotive industry for over a decade and is a frequent conference speaker and media commentator. He is based out of Toronto.
This article originally appeared in the September issue of CARS magazine
