O'Reilly Auto Parts 2013 Annual Report Download - page 18

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FORM 10-K
12
district managers, and store managers to provide excellent customer service to each of our professional service provider accounts by
providing the products and services identified below:
 broad selection of merchandise at competitive prices
 dedicated Professional Service Specialists in our stores
 multiple, daily deliveries from our stores
 same-day or overnight access to an average of 147,000 SKUs through seven day store inventory replenishments
 separate service counter and phone line in our stores dedicated exclusively to service professional service providers
 trade credit for qualified accounts
 Mitchell shop management systems
 First Call Online, a dedicated Internet based catalog and ordering system designed to connect professional service providers directly
to our inventory system
 training and seminars covering topics of interest, such as technical updates, safety and general business management
 access to a comprehensive inventory of products and equipment needed to operate and maintain their shop
 Certified Auto Repair Center Program, a program that provides professional service providers with business tools they can utilize
to profitably grow and market their shops
Marketing to the Independently Owned Parts Store:
Along with the daily operation and management of the DCs and the distribution of automotive products to our stores, Ozark Automotive
Distributors, Inc., our wholly owned subsidiary (“Ozark”), also sells automotive products directly to independently owned parts stores
(“jobber stores”) throughout our trade areas. These jobber stores are generally located in areas not directly serviced by an O'Reilly store.
Ozark administers a dedicated and distinct marketing program specifically targeted to jobber stores.
Approximately 181 jobber stores currently purchase automotive products from Ozark and participate in our Parts City Auto Parts program,
our proprietary jobber service program. As a participant in these programs, a jobber store, which meets certain financial and operational
standards, is permitted to indicate its Parts City Auto Parts membership through the display of trademarked logo that is owned by Ozark.
In return for a commitment to purchase automotive products from Ozark, we provide computer software for business management,
competitive pricing, advertising, marketing and sales assistance to Parts City Auto Parts affiliate stores.
Pricing
We believe that competitive pricing is essential to successfully operate in the automotive aftermarket business. Product pricing is generally
established to compete with the pricing of competitors in the market area served by each store. Most automotive products that we sell
are priced based upon a combination of competitor price comparisons and internal gross margin targets and are generally sold at a discount
to the manufacturer’s suggested retail price with additional savings offered through volume discounts and special promotional pricing.
Consistent with our low price guarantee, each of our stores will match any verifiable price on any in-stock product of the same or
comparable quality offered by our competitors in the same market area.
Customer Payments and Returns Policy
Our stores accept cash, checks, debit and credit cards. We also grant credit to many professional service provider customers who meet
our pre-established credit requirements. Some of the factors considered in our pre-established credit requirements include customer
creditworthiness, past transaction history with the customer, current economic and industry trends and changes in customer payment
terms. No customer accounted for ten percent or more of our consolidated net sales, nor do we have any dependence on any single
customer.
We accept product returns for new products, core products and warranty/defective products.
INDUSTRY ENVIRONMENT
The automotive aftermarket industry includes all products and services purchased for light- and heavy-duty vehicles after the original
sale. The total size of the automotive aftermarket is estimated to be approximately $239 billion, according to the Automotive Aftermarket
Industry Association (“AAIA”). This market is made up of four segments – labor share of professional service provider sales, auto parts
share of professional service provider sales, DIY sales and tire sales. O’Reilly’s addressable market within this industry is approximately
$136 billion, which includes the auto parts share of professional service provider sales and DIY sales. We do not sell tires or perform
for-fee automotive repairs or installations.