Used car parts market evolution
From sales in bazaar to the worldwide online sales
The trades of used car parts began and continued from the time when the first automobiles started to appear - after all, it has always been relevant to recycle good parts. However, in Lithuania, the main period of growth and rapid expansion in this market started in the 1990s, after regaining the independence and the onset of intensive automobile imports.
One of the Ovoko partners - Saulius, the CEO of UAB "Devautoda," shares his experience and history. He has gone through various changes in this field and vividly remembers how everything began.
The beginning of used car parts sales in Lithuania
Recalling the old days of the automobile parts trade and the beginning of his work, Saulius says: "I've been in this business for about 25 years now. Somewhere from the late 1990s - that's when I started tinkering with 'Zhigulis' and worked that way for about 5 years. At the beginning, there were no phones, no advertisements on newspapers, or anything of the sort. Phones were quite expensive at the time, so I got one later. Back then, the only way to buy car parts and everything else was to go to the market/bazaar, and people used to go there solely to buy parts. So, at the beginning, I used to buy parts in various smaller towns markets, just like that. When my bags were fully stocked with car parts, I would take a train from Palemonas to Kaunas or Vilnius, to the big markets like "Aleksoto turgus" or "Gariūnai", and sell those parts there. There was a significant shortage of parts in Lithuania in those days. You could only find them at the bazaars or there was 'Signifex,' which is now 'Signeda,' with imported parts, but there wasn't much else. That's why, after a while, trips to Poland started to buy parts over there and import them to Lithuania, and that's how it all started rolling until it rolled all the way to buying cars, and after that, it became easier with the purchases of whole cars, but it demanded much more money.
After this stage, the first scrapheaps began to appear. You have to understand that it wasn't like it is now, where there's a scrapheap on every corner - there were very few of them back then. So, at the beginning, I went to work at a scrap for a few years, and time flies. After working there, I realized that my own business was always better, so I started working for myself. I have tried to enter markert where was less competition, I always wanted to stand out, so the beginning of the development of scraps was the right time to open my own business. In general, I completed my automotive blacksmith training, but it didn't work out for me, so somehow, I ended up here."
How scrapheaps used to work in the 90s?
After Lithuania regained its independence, in the times of establishment of businesses was only a matter of time until the market for automotive parts, which was in short supply, started to fill up. Speaking about this, Saulius also confirms that in the earlier days, everything happened very rapidly: "The parts in the warehouse stocked up very suddenly, very suddenly... it certainly wouldn't appear so suddenly now. Back then, a busload of parts would arrive, and in less than a week, everything would scatter. If you brought them on Friday, you would sell half of what you had over the weekend, and the remaining parts would 'disappear' by Wednesday. We communicate with a Japanese scrapheap nearby, and they used to just bring in the car, and people would immediately line up at the gates - they wouldn't even put the dismantled part anywhere, just take it off the car and put it in someones hands, and the person would hand you the money. That's how everything went back then."
Over time, the number of sales channels, their convenience, and customer orientation have probably changed the most. But in the old days, when the demand for parts was so huge and trading happened at an unimaginable pace, there was generally no need to worry about finding additional sales channels: "There were advertisements and newspapers, even at the very beginning of my work, but I didn't use them. Some people used them, but the 'Noriu' (classifieds section in newspapers) didn't really matter to me. At the beginning, I just traded simply, and then 'Autoplius' (marketplace portal) appeared, and it was already good back then. Everything appeared in the electronic space, the opportunity to see the cars that specifically interested you, and everything became simpler. You didn't have to go to a place, just for checking the specific part you were interested in; you could immediately call and ask if they had it, how much they were selling it for, and so on."
"But I believe that everyone had a different start, different ideas in the beginning. It certainly wasn't the same for everyone. There were some people who traveled abroad and saw scrapheaps, how it looked like and brought back these business ideas. I didin't travel much that time but I know that in the Netherlands the scrap businesses has been around for a long time - you would go to them and dismantle the part you want from a car yourself."
Nowadays business
It's clear that comparing the current state of the market with the stories about the early days of scrapheaps operations, there has been a significant decrease in the need for live trading. Saulius' work now looks somewhat different: "The peak was probably somewhere from 2002 to around 2014, when it was booming here, that kind of development and that kind of business. But now, we live more calmly, earn quite good money for your living, can go on trips, but you can't set up full warehouses or houses as quickly as back then," he laughs.
