Learn about the future of buying and selling heavy-duty parts.
Episode 179: We’ve seen a monumental shift in the way our industry has adopted digital technology. We’ve seen many of the features of B2C eCommerce start to influence the expectations of B2B buyers. So, what does the future of purchasing heavy-duty parts look like?
My guest today is Zac Jones the CEO and Founder of PartsClub.
PartsClub is a wholesale equipment parts platform that allows buyers and sellers to securely connect, share customer-specific pricing and transact easily on their terms. PartsClub is unlocking eCommerce for thousands of parts businesses who previously didn’t have a secure way to share customer-specific pricing to their wholesale customers online.
Guest Website: PartsClub.us
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Transcript of Episode:
You are listening to The Heavy-Duty Parts Report. I’m your host, Jamie Irvine. And this is the show where you get expert advice about heavy-duty parts that keeps trucks and trailers on the road longer while lowering cost-per-mile.
We’ve seen a monumental shift in the way our industry has adopted digital technology. We’ve also seen many of the features in what we would call B2C or direct to consumer e-commerce platforms start to influence the expectations of professional buyers in a B2B environment. So what is the future of buying and selling heavy-duty parts look like? Well, my guest today is Zac Jones. He’s the CEO and Founder of PartsClub and PartsClub is a wholesale equipment parts platform that allows buyers and sellers to securely connect, share customer specific pricing and transact easily on their terms. PartsClub is unlocking e-commerce for thousands of parts businesses who previously didn’t have a secure way to share specific customer pricing and things like that to their wholesale customers online. So I’m really excited to talk to Zac about this development and get his take on where the future of buying and selling heavy-duty parts is going. Zac, welcome to The Heavy-Duty Parts Report. So happy to have you here.
Hey, thanks for having me, Jamie. Nice to be here.
So what is the future of buying and selling heavy-duty parts look like from your perspective and how does that differ from where we are right now today?
Sure. So the easiest way to think about it is to start with the buying side. So with the buying side, it’s gonna be your suppliers, your pricing, one search box, is really where we’re going. And the reason I say that is because if we look 10 years down the road, what is coming, if we don’t change anything, it’s gonna be a hundred tabs open from every supplier that you work with when they all have launched e-commerce. And so right now we’ve got a bunch of suppliers that are saying, we need to launch e-com. We need to launch e-com. We need to launch e-com and they’re all building independent stores, and there’s nothing wrong with that, but they’re all competing for that space on your browser tap. And we see that as being detrimental to most of them, you know, one or two, you’re gonna have a big OEM, or you’re gonna have a huge aftermarket company that is gonna earn that space in your browser but everybody else is gonna compete to be, you know, tab 3, 4, 5, 6, 7, 8, right? And so we want to take everybody else and put them all into one search box on PartsClub and allow you to search your entire supplier network with one go.
The interesting thing that we do is we actually allow you to get your customer specific terms. So that’s pricing, shipping and payment terms from each individual supplier that you connect with on PartsClub. And so, because nobody’s figured out that specific problem of how to share pricing terms, shipping terms and payment terms, independent to each customer they work with, they’re all doing it by phone and email. And so it’s incredibly challenging right now to add a new customer, because what happens if the customer’s big, right success could hurt your business? Like if you land a big customer where, so the great thing about econ is you can land that customer, but they can self-serve, they can in and get their pricing from you.
They can buy it on their shipping terms and their payment terms. And so the orders and quotes and all that for us really just flow right through the whole process. And so we see e-com as being a huge enabler for parts businesses. We don’t see it as being something that threatens the existing status of parts personnel, or technicians or anything like that. There’s a huge need for the technical expertise that those men and women bring to the table. But what we want to do is we want to free those people up to do that great technical work. We don’t want them sitting around quoting parts to the fifth time this week to the same customer that needs to be done by a computer. And so if we can get that taken care of for them all on customer specific of terms, it frees those people up to do value-added work. And so that’s like, is this the part I actually need? They can do those types of questions. What else do I need to complete this repair? Those types of questions. Is this an OEM or aftermarket situation? Like, is this a critical component, those types of questions. So, you know, there’s a lot of value that teams can provide that they’re currently just way too overwhelmed to provide. And so, you know, we see e-com as really being part of the strategy, but is an important part to a sales strategy.
