The death of the DIY oil change: What does it mean for online lubricant sales?
By Aaron Stone
Estimates from the U.S. Department of Commerce suggest that eCommerce sales in the U.S. grew by 14.6% in 2015. Europe anticipates online growth of a slightly lower 12% this year. Online purchasing in the Asia-Pacific region has far exceeded the U.S., a whopping 32.1% increase in 2015 and eCommerce trade worth a staggering USD834.71 billion. It’s no surprise many brands are looking to expand to these markets.
In fact, over the past decade and a half, online shopping has accounted for three-quarters of all U.S. retail sales’ growth. The rapid rise in web purchasing suggests it is an opportune time for companies to ramp up online efforts to avail of this consumer trend. Or is it?
Why are consumers turning to eCommerce more than ever before? Avoiding a crowded mall or store is cited by 60% of one U.S. survey’s respondents. 71% believe their wallet suffers less of a hit owing to a myriad of online deals. According to Business Insider, more than a third of 18-34 year olds would prefer to “buy everything online.” But would a significant proportion of consumers really buy everything online given half a chance? While it would seem logical for products like lubricants, greases and oils to follow this trend, the death of the Do-It-Yourself oil change may mean otherwise.
Traditionally, changing your own oil was seen as a quintessential test of manliness: popping on grease-stained overalls, heading to your local auto parts store, and sneaking under the hood to perform required vehicle maintenance. But the days of rolling up your sleeves and changing your own oil are over aren’t they?
Thierry Delesalle, a member of the management board of Delticom, Europe’s largest online tyre retailer, believes there is “a growing market of customers who want or need to do things by themselves.” Delticom has recently launched a new online shop specialising in lubricants for the UK market, the start of a “pan-European network of online shops specialising in engine oil and care products.” Delesalle suggests the oil shops answer to a specific customer need.
Emerging data on consumers preferring a professional to “Do It For Me” (DIFM) seems to paint a different picture. In 1995, 65% of U.S. households changed their own oil. Fast forward to 2007, and 70% have someone do it for them. A recent income-related survey from Charles Schwab indicated 87% of American workers would hire someone to change their engine’s oil.
Greg Paterson, general manager of Allied Lubricants, an authorised Mobil Distributor In Asia-Pacific, agrees the “number of people rolling up their sleeves and changing their own oil is declining.” At least in his small New Zealand market.
What’s the reason for this startling change? Research conducted for California’s Integrated Waste Management Board on former DIY-ers attributes time and convenience as the main driver. The difficulty in disposing of used oil was also cited by 17% of respondents.
Knowledge and interest in changing one’s own vehicle’s oil has been a feature of the world war and baby boomer generations. Millennials are seemingly more interested in how to get from A to B, than in understanding the inside workings of their engine. AutoMD.com, a leading online automotive repair resource, recently stated that two in three teens are unaware of how to fix a flat tire, check or change oil, or even jump start a flat battery.
Instead, millennial car owners flock into cheap lube shops or dealerships on the promise of a discounted oil change, a comprehensive vehicle service, or a vehicle warranty. There are usually countless Jiffy Lube shops, garages or dealerships in close proximity. Add the hassle of recycling used oil and it’s difficult to understand the rationale of a DIY job unless you’re a car enthusiast.
So does this suggest doom and gloom for businesses looking to sell lubricants online? Not necessarily. Demand for lubricant products remains strong. Worldwide sales are forecast to rise 2.3% through 2017. Admittedly, the U.S. and European markets have largely stalled or remained flat, however rising vehicle ownership rates and ongoing industrialisation in Asia makes up for the shortfall with a forecast growth of 3.3%.
It stands to reason that the growth in online purchasing will satisfy a segment of this global increased demand. Delesalle says of his European market that “online demand is continuously growing. We could imagine that 15-20% of the oil market will be sold online.”
Amanda Chen, a senior consultant at Kline’s Energy practice, suggests online purchasing is an integral part of Chinese purchasing behaviour. She says “sales through the online channel have grown rapidly in recent years: at least 20% to 30% a year.” Chen adds “Even when consumers do not buy their lubricants online, they are likely to first search for certain products in major online shopping websites, which include Tmall, JD.com, and Amazon.cn.” Malaysia, on the other hand is quite different. According to analyst Kathy Yuan, “online sales are slow… Consumers do not like to perform their own oil changes, and instead, entrust independent workshops to conduct the oil change for them.”
It seems, in the short term at least, online lubricant supply and performance may be variable. In fact, many companies still seem to be grappling with the exact role it should play in this market.
A number of OEMs are visibly cooperating with global online hypermarkets such as Amazon and eBay to drive eCommerce sales. Most prefer to leverage their own web presence for brand promotion, corporate identity, product research and customer education. Amazon, the largest internet-based retailer in the world, is the juggernaut that drives automobile aftermarket sales online and is home to a diverse offering upwards of 4,500 oils, greases and fluids. (A request from the author for statistical analysis of Amazon’s performance in this area was not responded to.)
Amazon however is not a dominating force in the developing Chinese market. In 2013 the company accounted for a minuscule 2.7% of the B2C market. Understandably, global companies are also targeting shoppers in Asia through alternative marketplaces such as Tmall, Global Alibaba’s marketplace for imported goods, or fierce competitor JD.com. This approach somewhat alleviates the challenges of marketing, logistics, culture and regulations when conducting e-commerce in that region.
Efficient multichannel services are heralded as the way of the future. Traditional retailers such as Walmart are wrangling with the merger of online and in store purchasing and how to compete with online behemoths like Amazon. Wholesalers, who have long dominated the traditional offline channel, are reportedly considering a multichannel presence including eCommerce.
Delving into online is not without its challenges. Some retailers remain hesitant about jumping into online sales – clinging instead to a more traditional retail model. Hong Kong- based OTL Group is one such example. Recently entering China’s high-end lube market, OTL prefers to focus sales through its established Audi and Honda car dealerships as well as traditional distributor channels. General Manager Henry Li suggests listing their high-end product online alongside a plethora of lubricants where quality or authenticity cannot be guaranteed was a significant deterrent. (Analysts however point out that imposters will not survive as competition heats up in China’s cutthroat market.)
Despite sticking to offline sales channels, Li was quick to add that online marketing will still play a pivotal role in their expansion by increasing brand awareness and product marketing – focusing on websites they can control. Li notes that WeChat, a messaging service in China with more than 800 million users, provides a great opportunity to speak directly to potential customers.
So what information is available regarding who is actually buying these products online? Delticom’s experience is that their web shops cater to four different types of customer. The obvious one is the car enthusiast or thrifty consumer who still likes to change their own oil. An emerging segment are the DIFM customers who buy online because it is convenient and inexpensive, but prefer the product “to be delivered to one of [Delticom’s] 40,000 garage partners in the EU.”
Then there are the safety conscious customers who, for example, wish to have a one-litre can in their car to top up their oil levels. Finally, there is a small but enthusiastic segment who need specialised products for vintage cars, motorcycles, gardening tools and the like.
Overall, the death of DIY-ers poses a potential hurdle for online retailers to overcome, but there is definitely an alternative market to explore and build on.