E-commerce channel is evolving into an important growth channel that can help lubricant companies increase visibility and sales, and it’s important to approach it with a customer-focused strategy, a consultant told the Union of the European Lubricant Industry’s annual congress in Athens in October.
Yana Wilkinson, vice president of Kline & Co.’s energy practice, said that e-commerce solutions need to complement and align with a company’s current business procedures, during her Oct. 20 presentation. Wilkinson emphasized that the customer should be the focus – meaning, engage with them the way and where they want, and view e-commerce as a customer touchpoint instead of as only a sales channel. E-commerce trends she noted included that the business-to-business component of e-commerce is growing, and that there are more digital-first buyers procuring products through e-commerce.
“Customer centricity and alignment with broader business objectives are vital for a successful e-commerce strategy,” Wilkinson said in her presentation.
On the business-to-consumer side, Kline estimated passenger car motor sales through online channels in key European countries at 28 to 30 million liters in 2021. The top five markets were Germany, France, United Kingdom, Poland and Turkey, which together accounted for more than three quarters of the demand. They were followed by Italy, Spain and the Benelux countries.
She said among key European countries, B2B general lubricant demand through online channel was only about 6 million liters in 2021, noting that online demand is less than 1% of the total B2B lubricant demand in Europe. Machine shops, agriculture and construction sectors have a much higher share of B2B e-sales, she noted. Germany, the United Kingdom and France were the leaders in online B2B lubricant demand, together accounting for almost 75 of such demand last year. They were followed by Italy, Turkey, Spain, Poland and the Netherlands.
Wilkinson said there’s potential for compound annual growth of 10%-20% in lubricant e-commerce sales in Europe, conditional on market conditions and level of investment.
Maximizing the potential of business-to-consumer e-commerce depends on making efforts towards an integrated and seamless customer experience, shesaid.
Key lubricant brands have increased their availability via online marketplaces, she said, and a focused marketing and promotional strategy can increase the visibility. Some of the e-commerce platforms promote top oil brands or oil categories for key vehicle models, she added.
Lubricant companies’ digital initiatives have helped to increase their overall audience footprint, she said, using digital outreach to connect across multiple stakeholders and customer touch points.
The business-to-consumer lubricants e-commerce types include online marketplaces, online car part stories and online-to-offline, or O2O, aggregators. Online-to-offline commerce attempts to draw potential customers from online channels to purchase products in physical stores.
Another trends is how online-to-offline aggregators are providing oil change services to improve online sales. She said this shows how partnership with popular online-to-offline service providers can help drive the audience for do-it-for-me customers.
Another e-commerce trend is towards bundle offers of lubricants with oil change packages and other consumables and services. Taking part in this trend, she said, includes implementing the right pricing strategy at the right time for the online channel. Other methods include deals, discounts, occasion campaigns and advertisements on a website’s deals section via coupons, promos, and corporate discount cards.
Wilkinson said that online marketplaces feature a broad generic portfolio, of which lubricants are a fraction. Such marketplaces include well-known global ones and regional players. Commercial terms vary by product and are commission-based. Logistics solutions offered for product shipment vary.
Online automotive stores specialize in car parts, she said, though lubricants may account for 5-20% of the online store’s sales. Some may have their own warehouses and logistics. Commercial terms mainly depend on the volume sold, she noted.
Online-to-offline aggregator platforms provide a marketplace for workshops to advertise their services. She pointed out that platforms don’t always support transactions and instead only connect buyers and workshops.
Wilkinson noted that points to consider when choosing priorities in B2C lubricants e-commerce include recognizing the wider audience coverage, and the limited opportunities for partnership. She said it’s important to understand that a rapidly changing marketplace could lead to the need for multiple partners required. E-commerce also requires monitoring and active management, she added.
Wilkinson said key barriers for B2B e-commerce growth include a lack of technical support and production selection support, not having a personal relationship with the online seller or trust and the risk of questionable quality products.
She pointed out that customers need reliable direct support – via phone or online chat – for lubricant products especially during disruptions like the COVID-19 pandemic. For query or issues, customer care of the platform must be contacted, which can be a time-consuming task.
Wilkinson noted that for specialist industrial lubricants, customers need detailed recommendations while selecting the best fit for their machines, which is not available on most online e-commerce platforms.
Another barrier to overcome is the comfort level customers have with existing processes for obtaining product selection recommendations. Conventional distributors have established relationships with customers based on trust, she said, and customers are eager to ensure they use the best product for their machines, based on original equipment manufacturer recommendations. Customers may also have concerns about the risk on e-commerce marketplaces of counterfeited products or products that will cause machinery to stop or break, she noted.