Technification: First Step Toward DigitalizationSat, 09/01/2018 - 11:48
Q: What main challenges does TecAlliance face when introducing its services to the country?
A: One of the biggest challenges we face is that the Mexican aftermarket has not fully embraced digitalization. Many small retailers still work without a computer and they prefer to do business in a traditional way, with catalogues to consult whenever they have a need. As a result, manufacturers are reluctant to let go of paper-based information. Even companies that participate actively with TecAlliance see their printed catalogues as something essential in Mexico. To counter this, we have engaged in technification programs with several auto parts distributors.
We have supplied several distributors and retail shops with systems to support them during this transition, but it is a complex process. The aftermarket sector in Mexico is immense, even more so if we go into the distribution part of the business. Today, there are approximately 180 auto parts manufacturers and more than 500 brands in the Mexican aftermarket, approximately 1,500 wholesale distributors, more than 44,000 retail distributors and approximately 150,000 repair shops. The value chain is huge and the size of the aftermarket in Mexico is approximately US$27,000 million. The challenge for TecAlliance is to bring all participants into the digital aftermarket age. We are working with companies all over the country that we think could be early adopters.
Q: How does this technification process differ from what TecAlliance has seen in other global markets?
A: The European market went through a similar technification process 30 years ago and TecAlliance participated in a similar process. Now is Mexico’s turn and TecAlliance is supporting companies in this transition. We see the aftermarket as a complete ecosystem where we have to work with each of the different participants to make our technology work. We seek the collaboration of every manufacturer and large distributor and we approach all shops and retail players to deploy strategies for IT technification, digitalization and e-commerce. In parallel, TecAlliance has a similar strategy in Central and South America, where the company has strong presence and is implementing similar actions in order to develop these markets.
Q: What will be the role of e-commerce in the development of the aftermarket?
A: E-commerce in the aftermarket has to be approached from two different angles. On the one hand, there is wholesale e-commerce where large distributors have found a really successful niche. Some of the companies we have approached are already managing 50 to 60 percent of their wholesale operations through digital applications. Our role with these companies is supplying them with data and services to help them digitalize their operations.
On the other hand, the retail market is an area where very few companies have ventured to participate in terms of digitalization. Large marketplaces remain the leaders due to their large experience in the digital environment. Logistics operations are a key element to enable e-commerce in the auto part segment and if companies manage to establish efficient delivery times, then digital sales would drastically improve for distributors. There are still many opportunities to participate in e-commerce as it is rapidly gaining ground in the auto part segment.
Q: What are TecAlliance’s priorities for 2018 and what role does the company want to play in the evolution of the Mexican industry?
A: Our primary goal for 2018 is to continue supporting part manufacturers to become TecAlliance’s data suppliers. We make sure to standardize all their products data, so their distribution network can use it in a very simple and efficient way. In parallel, TecAlliance is supporting distributors to implement digital solutions to help them to digitalize their commercial operations. TecAlliance has also collected information and intelligence on the Mexican market, such as data regarding vehicles in operation and original equipment part numbers.