CarParts.com is modifying its business approach to reach a broader audience and manage expenses more efficiently. The company, known for selling auto parts and accessories online, has traditionally targeted budget-conscious consumers. However, shifting economic conditions have led to a decline in purchasing activity from its core customers. In response, CarParts.com is focusing on attracting new buyers, including business-to-business (B2B) clients, while refining its marketing strategies to rely less on paid search. The company aims to increase profitability by improving its customer base and adjusting its sales model.
CarParts.com has previously relied on paid search to engage its primary customers, but this approach has become costly. CEO David Meniane pointed out that customers have significantly reduced spending in 2024, making it necessary for the company to seek alternative strategies. Similar adjustments have been observed in other e-commerce businesses that depend heavily on digital advertising. The company’s latest financial report shows a drop in net sales from $675.7 million to $588.8 million, along with a decline in gross profit. These changes reflect broader shifts in consumer behavior and the rising costs of digital marketing.
How Is CarParts.com Broadening Its Customer Base?
To diversify its clientele, CarParts.com is expanding its product offerings and strengthening its wholesale distribution. The company is also investing in last-mile delivery and higher-touch sales within key markets to enhance its B2B transactions. Additionally, it has introduced a premium paid membership program, which has attracted 3,000 members so far. Meniane stated that this initiative is expected to contribute to higher net profit margins over time.
What Steps Is the Company Taking to Cut Marketing Expenses?
CarParts.com is shifting its marketing focus toward organic traffic by improving site conversion rates and search engine optimization. It is also promoting its mobile app, which has gained over 800,000 users in less than 18 months. Meniane emphasized that mobile app adoption is helping the company decrease reliance on paid traffic.
“Our best-in-class mobile app, with over 800,000 users in less than 18 months, now accounts for over 10% of eCommerce revenue and growing, while allowing for a long-term change in our paid versus nonpaid traffic mix,” Meniane said.
These efforts aim to make customer acquisition more cost-effective in the long run.
CarParts.com recently announced that it is exploring strategic alternatives, including a potential sale. The company’s board of directors is overseeing this process with guidance from financial and legal advisors. Meniane declined to provide further details on this matter during the latest earnings call.
“That process is being overseen by our board of directors with the assistance of financial and legal advisers,” Meniane said.
This move follows inbound strategic inquiries, indicating potential interest from external parties in acquiring or partnering with the business.
With shifting consumer behavior and rising marketing costs, CarParts.com is adjusting its strategies to maintain stability. By focusing on B2B sales, expanding product offerings, and leveraging mobile technology, the company aims to improve profitability while reducing reliance on traditional paid advertising. The broader e-commerce sector has also been adapting to similar challenges, making digital optimization a key priority. The introduction of a premium membership program suggests that CarParts.com is testing new revenue streams to enhance long-term financial performance. As the company explores strategic alternatives, its future direction may include significant structural changes depending on market conditions and potential acquisitions.