And I would agree with that trend, especially with the more complex sales, like another thing, everything you said, I agree with all of those different applications for getting our experienced people involved in, in higher quality conversations. One other one is what grade of product is for me. So you might be looking at brakes. There’s a lot of different grades of friction material, which one meets my application. That’s the kind of high value work that seasoned people who have experience are able to help customers, especially fleets to lower their total cost of operation. So when you kind of mapped out PartsClub, everything you just said is the conclusion, but where did it start? What was like the one problem that you said there’s gotta be a better way and it led you to build this company.
So in my past, I was a sales manager for a hydraulic forklift parts company. And e-commerce was something I really wanted to get into. They had 35,000 parts on the shelf and nobody knew. They knew that we were a hydraulic provider. They knew that we did forklift parts, but that was really all they knew. And so we had a lot of trouble getting them to remember, yeah, we’re a great option for hydraulic forklift parts. So I wanted to get our stuff out there by part number and all that. And we did that. We did that very successfully. And we did that on Amazon, did that on eBay, Google Walmart, a site called Gear Flow. We went everywhere. Like we went super wide. And the challenge that we ran into was we could meet new customers, but we could only meet retail customers, the wholesale side, they need their own pricing.
They need their own payment terms, their own shipping terms. So when we launched our own Shopify store, that required a log in where they could go in and get that stuff from us we saw a little bit at the start. And then we saw a fall right off because we were a specialists. Like they couldn’t get everything on the machine from us. And so then even then they still forgot, you know, we can do this, that, and the other thing, but they knew for sure, we couldn’t do tires and we couldn’t do wheels and we couldn’t do forks and we couldn’t do a bunch of other stuff. And so we really struggled to get that attention and get that login and get that search. And so I understood as a sales manager, the only way to move forward for parts businesses that were not going to do everything on the machine was to get them all into one place.
If we can team them all up in one search box, you can do every part on that truck. You don’t need to do it all yourself. You can team up with other people that could potentially do it. And that way you are getting the benefit of having everybody else there, but you’re still showing up for the stuff that you do really, really well. And so, you know, I looked at it from a sales manager and saying like, I’m gonna build everything I’ve ever wanted in a product to connect with my customers. And it took me leaving to enable it for my previous employer, but also for everybody else. And that’s in the trucking industry, um, that’s in heavy equipment, agricultural equipment and now industrial equipment. So we’re looking at those four verticals and there’s just a whole ton of businesses that don’t do everything.
I know we hear a lot about the guys that do everything, the large OEMs and the large aftermarket providers. And, they’re a key part of the supply chain, but there’s so many great parts businesses that are not huge. Like we do business with one account to give you an example in Kentucky, it’s a little CNC shop. They do six SKUs. Six, that’s it, they do six part numbers. They’re absolutely amazing at those six, but would they benefit from having an e-commerce? No, they wouldn’t, they don’t need a store. No one’s gonna go to it. They can’t solve many of the problems. People need 99.9% of the problems they cannot and will not solve, but they’re excellent at those six numbers. And so we wanted to give companies like that a chance to get into that search box with people that matter, and also to really give small businesses the opportunity to maybe start up, like if, if you can be successful in six SKUs, you can afford to go out and start a business.
And so we see, you know a massive consolidation trend in the marketplace over the last 10 or 20 years. And part of that is because everybody’s trying to do everything like everybody’s saying, we need to be in everything store just to compete. And with PartsClub, that’s absolutely not true. And we’re hoping that we can create, you know, a robust set of parts businesses so that we all have options when we go, we’re not stuck with one or two folks in the marketplace. And so we see PartsClub as being a really important enabler in the parts marketplace, not just a software tool, but something that’s gonna structurally change the actual marketplace.
