Technology has changed the way people buy goods and services. Today people can pay for purchases with plastic or a computer chip, buy products from home, and transact virtually anywhere at any time. But, as technology revolutionizes retail, one industry — aviation parts sales — still lags behind.
Though an online aviation parts presence does exist, these shops do not show parts photos or prices. Purchasers must contact the shop owner via email or phone to see these things, which begins a series of informative emails, phone calls, and price negotiations. It can take days for a director of maintenance or an airline buyer to locate the right part then more time to negotiate an agreeable price, all of which adds to the time an aircraft may be out for service. Once the two parties come to an agreement, the retailer dispatches the part with an invoice and the purchaser cuts a check and mails a payment out.
There are 20 such marketplaces today, and they all do business the same way, states Lisa Butters, general manager of Honeywell GoDirect Trade.
Honeywell has launched the Honeywell GoDirect Trade Marketplace — the industry’s first e-commerce platform that will allow aviation operators to sell parts online and deliver them directly to the customer’s door.
The Honeywell offering operates a little differently than what’s already out there. It is fashioned after a number of consumer focus marketplaces, where consumers have global access to the wares of different craftsmen and sellers. Each craftsman or seller operates a small online business or shop within the marketplace platform, where they list items for sale with a picture and a price. Consumers can put their purchases into a virtual shopping cart, press click to buy, enter payment information, and in a few days to a week their product arrives at their door step.
“Until now, nobody has been able to build a marketplace where people feel comfortable enough to select an aerospace part, put it in their cart and check out online,” she says. “That’s the problem GoDirect Trade Marketplace aims to solve.”
Honeywell’s platform is one buyers can trust. The company has teamed with early collaborators to craft a purchase experience buyers love, manufacturers trust by leveraging blockchain technology, and sets the bar very high for each listing appearing in the marketplace.
What’s Airbnb Got to Do With It?
One of the primary reasons for delayed adoption in the industry is the cost of the parts themselves; the average part is around $8,000 and they are all unique, making purchasers hesitant to complete a transaction online, according to Butters.
But parts sales is a very big business with room to grow online. She explains, “Within aerospace $4 billion is traded per year within this used serviceable market, and that is expected to grow to $6.5 billion by 2023,” she says. “But currently, less than 2 percent is transacted online. The industry is really antiquated. Everyone does deals by email and by phone.”
The Honeywell GoDirect Trade Marketplace is poised to crack this nut with an aerospace e-commerce platform that directors of maintenance and airline buyers trust enough to buy and sell products.
There are several ways Honeywell is doing this. First, the company is using a technique right out of the Airbnb playbook, Butters says. Airbnb arose from humble beginnings when its founders moved to San Francisco and began offering “airbeds for the night” as a solution to a lack of hotel rooms in the city. Today, this $25 billion company is expected to facilitate 156 million overnight stays in Europe and the United States in 2018, growth made possible through a scaled and strategic effort.
“The founder’s solution was to start out small and scale the business over time,” she says. “We’re trying to do the same thing by working with early collaborators to build an experience that buyers love then figure out what it takes to get just those few people to buy and sell amongst themselves. Once we figure out that experience, we’ll scale it up from there.”
The first storefront to go live is Honeywell Aerospace Trading, which is owned and powered by Honeywell. It goes live in November. “We are really blessed that our very first storefront is Honeywell Aerospace and they’re a huge business,” she says. “It’s like having an immediate storefront that commands a lot of buyers from the get-go.”
However, Butters notes there are also several early collaborators who plan to have their storefronts up and running before the end of the year. These include Dassault Falcon Jets, H&S Aviation, StandardAero, Turbo Resources and WG Henschen.
Build in Blockchain
Honeywell is then becoming the first aerospace company to leverage blockchain technology in an e-commerce platform to build buyer trust. After all, it’s very different to transact a $20,000 part versus a $200 product.
To comprehend how blockchain can be used to build trust, one must first understand what blockchain is. In its simplest terms, blockchain is an independent, transparent, and permanent database, coexisting in multiple locations and shared by a community, which builds trust in three primary ways:
1) Data added to a blockchain undergoes a vetting process for people to reach critical consensus.
2) Information that goes into a blockchain goes in with digital signatures, so there is the notion of nonreputability. In other words, you can’t say you didn’t put the information there.
3) It is virtually immutable in that there are multiple copies. If a user were to unilaterally change a copy, it would become inconsistent with the rest of the data.
These three things coupled with the fact that what goes in there stays unchanged or unaltered into perpetuity is why blockchain can be used to store salient information relevant to business transactions.
Honeywell is leveraging blockchain’s abilities to build trust within the aviation parts marketplace. “It really is a way to ensure transactions are secure,” Butters says. “You know who you are buying from, and when you pull up a listing, every listing will have a parts pedigree that shows where the part has been.”
If the technology can be used to make the pedigree of a diamond indisputable in the diamond industry, it can be used in a similar way for aviation parts. Butters explains, “If someone goes on GoDirect Trade and pulls up an actuator, the blockchain part pedigree will show that it changed hands with Delta, then it went to Rockwell, which sold it to United. A purchaser would say, ‘This seems OK. I know these players.’ It’s far different than pulling up a part where it was unaccounted for up to a decade.”
She adds, “it enables buyers to make better decisions and to feel more trust. This is important because right now the biggest hurdle to online transactions is being able to trust that the part is OK, and safe enough to put on an aircraft.”
The company is also working with a parts dismantler out of the United Kingdom, called ECUBE. Blockchain is going to enhance this process as well. Usually it takes three months to dismantle an aircraft and get the parts listed. But with the Honeywell process and blockchain, the second a component comes off the aircraft, it will be listed on GoDirect Trade with an updated blockchain record.
Set the Standard
Honeywell is setting the bar high and standardizing the listings in its e-commerce platform. Rather than be an “aero everything” store with 10 million listings, where the listings are highly questionable, Honeywell has stepped up to provide quality listings that purchasers can trust. To list a product on GoDirect Trade or to have a storefront and list a part for sale, the company must have a product image, quality documentation for the part, and a list price.
“If you don’t have these three things, you cannot list the part,” she says. “Competitors out there might say this is a bad strategy because it’s a barrier for sellers, but GoDirect Trade is striving to have the best quality listings possible. When people come to this marketplace, they will see the images. They will know the quality documentation is there and that the part is safe to put in their aircraft. And by putting the price there, we remove the gross inefficiencies that the industry has been putting up with.”
For sellers, setting up a storefront and listing a part is easy. They simply grab their phone, open the GoDirect Trade App, and upload a new listing to their customized storefront.
Honeywell’s GoDirect Trade Marketplace will allow consumers to review sellers and the parts they receive. “We firmly believe this is another one of those things that the buyer needs in order to build trust,” Butters says. “This will be the first parts marketplace that allows seller ratings. People might say not to put seller ratings in aerospace because a customer might give you a bad review, but that is how we make it good — and trustworthy — for the buyer.”
Initially, purchasing a part may not be as easy as entering in a credit card number. At least not yet. Butters explains the marketplace is working with companies investing in business-to-business payment disruptor technologies to eventually bring that into its marketplace. Currently, Honeywell’s e-commerce platform will work off the standard purchase order and payment system.
While today the bulk of aviation parts purchases are transacted on the phone, Butters see the day where Amazon will not be the only company occupying a corner of the e-commerce marketplace. Honeywell is likely to occupy a permanent space in the online aerospace parts world.
To experience this revolutionary change visit www.godirecttrade.com.