A well-organized yard is central to Butler Auto Recycling sales.
Also be sure to watch your labor cost. “It’s the single largest expense that you can lower without costing sales,” Butler says.
Some cost-saving measures may involve actually spending money. To that end, Meyer recommends attending ARA’s Annual Convention. “Attend the training sessions with the goal of bringing home five new nuggets of information to implement at your facility,” Meyer says. “Attend the trade show to compare vendor products to what you are currently doing or using. If you put $200 a month ($50 a week) in a shoe box, you would have enough money saved in one year for two people from your organization to attend ARA’s convention. They would each bring home more than $2000 of value each month to your bottom-line profit.” At least every two to three years, shop your business, worker compensation, and health insurance. In addition to your current broker shopping your insurance, Meyer recommends having two or three other brokers shop your insurance. “Your current broker will shop the same circle of pro- viders over and over, year after year. You need to have a different broker shop your coverage with a different circle of providers,” Meyer says. “There are some great insur- ance companies in the market. Beware that part of the process to shop your own insurance is to request loss runs from your current provider.” As a result, your current broker will know you are shopping – and that is okay – just be ready for the conversation.
Curbing Returns Of course, product returns are the headache-inducing issue for many recyclers. Hoffman has come to the con- clusion that in this business, just like any other, there will always be returns.
“The best way to reduce returns is to fight the return battle that you can actually win by accurate inventory descriptions,” Hoffman says. If your inventory descrip- tions are true and accurate then you will see a reduction in returns for items that may have more damage than the customer was expecting. But you’re always going to have returns based on other uncontrollable factors such as customer cancellation.
36 // March-April 2019
Shroyer stresses using photography to your advantage in that a picture “really is worth a thousand words.” Most recyclers understand that it’s easier to show body panel damage with a picture than just listing the damage codes. “Images have become more important than just damage and paint matches – customers are less likely to order the wrong part if they have an image to compare to,” Shroyer says. “This has made a difference for every- thing from starters and alternators to suspension parts and even engines and transmissions. Customers are also less likely to attempt to make fraudulent returns if they know there is an image of the original part on file.” Obviously returns are part of doing business. Since the focus is the percent of returns you experience, the more you sell, the more returns you will experience. That said, Meyer recommends:
• Being upfront about the condition of the part. • Qualifying the expectations of the customer at the point of sale to insure the part will fit the repair.
• Don’t over-promise the delivery time. Be honest with when the customer can expect to receive the item.
• Tracking returns. If a customer is significantly higher than your average return percentage, contact the cus- tomer and ask how you can work together as busi- ness partners to lower the number of returns. “The reality, some customers don’t want your parts,” Meyer says. “If you can identify these customers, then you can decide if there is profit in doing business with them.”
Effective Buying Techniques
Buying good inventory and having a skilled inventory staff to properly identify and grade the parts is at the core of Tom’s Foreign Auto Parts business in Waterbury, CT. As Jim Eitvydas, president of Tom’s explains, buying at auction is one of the most important, most difficult and most time consuming part of his business. Having been in business for 34 years, Eitvydas operates on 2.5 acres with 30,000 square feet in three buildings. His team of 22 employees process 500 cars a year. “We have both a website and an eBay presence,” says Eitvydas. “We have over 40,000 parts on the website and eBay at all times.” Tom’s Foreign Auto Parts reduces returns by utilizing the method whereby every time a customer places an order over the counter or online, they receive a confirmation email with the fitment of the part accompanied by pictures of the exact part they bought. When it comes to becoming a more effective buyer at auction, Hoffman reviews every invoice on a daily basis. He also looks for sales on items that Elgin’s has brokered and then looks to see if this is something that is needed in stock on a regular basis.
“Use sales data to make buying decisions,” Shroyer
says. “Just because something looks shiny doesn’t mean you should automatically buy it.” As part of Pam’s Auto inventory buying process, Meyer and his team have daily and weekly conversations and
Automotive Recycling
BEST PRACTICES
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