You know, as you’re talking about that, I remember being a sales account manager for one of those large aftermarket distributors. And it was a challenge to get customers to remember what we had available because as employees of the company we had a hard time remembering all of the things that we sold because there were so many SKUs. So you have, you have that one extreme all the way to the example you use, where you only have six SKUs. One thing I know about heavy-duty parts manufacturers is they’re very, very concerned with channel conflict. This is a big concern and also suppliers, one of the biggest is leading up to the pandemic that I heard about incorporating a digital sales channel is, well, we don’t want people to see our pricing and we don’t want people to be able to easily, you know, compare prices online and they were completely missing the shift in buyers’ behavior. So how are you going to help companies get past some of those fears about channel conflict and about pricing and making that available online and things like that?
Yeah, it’s so important. And that’s one of the main things that was holding a lot of these businesses back was not wanting to share your information with certain segments of the market. And it could be, maybe you don’t sell parts in Brazil, or maybe you don’t sell parts to end users, or there’s a bunch of different reasons why you may want to hold your information close to your chest. And so what we did is we actually created LinkedIn style connections. And so if you want to do business with a company, you have to reach out to them and you have to say, Hey, I’d like to do business with you. And at that point, that company has two options with that connection request, accept to reject it. And if they reject it, that’s fine. We’ll just ignore it. If they accept it, they can set the customer up with their payment, pricing and shipping terms so that everything just flows from that point forward.
And so we’ve seen so many different use cases for this through connections, where we’re working with OEMs, for example, who are sharing data with their distributors. We’re seeing certain dealer groups or OEMs information amongst their dealers. So what do you have is overstock or something is being conveyed through PartsClub. We’re seeing companies go for the first time direct to consumer. Now they have the ability to charge retail prices to one guy and a wholesale to another. They can do both. We’re seeing some people that are saying, we want to give it to just our distributors, but not end users and then obviously just a conventional company selling to end users can do that as well. So it’s really, really great. And the other thing that connections allow you to do is they allow you to go bidirectional. So you can actually buy on the platform from your suppliers with custom terms and then turn around and sell that same part instantly to customers on their custom terms.
And so, you know, one of the craziest things we’ve seen happen on the platform is drop shipping where we’ll have three transactions that occur on the platform. So someone who’s connected to someone will sell a part. Someone who’s connected to someone will sell a part and they’ll turn around and sell a part to someone they’re connected to. And all those are happening like within nine minutes on the platform. And they’re all happening on custom terms, the terms switch every single time. So because it’s that one to one relationship, there’s a lot of really unique use cases. But the important part is each seller controls who sees their data, at what price, on what terms. And if they want to shut that customer off, they can do it. If they wanna hide pricing from a customer and require a manual quote every time they can do it, we give them full ability. We look at it as levers. You’ve got, you can pull the lever any which way on so many different facets of the relationship, whether it’s free shipping, whether it’s shipping markups, payment terms, your pricing discounts, you know we give you the set of levers and then you dial in the relationship as you need to.
We’re gonna take a quick break. We’ll be right back. Don’t have a heavy-duty part number and need to look up a part? Go to parts.diesellaptops.com or download the app on Apple or Android to create your free account. Looking for high-quality fuel injection for heavy duty applications? Having one supplier for fuel injection allows you to better serve customers by providing them with a complete line, which increases your sales and profitability. Learn more at ambacinternational.com/aftermarket. Before the break, we were talking about how the whole buying and selling of heavy-duty parts is already undergoing a lot of change and is going to undergo even more change moving forward. Zac, how will your platform help sellers reach new customers because that’s the name of the game when you’re selling parts, you want to be able to grow that customer list and sell more parts. So how’s the platform going to do that?
So we do Google list of things is the first way we do that. So every item that’s on the platform, the seller can choose whether they want it listed on Google or not. We’re seeing about 80% adoption in terms of customers saying yes, put our stuff out there. So that’s easy for us. A part number on Google is awesome because nobody wants to Google an XY1236-. Like no one is looking for that. So a customer Googling a part number has a very effective search and doesn’t require us to pay for listings. So we don’t need to turn around and charge the seller or anything. So that’s great. We can do that for free. The second piece is connections on the platform. So we really do foster an environment in which we want to see every connecting to everybody. We want to see you broadening out your supply chain.
