Businessmodel of AutoZone

Customer Segments

AutoZone has a mass market business model, with no significant differentiation between customer segments. The company targets its offerings at all consumers who seek auto replacement parts and accessories.

Value Proposition

AutoZone offers three primary value propositions: convenience, cost reduction, and brand/status.

The company offers convenience by making life simpler for its customers. It enables consumers to purchase something online and then pick it up in-store on the same day. It also enables them to return core parts (failed replaced parts) they have purchased online at a full refund.

The company reduces costs through various options. It has a section on its website called “Deals & Savings” through which it offers various discounts. It offers free ground shipping on all orders totaling at least $75, as well as orders shipped to APO/FPO/DPO addresses. It allows customers to come in any store to find out why their Check Engine Light is on for free. Lastly, it enables customers to borrow rather than buy specialty tools outright through its Loan-A-Tool program.

The company has established a powerful brand due to its success. It is the second-largest retailer of auto parts and accessories in the U.S., behind Advance Auto Parts. It sells its products through 5,314 locations in 50 U.S. states and the District of Columbia, Puerto Rico, Mexico, and Brazil.

Channels

AutoZone’s main channels are its branded retail stores. The company promotes its offering through its website, social media pages, TV/online advertising, promotions, loyalty card programs, in-store signage/circulars, sports sponsorships, and participation in trade shows and conferences.

Customer Relationships

AutoZone’s customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees. The company’s website features a section called “Repair Help” with resources such as a troubleshooting guide, automotive glossary, and a video library. It also provides answers to frequently asked questions.

That said, there is a personal assistance component in the form of phone, e-mail, and in-store customer support. There is also a community component in the form of a forum on its site where customers can interact.

Key Activities

AutoZone’s business model entails distributing products to its customers.

Key Partners

AutoZone’s key partners are the store support centers that provide the merchandise for its retail locations; they are based in Memphis, Tennessee; Canoga Park, California; Monterrey, Mexico; and Sao Paulo, Brazil. The company also maintains an affiliate program through which it invites third parties to promote it on their platforms (websites, mobile apps, etc.). Referrals that result in purchases lead to an 8% commission for the parties as well as potential performance incentives.

Key Resources

AutoZone’s main resources are its physical resources, namely its retail stores in all 50 states and the District of Columbia, Puerto Rico, Mexico and Brazil. It has important human resources in the form of store associates who assist customers.

Lastly, it places a high priority on its intellectual property, with its many trademakrs representing important components of its marketing/merchandising strategies.

Cost Structure

AutoZone has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is cost of sales, a variable expense. Other major drivers are in the areas of sales/marketing, operating, and administration expenses.

Revenue Streams

AutoZone has one revenue stream: revenues it generates from sales of products to customers through its retail stores.