Parts Insider Interview Series – North American Dealers Parts Exchange, An Exchange Platform For Idle Parts

Today, we continue Spork Marketing’s interview series, offering our readers even more insights to the business of auto parts ecommerce.

We’re speaking with Shawn Larkin, founder of North American Dealer Parts Exchange (NADPE). An industry rule-of-thumb is that there is only a 15% chance of that dealership ever selling a part that has been in stock for nine months with no sales, and the probability of selling drops to 5% after 12 months of no sales. After years of managing both parts and service operations, Shawn thought of a new idea to tackle the idle parts issue so many dealerships face.

The Interview

Can you describe your product/service as if I knew nothing about it or the market?

NADPE offers an OEM Parts Exchange platform that allows dealerships to trade, dollar for dollar, their idle and obsolete parts with other dealerships at their cost. The exchange platform allows dealers to trade their idle parts inventory in bulk, with other dealerships where those parts are active parts. We cross-match the two dealerships, so there is a near equal exchange in parts value.

What’s your standard ‘elevator pitch’ for your company?

Dealerships only have a few ways of disposing of obsolete or idle parts: sell them for scrap, pay to have them hauled away, or try to sell them on eBay or Craigslist, which is time-consuming and rarely works. We are a professional technical management team with years of experience across many industries, including parts management and finance, that offers a trading platform for parts. NADPE operates a private marketplace for dealerships in the U.S. and Canada where they can bulk trade, buy and sell obsolete or idle parts with other dealerships.

This is the most cost-effective solution for dealerships since by trading parts their only costs are for freight and our fee. Dealers upload lists of parts they want to dispose of and lists of parts they want to acquire, and our matching engine pairs dealers according to a set of transaction rules. Dealers then execute the transactions between themselves, arranging shipping and payment.

Can you tell us briefly about your parts industry experience?

I have spent my entire professional career in the automobile parts and service business. Starting in the parts department, I worked my way up to Director of Fixed Operations for a multi-location dealership corporation managing both the parts and service departments.

I have managed multiple departments and staff in multiple locations.

I bring a deep understanding of how parts and service departments work: their economics, their needs and problems. I have restructured 11 departments that had a lack of leadership and laced with problems, no process, and underperforming in my career as Fixed Operations Director.

What is your favorite part about your job?

My favorite part would be dealing with the people and the technical aspects of parts and service departments. I love the thrill of business and growing it. I like taking on broken dealerships, and departments, and restructuring them.

Are there any common misconceptions that people have about the products or services you offer?

There are a few misconceptions. First, the understanding of what the difference is between idle parts and obsolete parts. Many people classify them as the same, and there are many more who believe holding onto non-stocking parts for 12 months without sales is acceptable before they consider returning them. Our solution offers the ability for dealerships to address the dealer principal’s frozen capital while it’s idle inventory, rather than the moment those parts are classified as technical obsolescence.

When you’re talking to potential customers, what are the 3 most important things you want them to know?

• It doesn’t cost anyone anything to sign up and there isn’t a term contract a dealer is locked into. We only charge our fee of 5.99% once a dealer has accepted a bulk transaction.
• Idle parts are an issue and need to be addressed, just as any used car department would address a poor selling 90 unit. Parts that do not qualify under the parts manager’s stocking criteria become a problem “the moment” they realize the part won’t be sold (wrong part, customer returned, customer no show for special order part, etc.).
• All transactions are done in bulk, we find matches where dealers can ship out as many of their idle/obsolete parts at one time to one destination; dealers aren’t shipping out just a few parts at once.

What do you attribute to your company’s success?

We are unique, and first-to-market with a concept that allows dealerships to address idle and obsolete parts at their cost. No more 50% haircuts on parts they want to get rid of, although we offer that alternative for parts that just don’t move (e.g., headliners, sun visors, etc. – atypical stuff).

How long has your company been in business?

We launched our pilot program in December 2016. We moved off the pilot and launched in the domestic market (Canada & USA) in February 2017.

How did you choose your current business location?

Our business is cloud-based, so our service can be provided to anyone, anywhere. We just happen to be Canadian.

Where do you see the market for your product/service moving over the next 5 years?

Within the next 12 months, we will be expanding into import brands. We will be expanding into other parallel industries including heavy truck, RV, and power sports. Within the next 18 months, we will be heavily expanded into other marketplaces as an extension to our current offering on eBay and Amazon.

Takeaways

Signing up with NADPE gets you connected with other dealers and offers another alternative for buying, selling, or trading idle parts. Joining NADPE and listing parts to trade, sell and buy is free. When a transaction occurs, NADPE takes a small percentage of the value of each side of every transaction. Learn more here.