We want to see you broadening out your customer base. And so what we do is we allow you to search by brand, territory, product category, whatever it’s gonna take to search through our list of right now, we 2200 companies in there. Not all of them are on the platform, but you can certainly send that are not on the platform invite and we’ll get in touch with them. So there’s a million ways to get started with a new company. So we have the off platform with Google. We have the on platform with our ability to connect with new companies. All you do literally is just go down and list and hit connect, connect, connect, like just like on LinkedIn, if you wanted to. And then that company has a choice again, whether they wanna do business with you or not. And then if so on what terms, so you may not get the best terms in the world when you first start with a company or they may just ignore your request, but we want to give you a chance to try and connect with as many people as possible.
So that’s a really important way to meet new customers. But what we also want to give businesses a chance to do is go deeper into their existing customers. And so what we’ve seen in the past, and I’m sure you’ve seen it in the trucking industry is you’re winning one or two people in a parts room. So you’ve got one or two contacts out of 10 at a business that know who you are or know what you’re great at and know why they would call you who to call you, on what terms you do business. There’s a lot of stuff out the relationship that’s held in those one or two people’s heads. And what we want to do is take it out of their head, put it into the platform and now create account level terms so that the two businesses can do business together. And so if you lose a parts manager, you don’t necessarily lose the account.
If you lose a purchasing manager, you don’t necessarily lose the account. If you hire a new employee, it takes five to 10 minutes to train them. We’re getting away from this, like handing down of institutional knowledge to the next generation that doesn’t need to happen. It just needs to be in the platform. And so when we create that account of a relationship, we actually allow sellers to go deeper into their customers. And so you’re getting away from that one or two, and you’re getting all 10 buyers now. And so, you know, when we talk about how do you meet new customers? Sometimes it’s not a new business. Sometimes it’s a new person in the parts room. They’re four feet away and we want to be able to like attack that person because that’s the closest way to revenue. That’s the shortest distance to revenue is that person, they already have accounts set up.
Their accounting team already knows how to do business with you. You’re so close, but you just can’t reach them. And so, you know, you got Paul, who’s calling you all the time and that’s great, but Ryan who’s four feet away has no idea you exist. He’s got his own vendor for hydraulics or he’s got his own vendor for steels or whatever. And so we wanted to get both Paul and Ryan’s vendors into one system where they can see each other’s options. We’ve got the how to do business with each vendor in the system, and then they can grow their business that way as well.
Yeah. There’s a lot to unpack there. One, I think the broadening of your supply options. So this is something that impacts buyers, sellers on both like we just with supply chain shortages what that has taught us is that our supply chain is not robust enough and we need to widen out. So that’s awesome. And I also think you’re absolutely right when it comes to working in a heavy-duty parts room. Like I have in my past, in my career you have one or two people with all the knowledge, something will come across the parts counter. And that one person with the knowledge says, oh I know exactly where to buy that in. You know, they can rattle off the phone number by memory, but all the other parts people they’re like, okay, great. And then they never learn how to source that part. And then something happens to that individual or they retire and now what do you do? So everything you’re talking about is resonating. And it’s great to talk to someone who was in the business, who saw it firsthand and gets it. I think that’s so important.
Absolutely. We’re seeing supply chains getting shocks like crazy. We’ve got orders stuck in ports. The other interesting thing we’re seeing is as a container went from three to $25,000 to import. You’re seeing a lot of people go, “who in my neighborhood has this item?” I used to be able to get it from China, India, Vietnam, Malaysia. It didn’t matter. And that was fine. We set that up over time and that’s no problem, if you need 20,000 or something. Sure. And you’re willing to wait on it, because you’d built your minimums out for it. But for everything else you’re saying who in the US can do this item. And we’re having to relearn our supplier network all over again, which is great for North American businesses. Like fantastic. And we’re seeing sales develop in North America and we’re seeing parts businesses start to fill these needs.
But the question is like, who are they? Where are they? How do I do business with them? Do I need a credit card? Can I use my UPS account? There’s so much friction when you first start to add a supplier, you first start to add a customer and we wanted just to get rid of that. Like get rid of it, make it really easy. And in the past you do it on eBay or Amazon. The reason that that friction doesn’t exist is because they tell you, these are the ways you two are gonna do business. You’re gonna do it on a retail price. You’re gonna do it with a credit card and you’re gonna do it on our terms. Whereas parts businesses needed their own two sets of terms. And so we wanted to give them both a chance to put their terms in the system and do business together and do it frictionlessly, like add a supplier and within like an hour be set up, like just make it easy.
