Supply Network Limited: Challenges in Building Truck Parts Catalogs
Former Product Development Specialist at Multispares
inpractise.com/articles/supply-network-limited-building-part-catalogs
Former Product Development Specialist at Multispares
Interview Transcript
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I'd like to start with some fundamental questions because they help me understand the space better. I'm curious why aftermarket truck parts distributors exist in the first place. Why can't the end customer, being the truck owner or the transportation company, order parts directly from the parts OEM?
The more hands involved, the less profit. When I was with OEMs like White Horse Trucks, now Fuso Port Melbourne and Daimler Trucks Dandenong, we ran at about 25% to 27% gross profit on parts over a month. In contrast, when I started at Multi Spares, dealing with the general public, the markup was 45% to 50% because fewer hands were involved.
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Who are your typical customers? From what I've read, 98% of all trucking operators are very small, family-owned businesses, and around 70% of them have only one truck. As Multispares, do you mainly serve these small customers, or do you also cater to larger transportation companies?
They also become the most profitable in a way because of the gross profit percentage and pricing structure. For instance, with the bus contract I mentioned, we might sell parts with a 15% profit due to contract negotiations with OEM dealerships. However, a single truck owner who comes in regularly might bring a 45% profit. If you have many of them coming in, it's very marketable.
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Why?
Because of where we're based in the world, in the Southern Hemisphere. If you fly to Australia, it's a long trip. Sometimes it might be an older truck, and the OEM dealership might not need the part often. But they have a customer who needs it, and they know we have it.
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