PartsClub - The DL S4E8
PartsClub - The DL S4E8 is now available on your favorite podcast app!
In this episode of The DL, Diesel Laptops’ Founder and CEO, Tyler Robertson, is joined by Zac Jones, Founder & CEO of PartsClub.
PartsClub makes it easy to connect with suppliers and get parts quoted in minutes. Then just pick the quote you prefer and checkout. Easy, fast & free. PartsClub helps buyers and sellers work together on quotes and orders without emails or phone calls back and forth. PartsClub helps Parts Teams avoid miscommunication, disorganization, lost deals and lost revenue.
As always, thank you for watching and listening!
Connect with Zac Jones & PartsClub:
LinkedIn - https://www.linkedin.com/in/zachary-jones/
Website - https://www.partsclub.us/
Listen on your favorite podcast streaming platform below:
Transcript for PartsClub - The DL S4E8:
Tyler:
All right, everyone. I really love hearing about people that see a problem and create a solution. This is what I did at Diesel, right? I said, "Hey, there's a problem here. We're going to do something." And I remember people telling me when I said, "I'm going to go document every fault code that exists," people were like, "That's impossible," or, "That's stupid. Why would you do that? Do you know how big that is?" All the naysayers in these people. So what you're going to hear in this podcast is with Zac Jones. So again, this is someone that worked in a space for a while, saw a problem and said, "I'm going to make a solution." And these are not overnight success stories. They're just getting going. They're in beta, about to open it up to the general public, and there's real challenges. There's only so much time and so many dollars you have to spend on things and you have to get them going.
He had a lot of things he needed to overcome here because the marketplace he's trying to build, you can only have a marketplace if people can find the thing they're looking for. And in the world of off-highway construction, ag, componentry, and parts, that stuff's behind paywalls. Only dealers have access to those things. It's a really hard thing to do. So he's doing a very similar thing to what we do with diesel parts, but we're more focused on commercial truck. He's more on the off-highway. He took a different approach, and he might be right. I might be right. Maybe we're both right. I don't know. But I love the story. I love talking to people like this. And if anything you get out of this is where there's a will, there's a way, so enjoy the episode. Grab a cocktail, popcorn, whatever you want. Take a listen. I think you'll come away saying, "Man, we need more Zacs in the world out there creating solutions to problems." Enjoy the episode.
Welcome to The DL. I am your host, Tyler Robertson, also the CEO and founder of Diesel Laptops. Again, the podcast show where I get to talk about my two favorite things in life, and that would be entrepreneurship, and that would be everything going on in this diesel repair industry. These are my hobbies. These are the things I enjoy doing and talking about. And any chance you get to find someone that does both, I'm like, "You got to come on the podcast show," so I have a gentleman with me today, goes by Zach Jones. Same title as me! Founder and CEO of PartsClub. So welcome, sir, to The DL.
Zac:
Yeah! Tyler, thanks so much for having me.
Tyler:
So PartsClub, how do you explain to people what that is?
Zac:
Sure. So if I'm stuck in an elevator, hopefully not for too long, and we're doing a pitch for somebody, PartsClub is a marketplace that connects buyers and sellers of heavy duty parts. We're focused on the ag space, the construction space, trucking, and industrial. So forklifts and aerial lifts, that kind of thing. And so really, we're looking for those heavy components that customers are having trouble finding online or in general, and just really looking to help suppliers get that inventory digitized. The big problem that we're seeing, and that I slammed into and I joined this industry, was that 99% of products are digitally undiscoverable. So they're sitting on a shelf, but nobody knows they're there. They're not connected to the internet in any way, shape or form. So I think the world is going to look very different when we do solve that problem. And when I looked at it, I said, "Okay, let's work backwards. What needs to happen between that world and the world we're currently in?" and started that entrepreneurial journey.
Tyler:
So why ag and off-highway? Why not, really, automotive or power sports or motorcycles? How did you land in that particular niche?