"We're also facing a shortage of people now; it's hard to find anyone willing to work. But on the other hand, the question is how many of them are really needed. The day-to-day can be very uneven; there are days when you can't keep up at all, and then there are empty days when there's no sales at all. That's when we catch up on work. Consistent work certainly requires any kind of help. But choosing people is not easy as well - if a donut maker were to come, there would be no good in that, it would be better not to have anyone at all. It takes a year at most, just to train and prepare. It's a sphere where you still have to be knowledgeable about cars and their structure. Of course, it's easier now because you can 'google' anything you don't know. Even an older person can figure it out, and there are no problems for the younger generation. This is also a change in the market, where everything is more accessible."
How did everything changed after the online sales came in?
One of the most recent changes in the market is undoubtedly the emergence of online parts trading. Buyers no longer need to go anywhere; the product is visible to them anytime they search. Meanwhile, sellers save time with fewer phone calls and arriving customers. However, this change is not easily and quickly embraced, and by no means have all scrapheaps digitized their activities. UAB "Devautoda" shares its story and experience in this regard:
"Oh, I resisted this a lot; Agnius from 'Ovoko' even visited me multiple times. I even avoided him, saying that I didn't need anything, that it wasn't interesting to me. I was quite stubborn at first, but now I see that there's no way without online sales. There was a time when we thought about creating our own e-commerce system, but now I see that it's not enough to just create it. You have to work on it, improve it, take care of it constantly, and it's not that simple. So, 'Ovoko' has done a great thing for all Lithuanian auto parts entrepreneurs. It's really good; there's a lot of traffic, it's good that parts are not forgotten, you know what you have, what you don't in your stock. You never used to look for hoses for 10 euros, but now they sell. This still happens now - someone calls for something, I don't have it, I say, but they tell me, 'Well, it's on Ovoko.' Saulius laughs. "So, even the service centers are all satisfied; they send codes, and there's no need to spend half an hour explaining what you have and what you don't. If something doesn't fit, you return it, and that's it. This thing is really great, and everyone is happy with it."
Saulius recalls the decision to start working with Ovoko as long-delayed but ultimately inevitable one: "The warehouse kept accumulating and accumulating, and then it became sad - you look at those full boxes and you realize that no one sees them, no one sees what you have. Someone calls on the small part and you say you don't have it, even if you do. There is not a large stream of people coming onsite as well so those parts kept piling up. That was the turning point when we had to start putting them online so that people could see them and buy them. About four years ago we began digitizing and now we have about 40.000 parts listed. And this is still only about 30 percent of all stock."
What the future holds and how the market will look like?
Perhaps everyone is curious about what the future holds, but it's challenging to talk about long-term plans and market development. The head of UAB "Devautoda" states that significant changes are unlikely in the near future: "I don't see where we will go next; we're not flying to the moon yet. I think that e-commerce will continue to dominate for a long time. In the future, there may be no traditional onsite sales at all. If someone needs a service, they might come for those parts, but gradually, it's declining. In essence, this is how it is now, and there's no future here. Some others already, if the entire car isn't disassembled, don't sell those parts. It's all about e-commerce, just packing and shipping, it's simple. As for the more distant future, it's hard to predict for now; I can't imagine what could happen after this stage."
Recommendations and tips for other car part sellers
"Those very good, super profitable, and enjoyable times of unreal growth are in the past; now, we need to keep our heads down and work. Everything is changing, and it won't be the same as it used to be. Buyers are busy too; many work more intensively and can't come to buy part onsite. So reaching them is more challenging with traditional sales; you need to develop online sales."
"It's also very important when starting to work with digital solutions - don't mix parts into one pile. There are models, you place items in boxes according to the models and then store them neatly. I once put all the lambda sensors in one box from all different cars, there were hundreds of them - what a mess when you need to find the one you need. Sorting, sorting endlessly and there are hundreds of them. So, neat warehousing is essential - mark by models, mark the shelves. That's a much advice on that." |
Online sales will stay dominant
Saulius's narrative takes us through the evolution of the automotive parts trade in Lithuania, from the early stages of the emerging market to the modern e-commerce, where trading and communication methods are entirely different from the beginning. It all began with local markets/bazaars, and we witnessed a lightning-fast growth in the automotive parts trade until the market demand was filled. However, now that the times of crazy demand and grabbing parts are over, the main assistance to sellers is the opportunity of online commerce solution, giving customers the ability to see and purchase goods directly on the internet at any convenient time and from anywhere in the world. In this way, everyone can expand their sales and not limit themselves to just the local market but venture into "broader waters."
Join us and let's take on digitalization path together - join.ovoko.com!
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