Will Burgeoning E-Commerce Hurt the Collision Repair Industry? by Gary Ledoux
For many months prior to March, the collision repair industry had been preoccupied with ADAS systems and autonomous cars and trucks and their effect on the collision repair business. The systems are purported to greatly reduce accidents and mitigate the severity of accidents that do occur. Many in the industry were afraid this would have an ill effect on the collision industry—fewer accidents and less severity means less work for body shops. According to Frank Terlep, industry veteran and author of the recently released book, “Auto Industry Disruption,” only about 21% of the U.S. fleet currently has ADAS capability. If past history is any indication, it could be years before ADAS-equipped cars reach a crucial mass where accident prevention and severity mitigation have a profound impact on the number of cars requiring collision repair. For instance, hydraulic brakes for cars were patented in 1917. Ford would be the last auto manufacturer in the U.S. to adopt the hydraulic system in 1939. What might have a more immediate and long-lasting effect is the burgeoning concept of e-commerce, most lately exacerbated by the COVID-19 pandemic. COVID 19 Hits With the onslaught of the COVID-19 pandemic, people started working from home if their occupation allowed it, or many were furloughed if they couldn’t. Travel came almost to a standstill. Highways were empty, airplanes were empty, restaurants and hotels closed and American business was brought to its knees for weeks. With so many people no longer commuting and/or minimizing their trips, even locally, collision shops reported a decrease in business by 40% to 50% or more. Fortunately, American business is not only resilient but also innovative and resourceful. Despite many consumers staying home, American business is continuing to find new and innovative ways to reach and engage them through online
services and products. Granted, online purchasing is nothing new. It has been growing for years. But the past few months has seen some dramatic changes and increases. Online Shopping Goes Wild QuantuMetric, a digital consulting and intelligence company, estimates an increase of 146% in online retail orders from March through June. Neilsen, an independent consulting company in the UK, notes that in March, more than 600,000 people who had never used e-commerce before ordered some product online. Similar consulting companies listed similar results. One of the commodities most affected is weekly groceries and related products. According to Joshua Schall of J. Schall Consulting, an Austin, TX-based consultant for the consumer packaged goods industry, in 2015, only 15% of those consumers surveyed had bought groceries online. In March, that number had climbed to 55%. A survey conducted by Rakutan Super Logistics, a national leader in e-commerce order fulfillment and freight brokerage, shows a 250% increase in groceries sale volume for the month of March. Other products seeing a sizeable uptick were baby products, medical and cleaning products. Not surprisingly, there was a rise in online orders of alcoholic beverages. Again, this equates to fewer trips to the supermarket and related stores, fewer miles traveled and fewer traffic accidents. Lifting Stay-At-Home Orders May Do Little To Change Customer Behavior According to Rakutan, once stay-at-home orders are lifted, most consumers are more likely to stick to their newly-developed traits of buying products and services online. Those that stopped mall shopping, due to social distancing concerns, and used online shopping instead may opt to stay away from the malls completely. And speaking of malls, they have been dying for years. According to a study done by Credit Suisse and reported in Business Insider Magazine in November 2019, between 20% and
25% of America’s 116,000 shopping malls will be closed by 2022. Note this was announced prior to the pandemic. Experts note not the least of the reasons for the mall’s death-spiral is online purchasing exasperated by stores’ slow adaptation to changing consumer demographics and subsequent buying habits. Fewer malls, less reason to drive to them, fewer traffic accidents. Rakutan also notes “some consumers have invested in fitness equipment to use at home and may never return to a gym. Others have learned how to cut their kids’ hair and may never pay for a professional cut, for as long as their kids will allow it. Many organizations will have also noticed how cost-effective allowing employees to work from home can be. It won’t come as a surprise when the remote working population increases from the current 4.7 million to even double the figure. “The point is, once consumer behaviors change, it’s hard to get back to the old way of doing things. When
these changes in behavior become permanent, shoppers will stick to the e-commerce brands they discovered over the brick and mortar spots they once frequented.” PaySafe, a UK-based company similar to PayPal in the U.S., conducted a survey of more than 8,000 consumers in seven countries. When asked how their spending habits would be impacted in the future, 38% of all surveyed consumers said they plan to do more online shopping next year regardless of the end of social distancing. In the U.S., that number was 49%. Two-thirds (65%) of consumers that plan to shop online more following the conclusion of the pandemic are doing so because they find online more convenient, and 42% of consumers who plan to shop online more say it is more enjoyable. Of those people who said they would not increase or maintain a higher level of online shopping, it was because they already conduct the majority of their shopping online. See Burgeoning E-Commerce, Page 47
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