Zac:
I was born into it. My father owns a business in Toronto, Canada that does hydraulic repair and parts for forklifts, and so I was in that shop from the time I was two feet tall and went off to college, came back, worked for them. I know that industry the back of my hand, so it was really interesting. And I also wanted to do something that was going to support businesses like his. He spent his whole life building this incredible business. When I joined as an adult, they had 36,000 products in the warehouse and none of them were online.
So the second that we were able to get those all organized, photographed, priced and everything, our business transformed, and I saw the potential in that to help businesses like his that have that expertise and that great business [inaudible 00:04:38], but are just struggling to take that next step and compete against some of the larger players in this space. So that's really where I got started, and I think there's a lot of businesses like that in those particular verticals that are on that 15 to 30 employee range and are just on the hump of doing something really special.
Tyler:
So I just got to ask this. I'm always just curious. What did you go to college for, and did you graduate?
Zac:
I did. I graduated twice. Yeah. So I did philosophy and economics, a little more philosophy than economics. So I did philosophy in undergrad, economics in undergrad, and then did a graduate degree in behavioral economics. So why we choose the things we do, why we do the things we do. I was just trying to understand why the heck we make the decisions we make.
Tyler:
That's really interesting. I went to school first for computer engineering and then I got kicked out after two years because I never went to class. I guess they kick you out if you don't show to class and fail all your classes. But then, I ended up doing night school with my bachelor's degree. And the one course that I did not want to take at all ... I was so dreading it ... but it actually ended up being my favorite course, was an intro to philosophy. I don't know what it was about it, but I was like, "Man, this is the human mind understanding things so people think." Socrates and all these things. It was just a very interesting thing. So if anyone listening to this has never read about it or read a book or learned about it, there's actually some really interesting things that you can take away from that and apply to business and everything.
So again, I just was curious. We all kind of end up in this industry, it seems like. None of us really intended to get here, but we end up here and we stay here. So I want to go back to your father's business and you guys are trying to go online and digital. I think a lot of people think it's a super easy thing. "Oh, we'll buy a website. We'll throw the product up on there and the money will follow." But in my experience, it's not really easy to even get your product on the platform, right? You had 36,000 SKUs. I can't imagine you guys had photos and data and descriptions and all these things ready to go. So what was that process like when you guys were like, "We're going to go try to do this thing?"
Zac:
It was incredibly painful. It was like building the pyramids, where you're like, "You mean they had no telehandlers?" And you're like, "No, they had no telehandlers." So we were back there, 40 degree heat, taking photos nonstop and dusty and dirty. It took two, two and a half years of just pure grunt work to get that stuff done. And what it did is it really taught me what is involved in that process and how hard that's going to be for people. When we looked at the e-commerce space and we were like, "Okay, what's required to put a product listing together? Typically, you need a photo, but not necessarily. You do need a description. You need an updated price. You need a weight." Those are actually really hard to do. Even something like weights, weighing all your products it's just impossible. Keeping your pricing up to date with inflation being as dynamic as it has been is just impossible.
So what do we do in a world where that is really, really hard for businesses to tackle? That's really what we spend a lot of 2022 doing at PartsClub, was being like, "Okay. Pricing is hard to maintain, Weights are hard to maintain. Photos are definitely challenging for a lot of people. How do we help these suppliers look incredible online when their data's not that great?" And so we've spent a lot of time trying to connect buyers and sellers without a part number in an attempt to kind of take care of everything for the supplier, deliver a clean quote to them, and let them quote it.
Tyler:
Yeah. So for the audience, what Zac's referring to here at the end of the day in the automotive world is ACEs and PIES. So PIES is product information, weight, dimensions, pictures, all those things, and then ACEs is more of what does it fit. So what's really interesting here is in the automotive world, if people go on look on RockAuto or Amazon, they can be like, "Oh, I got a 1999 Toyota Camry LE, four-cylinder. Boom. There's my wiper blades," or whatever the part is. You can do those things. In the commercial truck world, that's virtually impossible at this point. And I know in the off-highway world ... because I was on one of the committees and on a panel talking about this, the data standardization, really, with auto care ... off-highways are even further behind.
