E-Commerce Trends – Strengthening Sales and Reducing Shrink

Looking further into the top 20 categories, Sievers noted that Automotive Wheels and Tires generated the strongest year-over-year growth at +27%. Vehicle Batteries and Oils/Additives/Lubricants also posted strong year-over-year growth at +20%. 

And at the subcategory level, while Automotive Headlights generated the most sales volume, Floor Mats and Shocks/Struts grew the most rapidly at +22%. Other high-growth subcategories include SUV Tires (+56%), All Season Passenger Tires (+46%), and Wiper Blades (+35%).
I spoke with Sievers and his team about these data and their implications for aftermarket companies. His team shared: “Automotive sales are relatively stable throughout the year with muted surges on event weeks such as Prime Day or Black Friday Cyber Monday. As a reference point, Headphone category sales typically at least double during event weeks compared to the prior 4 week average.” The chart shows the pronounced increase in automotive parts sales during the Black Friday Cyber Monday (BFCM) periods in 2022 and 2023.


Note: BFCM = "Black Friday Cyber Monday"; T4W = "Trailing 4 Weeks"; PD = "Prime Day"; PBDD = "Prime Big Deal Day"
Source: Stackline, October 2023.

Looking at individual brand performance, Sievers identified Noco as “the top brand across Automotive with its line of jump starters and battery-related products. However, A-Premium generated the strongest growth (+121% year-over-year) of any top brand with a massive increase in promotional activity and ad spend. Noco branded search volume is up 23% year-over-year, with consumers actively seeking out the brand's products across the internet. However, only 6% of searches leading to Noco pages were branded.”

Stackline's Sievers emphasized the growth potential for companies via branded search: “Top search terms within Automotive are nearly entirely unbranded, with only 3% of organic traffic on the top 100 keywords coming via unbranded search. This is a highly competitive product set with relatively little brand loyalty within the online marketplace.”

As we head into the holiday season, the potential for sales is high, and unfortunately, so is the risk for fraud. Retail shrink across all sectors rose from 1.4% in 2021 to 1.6% in 2022 according to the National Retail Federation’s 2023 National Retail Security Survey. NRF reports that 78.1% of study participants indicated organized retail crime  is more of a priority than a year ago; 57.8% noted the same for e-commerce fraud/loss. 

There is good reason to be concerned: NRF estimates total shrink at $112 billion for U.S. retailers across all sectors – this “includes losses caused by both internal and external theft, operational or process mistakes and systemic errors” as defined by NRF. 

With the automotive aftermarket projected at $389 billion in 2023 (inclusive of non-warranty parts and labor) and e-commerce sales projected at $41 billion in 2023 (including Amazon, EBay and Walmart, but not including mobile service or parts ordered by shops via shop management systems), even 1% of shrink via e-commerce implies a $4 billion loss to the industry, not including any efforts to address it. 

Source: 2022 Joint E-commerce Trends and Outlook Forecast (available here.)

NRF’s study found that “loss prevention departments are becoming more engaged and responsible for ecommerce fraud oversight. More than 50% of respondents stated their departments had direct or indirect oversights for in-store fraud (71%); online or mobile fraud (70%); loyalty abuse or fraud (66%); return fraud (60%); and chargeback fraud (60%). The holistic approach is timely; 52% of respondents have seen an increase in ecommerce fraud in the past year, which includes the capabilities of buy online, pick up in store (BOPIS).”



NRF recommends a number of actions to reduce fraud, including: 
• Reviewing line voids, refunds, and seasonal employee discounts every 30 to 90 days.
• Monitoring employee purchases and tallying unique payment cards to estimate the number of employees benefiting from discounts.

With more than $936 billion in holiday sales in 2023, the possibilities of return fraud are significant: “For every $1 billion in sales, the average retailer incurs $165 million in merchandise returns” (https://blog.apprissretail.com/blog/handle-post-holiday-returns-with-care-top-strategies-to-limit-losses), so a healthy portion of that is likely fraudulent. 

The “Check the Part” campaign has been successful in reducing warranty abuse . Catalog and website managers know the importance of accurate product descriptions to reduce the chance of a customer ordering the wrong part. 

To address e-commerce fraud, a number of systems need to be designed and implemented, especially given the number of possibilities – for instance, if you order a part from a parts store online, are you able to return it to a brick-and-mortar store? If you return a part, are there limits on how many parts you can return in a given time period? 

We’ll explore this topic in more depth in a future article. Until then, best wishes to you and your families and loved ones for a wonderful Thanksgiving holiday!