ILMA Compoundings September 2018 - 21

that online sales will grow in the U.S. at a compound annual
rate of 12 percent through 2020 and at 9 percent over the
next decade to reach over $1 trillion by 2027.
With the ease of comparing products between websites,
price-conscious consumers are able to find the best deal.
This means marketers must track the market in order to be
competitive on core products. It is important to remember
that even if consumers are not actually making their purchase
online, many are doing their research on price and availability
online before going to make the purchase in a store. Therefore, your online presence is vital for brand awareness.
The existing traditional retail channel is not the only
source of this online volume. Online lubricant sales are also
growing out of the installed channel, with some consumers
buying their lubricant online and taking it to the workshop,
following a "buy-and-bring" model. Consumers did have
the choice to do this before, but the accessibility of lubricants online has made it easier. There are two main types of
consumers following this model. The first is the consumer
looking for a specific and not widely available oil. This
availability of specialty products online is a major benefit to
these types of customers. European PCMO suppliers such
as Liqui Moly are prevalent across a lot of sites. The second
type of consumer for "buy-and-bring" is the price-conscious
consumer who will search for the best price for the oil
required and then take this to the installer.
When determining your own e-commerce strategy, the
business-to-business (B2B) sales channel for online business

should not be ignored. Workshops are finding the price
and convenience attractive, with large pack sizes, such as
55-gallon drums, offered through online marketplaces and
auto part online stores. Industrial lubricant manufacturers
should be interested, too, as there are some heavy duty and
industrial oils available for direct purchase online, both
on traditional marketers' sites and even on Amazon. The
potential for growth in this channel is proven by the success
of Chinese behemoth Alibaba, which started out in 1999
solely as a B2B site for small to midsized enterprises.
The growth of the online sales channel raises a number of
questions: What does the future role of a distributor look
like? How can manufacturers/marketers differentiate where
price seems to be the key driver of success? How do you
maintain business if you have little or no online presence
where consumers are shifting to online purchases?
Wherever you are situated in the lubricant value chain,
understanding your position in the online sales channels
compared to your competitors is essential. Having a blind
spot for e-commerce sales means that any effort to maintain
sales in a declining market may be thwarted further by
threats from lubricant players that are ahead of the curve in
online presence.
Jarquin is director of energy at Kline Group. She can be
reached at annie.jarquin@klinegroup.com.

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ILMA Compoundings September 2018

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