It's a really complex thing that people don't understand because in the world of HD, at least with commercial trucks ... I don't know if you can speak to this at all about off-highway ... but in the heavy-duty truck world, you may have an injector manufacturer that makes an injector, that sells it to Detroit Diesel, and they know it goes into Series 60, but they don't know what year, make, models, trucks that Series 60 engine goes into. The original parts manufacturer is like, "I don't know. I can't even tell you my year, make, models on my own products that I made." Is it a similar thing that you guys find in the ag and off-highway space?
Zac:
It is, also because the OEMs are playing games with the aftermarket, right? So they're changing part numbers, they're doing all kinds of crazy stuff to keep shifting the ball from cup to cup. It is really hard, both from the supplier side and the buyer side, to come together based on a part number. For the buyer to figure out their own part number ... I mean, really, who wants to do that to be honest? You just want to call someone and be like, "I have a broken excavator. It's this thing," and take a photo and send it off to somebody. And so we understand that from a buyer's perspective. On the supplier side, they typically have the tools they need to look this stuff up. They just need to know what you want.
And so for us, what we came up with in 2022 ... and I think we talked about this before, it was super interesting ... was a drop down menu or a drill down. So it would be like, "I've got this type of machine, this brand. I need the bucket cylinder, and maybe throw in a quote for a seal kit for it as well." And when the supplier can follow that logic down to the bucket cylinder seal kit, you don't necessarily have to provide a part number. They'll figure it out on their own in a few minutes. But it's very different from an experiential standpoint on both sides, than somebody just texting you a photo and being like, "I need this thing." And now, it's a 40-minute quote for you to figure out.
Tyler:
So I guess walk me through it a little bit. Just like a scenario, right? I'm a buyer. I got my excavator. I'll use your bucket example. I need a bucket or a cylinder for the bucket, right? What is the buyer doing, and then what happens to the seller, or sellers I guess, once that buyer does his piece of it?
Zac:
Yeah, so the buyer's coming in and we take them through what we call a quote flow. So you come in and we go, "What machine are you working on? Brand, equipment type, excavator, model, serial." And the next step we do is we go, "What part are you looking for?" and we present them with a bunch of categories and he can click on one, drill down, see subcategories, then see more subcategories and more subcategories. And so by the time he clicks through and tells us what he's looking for, we fire off that quote request to a series of suppliers who match the brand, the equipment type, the product type that he's looking for, and that all happens automatically.
Very similar to when you go for a car insurance quote and you say, "I've got this car. I do this much driving," or whatever. And then they fire it off to a bunch of insurance companies and you get your quotes that way, so it's the same type of experience. The nice part about that is they don't necessarily need to know the part number and the supplier gets all this great information. They know exactly what machine it is. They got their model on serial number. They got the part description. It's a pretty quick quote. And even if they decide, "Hey, this isn't my type of quote. I don't want to get involved," at least they can make that decision really, really quickly.
Tyler:
Yeah, we have a similar thing here. We have a little mini lending tree. So a customer applies for financing, we get it and we send it out to a bunch of people, and then we get them back. So on your platform, I'm assuming the seller gets a notification on their phone or their email, or whatever happens. Are they replying [inaudible 00:12:29] like email and calling the customer? Are they just providing pricing and availability, or what do they send back to that buyer and how do they do it?
Zac:
Yeah, so they're clicking a link in that email and they're heading back into PartsClub, and they're going through a quote flow. We ask them to build a quote for the buyer in PartsClub. So that's price, availability, any special conditions, like something is non-returnable or special shipping conditions, or whatever. They quote their freight. They send it off for approval. And when the buyer approves it, they get the order notification. That's all happening within the platform.
Tyler:
So how does the payment happen? Are you taking the credit cards on the platform and processing them that way? Or are you just saying, "Okay, buyer, seller, go to your transaction over here now that you've picked your seller."
