Amazon already has its eye on the car repair market, and auto shops should be worried
Between Amazon's blitz into the grocery market and its fashion aspirations, you might have missed the shopping juggernaut's entry into the auto world.
Car retailers certainly haven't. The company has already built a sizable business selling vehicle parts online, and it could have its sights set on auto services and even car sales down the road.
Like most of Amazon's plans, this is no small ambition. Cars and their maintenance are a bigger cash sink for the average American household than even groceries, according to the U.S. Census Bureau. While online sales still make up a comparatively small share of the overall auto parts market, they're growing at a much faster clip than traditional channels with a 16 percent expansion predicted this year, according to market research firm Hedges & Company.
Earlier this year, the New York Post reported that Amazon struck deals with a host of new auto parts vendors to expand its business.
Big chain auto shops may already be feeling the squeeze. Some analysts pointed an accusatory finger at the company earlier this month when companies like AutoZone and O'Reilly reported an abysmal sales quarter, though others blamed the weather.
Nicholas Farhi, an automotive services consultant at strategy firm OC&C, thinks car repair could be Amazon's next move. The company has already begun to offer various standard installations and fixes through its larger home and business service arm.
"Amazon is likely to enter into car services—annual maintenance, broken windshields, replacement tires, etc.—before sales of the car itself," Farhi said in an email. "The consumer experience of buying automotive services is a mess, and the suppliers are fragmented."
The value that Amazon can provide is clear. Order a car battery replacement through the page and Amazon will simply send someone to your home to take care of it, provided your zip code is in the company's coverage area. There's also the option of taking it into a partner store. Battery replacement services have a 92 percent five-star rating on Amazon.
Amazon's role in this space would get even bigger if Alexa gets involved. Using the voice assistant to set up car appointments with a simple verbal instruction would give Amazon a lot of power with the companies and people who provide those services, Farhi said.
"The role of Alexa in this is interesting because the voice interface hands huge power to Amazon in selecting the supplier," he said. "When you say: 'Alexa, book my car in for a service,' Amazon can decide the optimum location, price, time, etc."
That sort of integration may be a boon for big car shops that are organized and savvy enough to keep their availability electronically updated, Farhi said. But it may conversely hurt local mom and pop shops.
In any case, the company is already beginning to turn heads in the industry.
"These days, whenever I meet with car industry executives, I invariably get asked this one question 'So, what is Amazon's strategy in automotive?'" auto consultant Sarwant Singh wrote in a Forbes column last week.
Is there any consumer industry not asking that question these days?
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