What is DustyMoto? A particularly harsh desert race in Arizona? A porn star from the 70’s with a predilection for motorcycle apparel? Actually, DustyMoto is one of the most innovative companies that I’ve come across in our industry and one that you should absolutely be signed up for and using.
DustyMoto is a web-based service that creates a virtual warehouse in “the cloud” that is composed of all the inventory with nine months of no sales held at its participating dealers. When a dealer has demand for a part they don’t have, rather than order it from the OEM, they order it through DustyMoto, and the part is shipped from one of the dealers in the network that has it as excess or obsolete inventory.
Let me rewind and explain what all that means. First, a virtual warehouse in the “cloud” means that all of the product that DustyMoto shows as available in their system is not sitting in a big physical warehouse somewhere (if it was, it would be pretty big as DustyMoto’s CEO Bobby Franklin told me that they currently have around $45 million in inventory). All of the inventory is being held at participating dealers around the country. “The Cloud” is the term that has been developed in the internet application space to refer to data storage and processing capability that is not housed on any one machine. It’s physically spread all over the place but the application or database appears as one unified entity (Google’s App Engine or Amazon’s S3 for example).
The inventory in the system is typically all stuff that is at least 9months old. According to DustyMoto, studies show that if a part is on your shelf with no sales activity for 9 months, odds are really, really good that it’s going to be there for a birthday or two before you finally pitch it or it ends up on eBay for pennies on the dollar. DustyMoto makes it’s money off a small commission/fee to the seller, currently 15%. Considering that most shops eventually blow out old inventory at levels much steeper than 15%, and typically after incurring carrying costs that add up to way more than that over a year or two, 15% seems reasonable.
Another nice aspect for the seller is that all parts are sold at current dealer cost (the same cost in your price files). That means that it’s possible that you may have paid $100 for a part a year ago, but the part now sells from the OEM for $125, so DustyMoto transacts it for $125. You just made (or recouped carrying costs) $25 on that part.
This is the type of brilliant idea that I’ve called for in several columns over the years. Although in my naivete I thought that it would have been driven by the distributors or OEM’s. Bobby from DustyMoto sent my thinking straight on that one. He explained that the OEM’s and Disti’s have zero interest in making the supply chain or inventory management efficient across the industry. In fact, it’s in their best interest to stuff inventory into the channel with the ferocity of a farmer cramming feed into a goose for foi gras.
When I pointed out that inventory carrying costs were one of the largest contributors to dealers having financial hard-times, and wouldn’t it be in the OEM’s interest to do what they can to make their dealers more healthy. I could sense Bobby rolling his eyes over the phone as he explained to me that if that dealer dies off, it’s an opportunity for the OEM to shove inventory into another empty parts department in the dealership that steps in to take the dead one’s place. My, what a healthy industry we have…
With those market dynamics in place, it’s imperative that dealers and retailers in our industry use all the tools available to make ourselves as self-sufficient and profitable as possible. Think of DustyMoto as a Co-Op that allows all of the dealers in the country to work together to make the entire industry more efficient, effective, and healthy.
Think about it… How much old inventory do you have on your shelves that you just know someone, somewhere, is ordering brand new from the OEM…? How many times do you order a part for an older bike that you just know has been sitting on some poor sucker’s shelf two states over for the last three years? DustyMoto is in place to solve these very real problems
I’d like to see DustyMoto’s capability built into every major DMS system out there. When you add a part to an invoice that is not in stock at your shop, it should query DustyMoto’s servers first, before that special order goes to the OEM or distributor. It should be seemless. If DustyMoto has not already begun working on an integration with folks like Ziios (see Arlo’s recent article on Ziios openness to integration and extension) they are missing the boat. If DustyMoto and Ziios offer that capability, then ADP better get on board as well.
I honestly believe that if DustyMoto plays it’s cards right, they have the ability to radically transform a major aspect of our business thus making everyone at the retail level a lot better off. And like all networks, the more nodes, or participants, the better it will all work.
I think one of the biggest risks to their success is if one of the major DMS players steps in and sets up a competing network (which is not just bad for DustyMoto, but bad for the idea as a whole because now you have inventory split into multiple exclusive networks).
I also think that DustyMoto needs to implement a type of credit system that rewards buying from the network. Sure, everyone wants to unload their old stuff, but I think there needs to be an incentive system that can help re-train the behaviors of parts managers to not just order from the OEM or distributor first without checking DustyMoto’s system (again, integration into the DMS will help alleviate this). Maybe a system that the more you buy from the network, the lower commission rate you have to pay when you need to unload your own old stuff?
After a year that had me writing a few columns and blog posts that made me sad or mad about things going on in this industry, I’m happy to be able to finish up my year with a column that is as hopeful for what may be ahead for our industry as this one.
Now go sign up!