And so, you know, it’s one thing to go out and find a bunch of companies that can do this it’s another to actually do business with them. It’s another to actually place an order. And to know that the order’s gonna come through and to get your tracking number and be like, oh, I can go home today. Like we want to make that process much simpler and facilitate those connections. And so everybody’s talking about, I gotta widen out my supply chain, but the amount of time and effort it takes to actually do that is so high. And a lot of parts businesses don’t have a procurement person. They don’t have someone who gets paid 50, 60 grand to just find new suppliers. So you’re doing that, you’re assisting customers, doing training. You’re trying to help the service department. You’re, you know, like you’re doing a million things. You don’t really have time to go do this. And so by allowing them to go in and connect by brand or category or territory or whatever, we take that search process and make it incredibly easy, frictionless, and easy to get started.
Let me ask you something. So with your platform, let’s say an American company, but of course the US isn’t going to be able to just suddenly turn on enough manufacturing to kind of fill the void that has been left in our global supply chain. So I know that nearshoring is becoming a much more prevalent topic and when we think of nearshoring, that could be the Caribbean. It could be, you know companies just in central America. It could be the companies up here in Canada, all helping to fill the void of the global supply chain and keep manufacturing and purchasing done more locally. Will your platform and be able to help cross those borders that are so close to the US?
Yeah. I think where we have the benefit though is on anywhere between under one and 10 lines. So we don’t see a real benefit to somebody spending an afternoon, ordering 50 lines. I think that’s better done in a slower process, you gotta build a relationship and make sure you’re gonna get paid and all that stuff. Like certain transactions should actually be slowed down. A container transaction should be slowed down, like please don’t order a $45,000 container like that. Certainly don’t sell a $45,000 container like that. So we see it being like, I need one or two items to finish my engine repair or something like that. And so by connecting you with sellers that are nearby, yes, we can help with that. The more important piece again is having that relationship configured, understanding, you know, can I use my FedEx account with this supplier in Mexico?
Do they take US dollars? What’s the last time in the day to buy a product. We call it cutoff time. What’s my cutoff time, is it 3:00 PM? 4:00 PM? 5:00 PM? Can I have it tomorrow is oftentimes the question we need answered. So the important piece is not do they exist because a single Google search will help you find people in Mexico or Latin America, like tons of really great suppliers in Canada. We found them in Columbia, Panama, you know, we found certain markets that are amazing. You know, there’s Miami, half of Miami is sourcing stuff from Latin America. Like there’s tons of great suppliers in Latin America. We’re just finding them through facilitators in Miami. So all these great connections that can happen, but again, you have to have that basis of how do I actually buy something from you? And we allow you to connect preconfigure that relationship.
And then from that point forward, you’re good. If you don’t like the terms, remove the connection, right. Go through the process. If they say, you know what, it’s always gotta go in our account. We charge you $500 per shipment for processing fees and whatever, just be like, okay, great, thank you for your time. Remove the connections so your team doesn’t buy anything, right? So we allow you to explore your options, go through them, try and find somebody near you. But the other thing too is like, as you build your network out, you’d be really surprised what people have on the shelf. Like really surprised. You know, guys just have stuff from old jobs or they bought a skid of something one time or who knows, but having the ability to connect with a ton of businesses and what they have is going to surprise you for those one to 10 lines that you need for this one repair, two repairs, you may be able to get that fulfilled within your own borders. You probably don’t need to go away. But when we get into that manufacturer level of the supply chain, where somebody is building, you know, a thousand machines, that’s not really our area. And they would have, you know, procurement people that would go through a very formal RFP or RFQ process to develop those relationships. And so we wanted to leave that alone, let somebody else go. But for the parts department, we wanted to connect parts departments at that level.
You’ve been listening to The Heavy-Duty Parts Report. I’m your host, Jamie Irvine. And we’ve been speaking with Zac Jones, the CEO and Founder of PartsClub. To learn more, go to partsclub.us, links will be in the show notes. Zac, thank you so much for being on The Heavy-Duty Parts Report. I appreciate it.