Zac:
One of the things the supplier can dictate in the quoting flow is whether they need a credit card right away. So what they're saying is, "Do I know Tyler or is Tyler a new customer? If he's a new customer, I need a credit card. We're not doing anything that way." If they already know you and they have an established relationship, they can just let you check out without a credit card. And that was something that we thought really hard about because a lot of these buyers and suppliers have preexisting billing relationships, and we didn't want to stick our nose in the middle of them and get in the way. So typically, the credit card is required 95% of transactions, but if you have an existing relationship and you're like, "Hey, I know Joe. Joe bought from me yesterday. He's got an account here," you can just let Joe check out without a credit card if you need to. But we take all that on the platform.
Tyler:
Yeah. So you're processing the credit card yourself essentially then? Or is the seller processing the credit card?
Zac:
Nope! We're doing it.
Tyler:
You're doing it. Okay. So your business model then, do you guys make money from the buyers, the sellers, the credit card transaction? How do you guys end up monetizing this?
Zac:
Yeah, so we make money in a few different ways. On the buyer side, your first 10 quotes per month are free, and after that you do need to pay a small, Netflix-sized subscription, so it's $7.99 a month. On the supplier side, we take 3% of the transaction plus credit card fees. So as a marketplace, you have a decision to make, always, of what side you want paying and what side you don't. We decided to go a tiny little bit on both sides rather than load up on one or the other. But it's really important that we make it free, so there is a free tier on both. The suppliers are not paying us every month to join the network. They only pay when they sell. And then the buyers are not paying for their first few quotes. So if you've got one or two pieces of equipment, you're probably not running over. Hopefully, you didn't break it 10 times this month. So at that point, you're still on the free tier.
Tyler:
Yeah. No, that makes total sense. I mean, hey! 3% for a seller to get a sales lead actually sounds really cheap. I mean, these are not $5 items, right? These are expensive items, typically, in the heavy-duty and off-highway market and everything. So I like the business model, I like everything there. I'm just spitballing here, but have you guys thought about doing Google preferred sellers or ads, or any of that type of stuff as well to monetize it more? Or has that not come across the radar yet?
Zac:
Yeah. Before we hop on that, I just want to talk about the percentage for a second, just to give the listeners a little bit of context. So eBay and Amazon are between 18% and 22% when you sell a product on there, just so people understand the difference. There are lots of people. I've sold on both platforms. They're great platforms. But 18% to 22% is a real punch in the gut, and so we're hoping that this is a much more attractive platform from a fee perspective. When it comes to advertising, we are advertising on the platform, so we do help brands. What we do though is because it's software, we can do some really amazing creative things with advertising. And so for us, what we call it is Just in Time advertising. So we will never show you a banner ad that doesn't relate to anything that you're currently doing. We will present you with an ad just for the task that you're doing in that screening.
So if you're doing a lookup and you're trying to figure out what part you need, we will present an ad for somebody who can help you with lookup, like you guys or somebody else. And then when we were looking at the order screen ... So somebody's going in and they're saying, "I got to track this order on the supplier side," we're presenting them with an option for a company that will actually help them fight disputes with couriers, so that company is advertising on the platform. But they're only relevant when you are looking at the platform trying to dispute a fee from a courier.
We have the ability on PartsClub, from an advertising perspective, to do these creative little things to pop out the right person at the right time, and we also have the benefit of knowing who the buyer is and who the supplier is at a really detailed level. So what fleet they have, what brands they typically work with, what part types they're looking up. And so if you're advertising as a parts business, we can tie you right to the right person as they're going through the quote flow and bring you right in for the right situation.
Tyler:
Yeah. So anytime you build a marketplace, no matter what it is, right ... In your case, physical parts ... I remember reading about Reddit when they first got started, the online forum, right? I mean, they needed people to create content and they needed people to respond. They'd make fake accounts and just do things to get traffic. But it's always the marketplace, always a challenge, because you can't have buyers if there's no sellers, and you have to go convince a seller to go jump on this platform, but you have no buyers yet. So how was that when you first started getting going? I'm assuming you went after sellers first, and what was it like trying to find sellers or even the first one?
