ILMA Compoundings September 2018 - 20

INDUSTRY RUNDOWN

Market Report
Lubricants Slide Into E-Commerce Sales
Do you want to be part of a $600 billion business?
By Annie Jarquin
E-commerce sales in the U.S. have grown from just over
4 percent in 2010 to almost 10 percent of total retail
sales as of the first quarter of 2018, according to the U.S.
Department of Commerce. This will continue to grow to
over $600 billion by 2022, according to Statista's Digital
Market Outlook.
As business-to-consumer (B2C) sales of passenger car
motor oil (PCMO) lubricants in the U.S. start to decline
because of longer drain intervals and the increasing penetration of electric vehicles, a clear understanding of and focus
on the channel to customer is more important than ever.
Changing consumer behaviors due to the growth and ease of
access to e-commerce platforms have created an important
channel to customer for lubricant marketers, one previously
not seen. With no organic growth in the lubricants industry,
this online channel is taking volume out of the traditional
channels of retail (auto part stores and mass merchandisers)
and installed (quick lubes and workshops), whether for DIY
(do-it-yourself ) or DIFM (do-it-for-me) customers.
Within the context of lubricants, there are three types of
online stores: (1) Marketplaces such as Amazon.com that
have a very broad range of products and only have an online
presence. Here, lubricants represent only a small fraction
of total sales. (2) Online auto parts stores that only have
an online presence. Some sites offer a broader range of
lubricants than others, but they all serve a relatively knowledgeable customer base that is more likely to understand
the implications of oil choice. (3) Traditional retailers that
have added an online store to their existing business. These
businesses tend to be very well known but vary in their
success of transitioning to online sales.
In 2017, Amazon.com had sales of over $50 billion in the
U.S. alone, with year-on-year growth of 20 percent, according
to ecommerceDB.com, and it is by far the leading marketplace in the U.S. In order to have the best chance of success
with Amazon.com, becoming a "Fulfilled By Amazon" (FBA)

SEPTEMBER 2018

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supplier allows Amazon.com to hold your inventory or manage the pickup from your warehouse, and your products are
offered in the Amazon Prime membership, allowing for next
day and free delivery. Already, numerous lubricant distributors
and brands have this relationship with Amazon.com.
Online sales are offered by traditional retailers, but the
rise of purely online auto parts stores is where there may be
"real" new customers for lubricant marketers. Online stores
such as rockauto.com and jegs.com have seen over 84 million and 18 million visitors, respectively, in the last year. Of
course, lubricants only constitute a small part of the attention of these visitors, but as consumers move to buy more
products online, lubricant sales on these sites will continue
to grow. In 2017, 9 percent of all retail sales in the U.S. took
place online compared to 19 percent in the U.K. and 23
percent in China, which illustrates the potential online penetration still possible in the U.S. FTI Consulting predicts

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ILMA Compoundings September 2018

Table of Contents for the Digital Edition of ILMA Compoundings September 2018