A manufacturer and seller of the avionics and others parts that make airplanes and helicopters fly doesn’t think the $4 billion market for aerospace parts is nearly transparent enough.
To rectify the situation, Honeywell Aerospace, the $14 billion arm of Honeywell International Inc. that makes and maintains a wide range of parts for fixed-wing and rotary aircraft, is borrowing some e-commerce lessons from arts and crafts marketplace Etsy.com and motor vehicle research site CarFax.com to launch a GoDirect Trade, a new B2B aviation marketplace.
Since GoDirect Trade went live in December, six prominent aerospace companies—Dassault Falcon Jet, StandardAero, Turbo Resources, H+S Aviation, Honeywell Inertial Measurement Units and WG Henshen—have opened online storefronts, says Lisa Butters, general manager of Honeywell GoDirect Trade. By the end of next year, she notes, Honeywell’s goal is to have as many 100 companies operating on the marketplace.
Honeywell sees itself as a big user and enabler of B2B e-commerce. For example, last July Honeywell relaunched MyAerospace portal, a major B2B e-commerce site and product specification and information site where 200,000 customers place new and repeat orders for a product inventory of about 1.5 million parts across 20 product categories.
Taking the competition online
Honeywell Aerospace says the aerospace industry is highly competitive, but so far not a big user of B2B e-commerce—a situation Honeywell is out to change, Butters says.
“GoDirect Trade is one gigantic online marketplace where people can buy and sell aerospace parts,” she says. “This doesn’t sound like rocket science but in an industry where most all buy/sell transactions are done through email and phone, there is no clear winner when it comes to an aerospace e-commerce marketplace—GoDirect Trade is going to change that.”
Today buying and selling aerospace parts is highly competitive but also largely devoid of e-commerce. There are about 20 companies that have some type of e-commerce systems in place for buying and selling parts online.
But most of those B2B e-commerce sites contain mostly basic parts listings, and they lack more transparent pricing and key details and images on the aerospace part being sold, Honeywell says.
Today, buyers looking for avionics, auxiliary power units and related aerospace products still do so manually, Honeywell says. Those buyers have to call numerous companies, wait days or even weeks to price a part, and risk buying from a company that did not have the inventory immediately in stock, Honeywell says.
Lessons from Etsy.com and CarFax
“Currently, less than 2.5% of all transactions in this space are done online,” Butters says. “Up until now, the ability to shop for spare parts online with prices, product images and quality documentation all in one place was unheard of for the aviation industry.”
To build its B2B marketplace, Butters, a frequent online shopper, used some aspects of Etsy.com—the online marketplace for handcrafted goods with nearly 2,000 active sellers, 33,300 active buyers and annual gross merchandise volume of $3.25 billion—to design a framework and build some advanced features.
For example, on GoDirectTrade.com, Honeywell is using blockchain technology to give every listing images and quality documents for the exact part being offered for sale. In addition, every part on GoDirectTrade.com is immediately available for sale and shipping. There is no need to wait days or even weeks for the seller to confirm availability,” Butters says. “If a part was previously used by, say, Delta, that history will be part of the listing— it’s similar to what Carfax does for vehicle histories.”
Currently there are about $68 million worth of products available for sale on the marketplace, a figure Honeywell expects to grow to $100 million to $150 million in the coming months. The products range in price from a few hundred dollars to more $1 million, but for now the average product sold is about $3,000, Butters says.
“We are the first marketplace to enable customized seller storefronts, and we are the first to leverage blockchain technology to build trust between the buyer and seller,” Butters says.
Honeywell Aerospace began working on GoDirectTrade.com in April. The aerospace marketplace runs on e-commerce technology from Magento Commerce, now a part of Adobe Systems Inc. Honeywell Aerospace also worked with Tata Consultancy Services, an information technology services and consulting business, on some parts of the launch.
A better option than Amazon Business
To put up a storefront on GoTradeDirect.com, sellers will pay an annual subscription fee of $15,000 which lets the buyer build and brand a storefront. There is no limit to how many product listings or sales each seller can have on GoTradeDirect.com, and the site doesn’t charge sellers any transaction fees, such as a percentage of each sale, Butters says.
The new aerospace marketplace also lets buyers and sellers complete deals by paying by purchase order, but Honeywell is looking into more advanced forms of electronic payment. “We are convinced that paying by purchase order will soon become a thing of past—we’re looking into different technologies that will replace this payment mechanism in the future,” Butters says.
Some aerospace product sellers originally had looked to Amazon Business to sell parts online, but as of now the Amazon marketplace cannot handle all of the complexities that are a part of buying plane and helicopter parts, Butters says. “One of the companies that will be launching a storefront this month, is a new original equipment manufacturer distributor for aerospace parts and they thought Amazon would be the perfect choice for them to start selling their goods online,” Butters says. “However, they soon realized that Amazon wouldn’t let them show technical documents or pay by purchase order, which was a must in the B2B space.”
GoDirect Trade aims to build stronger connections between buyers and sellers, she says. For example, buyers and sellers can directly contact one another online and post online reviews. “Our platform and mindset will change the way the industry does business,” Butters says.
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