Zac:
Yeah, yeah. Definitely a challenge. I wouldn't advise it to people. It's an emotional rollercoaster to go through that one. But there are suppliers out there, 100%, in every industry that are looking for the next big thing. And it's really important that when you look at a market, that you don't look at it as one homogenous group, and you break it out into early adopters, mid adopters, late adopters and what we call laggards. And so when we look at the market of suppliers for trucking or ag or whatever, we're dividing all those potential suppliers out in terms of whether they're likely to adopt tech early, mid, late, or potentially never. So we're not wasting our time going after the right people. And one of the best indicators for us was, "Do they have a great e-commerce website?" If they've already tackled that, they've probably got their product data organized. They're probably looking for customers online. Those are the folks we reached out to, and that was a really good strategy for us to break the back of it.
The other thing was ... I use DoorDash as a model. So it's 2008, 2009. I bought a pizza on DoorDash and the pizza took three hours to come. The reason was that I didn't actually buy it from the pizza shop. I bought it from DoorDash, and then they turned around and bought it from the pizza shop, and the tracking number wasn't linked. It was just a nightmare. But the fundamental thing that I learned there was we don't have to necessarily wait. So what we do is we put the supplier on ... If you request a quote from the supplier, we have a team that will literally call them and be like, "What is your price for this product?" and we will sell on their behalf and send them the money. So sometimes, you do need that manual bridge, yourself, between the supplier and buyer just to kind of get it going. But yeah, it is a very big challenge and one that I spend a lot of time talking to advisors and other entrepreneurs about for sure.
Tyler:
Yeah. We got a similar thing going on, and talking about early adopters, right? We're launching a reseller program and there's some people that they do the pitch to give us the form paperwork. We're signing up. We're ready to go. And there's other ones that talk about it for weeks and months at a time before they finally decide to do something or do nothing, right? So I think everyone that runs a business, I'm sure, runs across a very, very similar thing. Yeah. So setting up a marketplace, not easy, not difficult. How far are you guys into this? How long has the platform been up for and how's it been going so far, I guess? It's always tough. I mean, I was bootstrapping my company in my garage seven years ago, so I know the struggle of just not enough hours in the day and not enough resources. So how have things been going?
Zac:
Good. Yeah. We launched a beta version behind the login page, so everybody using the platform right now has to log in. They need an account approved by us. We've been testing that for about eight or nine months with wholesale businesses working with each other, and we've learned a lot and it's been great. We are going to go public ahead of the login page on January 1st, 2023. So everybody will be able to see all the uploaded parts, buy a product, create a quote request, all that stuff right off the bat. And that'll start on the first day of next year.
Tyler:
Yeah. I mean, you want that open enough when Google starts picking you up and all these other things happen, too, and the traffic and whatnot, so I totally get it. And I think the other interesting thing here is ... I mean, you built a software company. You didn't graduate with a software degree. You got a philosophy degree, right? How was that journey of figuring out, "I need to build a software program and I know nothing about software." How did that journey start for you?
Zac:
Yeah. I mean, the details of it are tough. You got to learn the tools and whatever else. But what I studied in school was choice architecture, and software for me is the best sandbox for that because it's so malleable and so manipulatable, and we can test stuff. So we can throw five buttons onto the platform and see which one people are interacting with in real time. It's a really amazing opportunity for me to take what I learned in the past and apply it to a new situation. So software is something I've kind of always been around, but I've certainly had to learn about a lot. And the part that I've really learned to appreciate the most is databases. It's the really boring part of it.
But something as simple as when you go to create a quote on PartsClub, we ask you, "What type of equipment are you looking for?" And if you select loader, we need to know what brands to show you. We can't show you every construction brand. It's going to be really annoying. And then of the 30 loader brands, we need to surface the right five or six so that you're getting the most popular ones up top. So you have a database of equipment, a database of brands for each equipment, and a database of the most popular brands for that brand set.
Tyler:
Yeah.
Zac:
And so you end up with all these databases on databases on databases. You end up looking at the world through a series of databases and it's really, really interesting to do. But it's developed a huge appreciation in me for the people that have to figure out how those databases all relate and link together. That's really what creates the magic of the experience. And when we look at dropping down an advertisement and knowing when to do it, that's all predicated on 17 to 18 different databases. So really, it's a fascinating problem around database, structure, and architecture.
