How to Start an Online Auto Parts Store

Whether it’s the convenience of not leaving home, or needing to find the right part fast, more and more mechanics and customers today are purchasing auto parts online.

Thinking about selling auto parts online, but not sure where to start? There are a variety of resources available online to help you launch an online business.

1. Choose Your Niche 

While it may seem like focusing your auto parts store to one thing would mean less sales, customers typically have more confidence in businesses who show their in-depth knowledge in a particular area. Some businesses choose to offer parts from a variety of different brands. While this may work for some, as a new business, choosing a particular niche to focus on can help differentiate your brand. Some auto part niches could be:

• Parts for sports cars
• Parts for trucks
• Parts for motorcycles
• Focusing on one type of part (only tires, only wheels, etc.)
• Parts for a certain automotive brand

2. Choose How You Will Structure Your Auto Parts Business Legally 

In the U.S., there are several business structures you can choose. What business structure you have can affect your personal liability, the paperwork you need to file, and can also affect how much you will pay in taxes. When choosing a business structure, consulting with an accountant or attorney is often wise.

Sole Proprietorship 

If you are doing business but have not registered as any other kind of business, you are automatically considered to be a sole proprietorship. Sole proprietorships do not separate business assets from personal assets. This means that you can be held personally liable for the debts and obligations of your business. If you think that your business idea is relatively low-risk, and you want to test the waters before forming a more formal business, you may consider a sole proprietorship.

Limited Liability Company (LLC)  

An LLC can be owned by one or more people or entities, called members. One advantage of an LLC is that it offers members personal liability protection against the debts and obligations of the company, meaning that in most instances, your personal assets like your personal savings accounts or your home won’t be at risk if your LLC faces bankruptcy or lawsuits. If you have significant personal assets you would like to protect, or you feel like your business is at a higher risk, an LLC may be a wise choice.

Corporations 

A corporation can be owned by one or more persons or entities, called shareholders.  The potential advantages of corporations include protection of the shareholders’ personal assets from the debts and obligations of the corporation, as well as potentially the ability to raise revenue from outside investors by selling shares in the company.  However, there are certain formalities and tax considerations/implications that go along with forming your company as a corporation.

As the type of structure you choose for your company can have a significant impact on issues related to your personal liability, taxes, required paperwork and other formalities, it is always a good idea to consult with an experienced accountant and attorney so that you can make an informed choice. 

3. Find a Supplier, Distributor, or Wholesaler 

A supplier typically manufactures the auto parts and sells to a distributor. The distributor then will sell to a wholesaler. Each company may focus on anywhere from a handful of brands to hundreds of different brands.

4. Decide How to Fund Your Auto Parts Store 

You have several different options when it comes to funding your online auto parts store.

• If you don’t require a lot of funding to start your business and you have some savings, self-funding your business may make the most sense for you.
• For businesses that require more capital to get them off the ground, consider obtaining a commercial loan from a bank.

Opening a business bank account can help separate your personal finances from your business finances. If you are operating as a sole proprietor, this may not be legally required, but it does make keeping an eye on business expenses and cash flow easier.

5. Create a Website or Choose an Online Marketplace 

If you are building a website, you will first need to get hosting and a domain name. Your domain name is the URL that someone would type into their search bar in order to find your website.

When designing your website, you want to ensure that it will be easy to navigate on both a laptop and a phone or tablet.

If building a website seems like too much of a stretch, you can utilize popular online marketplaces like Amazon or eBay. These marketplaces reach a broad market, but you will likely have to pay a percentage per sale.

6. Get Insurance for Your Online Store 

At Cross Insurance, we work with many different insurance carriers ranging from local companies to nationally recognized names. To get a picture of what it could cost to insure your business, you can request a quote from us, or if you prefer to call someone to start the quoting process, you can find a list of phone numbers to all of our offices here.

Product Liability 

Product liability insurance can potentially cover claims related to defects with the products that you sell that cause injury or property damage to the buyer or other third parties.

Cyber Liability Insurance for Your Auto Parts Business

Cyber liability insurance can help if your business becomes the victim of a covered cyber-attack or IT issue that puts your sensitive data at risk.

In the event of a covered claim, cyber insurance can help with certain expenses such as forensic investigations, legal fees, credit monitoring, and customer notification.

7. Establish What Your Returns Process Will Be 

Your return policy should be easy to understand, precise, and displayed clearly on your website. You can look at the return policies of your competitors to see what standards are common in your industry. It should include:

• The return window, or how long customers have
• The condition the item should be in (in original packaging, etc.)
• Any circumstances where the product cannot be returned
• How customers can return their items
• Who pays for the return shipping costs
• How long it takes to receive your refund

Review return and refund laws for your state to be sure that you are in compliance.

Consider including your return policy in the footer of your website as well as the final checkout screen.

8. Marketing and Advertising Your Online Parts Store 

Social media is one way to promote your products to a wide audience for little to no cost. You can also run ads on social media.

If you have a website, you will also want to focus on SEO. Add content pages that you think will be beneficial to your audience with keywords.

Another way to generate more sales is to include a coupon when shipping out your orders for a future order.

 

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This article is for general informational purposes only and is not to be relied upon or used for any particular purpose. Cross Insurance shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, insurance, accounting or other professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article are that of its author and do not necessarily represent the views of Cross Financial Corp. and its subsidiaries and affiliates (“Cross Insurance”) or Cross Insurance’s management or shareholders.