Tyler:
Yeah. I had this epiphany several months back and I was like, "I'm pretty sure everything I do and touch now, there's a database behind it that's driving all these things that I'm doing." And it really is true from what you're saying to banking to just our car. It's amazing, databases, and how much ... Hey, I employ database people here. I know what they make. It's actually a great profession for people that enjoy doing that. So for me, I took a little bit of computer software development stuff at school, at college. I knew enough to be dangerous. I really never did any coding, per se. Did you get into the weeds of the coding, or do you just go find people to help you with that part of it?
Zac:
Yeah, so I don't code myself. I can't read code. I can't check it, so it's been really important that I find resources that can help do that for us. And frankly, people that I trust. Unfortunately, I can't check that stuff myself, and so that's an area of the business where I have to find people that know what they're doing, and believe in the business and really want to see it grow.
Tyler:
Yeah. Man, I think I still don't know anything about software development besides what I've learned here. And what I've learned is that I'm just going to hire some great people and they can make sure this happens. I remember I made the mistake of, "Hey, I need a thing built. I'm going to go on the internet and find a developer, and he's going to build me a thing." And then I was like, "Oh, I got another thing. I'm going to find another developer and go build another thing." And all of a sudden, I did it 10 or 12 times, and I'm like, "Wait a second. None of these things talk to each other. They're in different architects. They have different user op systems." I'm like, "I kind of made a mess here," and nothing worked together like it was supposed to.
But thankfully, that was, I think, a turning point for Diesel Laptops when we said, "Man, we're going to go add $1 million to payroll, and it's all for software development. And it's not software developers. These Scrum masters and QA and executives and all these moving pieces you need to be a software company. So every day I'm like, "Man, I hope the ROI is here. I hope the ROI is here." We're getting there, though, and everything. All right, man. So it sounds like you're going, sounds like you got the beta going off beta, kind of opening up the thing to everybody. What's next? Is that it? Is there more features that are lined up, or is it one baby step at a time? Or do you got 50 things going all in parallel at once over there?
Zac:
Yeah, we got a lot going on. And when we go public, we're going to go public in a big way. But the biggest thing that we've been doing is working on that quote flow, making sure the buyer doesn't need a part number and making sure the supplier doesn't need to have one uploaded. There's probably only, I would say, 100 suppliers in our marketplace that have the ability to upload products, period.
Tyler:
Yeah.
Zac:
And so by reducing the need for a part number now, we've gone from 100 potential suppliers to 4,000 potential suppliers. Same thing with the buyer. With the buyer, we went from 1,000 buyers a day that could realistically use it to hundreds of thousands globally. It's going to get real hot, real fast in January and February, and we're looking forward to it for sure.
Tyler:
Yeah, no. I think you're onto something. I mean, the data standards don't exist to allow people to have those lookups and find parts, and we got right to repair and people don't want to share their exploded views and all these ... I mean, there's a million things that have to happen in order for that. I really love what you're doing, man. I've seen similar things in different industries and I know the grind. I've been there. I'm still there, so I totally respect and appreciate everything you're doing over there. If people want to find your website ... we never gave out the website ... and if people want to get ahold of you, where do they go?
Zac:
Yep. So our website is partsclub.us. You can drop us a line there, or you can always contact us at [email protected] as well.
Tyler:
Well Zac, it's been a pleasure having you on there. And obviously, the people on your platform need my diagnostic tools. We got parts things and service things, so hopefully we can keep working together here or find a way to work together and improve both our businesses. I look forward to the future. You got a fan over here at Diesel Laptops, so keep up the great work, man. And as we end every episode for everybody, please comment, like, share, subscribe. Tell a neighbor. Tell a friend. Tell the guy next to you at the bar. Whatever it is, we really appreciate all the support and effort we get here from all of the listeners and watchers. We're going to end the episode. Not just diagnostics. It's diagnostics done right. Diagnostics leads to parts. Partsclub.us. They definitely got people that can find you the parts you need. Thank you for watching and listening.
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