We continue our series of articles on starting a business in a narrow niche and today we will touch on the topic of cars. Most of us are motorists, and we know very well that replacing consumables for a car is a common thing. We change the engine oil at least once a year, usually every 10,000 km. In this article we will talk about how to open a motor oil store in your city and where to scale this business in the future.
Business Features
We can say for sure that it won’t be possible to sell only oil; you definitely need to sell filters and other auto chemicals. Only in this case will you be able to make a profit, and when launching a niche store in this direction, you need to gradually move into the field of auto parts sales. We can say that oils can be the starting point in this line of business, after which you will need to think about increasing turnover and auto parts are a great option.
Go ahead. Now let's talk about competition. Of course, it is high, since almost every auto store sells these consumables. In this regard, you need to wisely select a place for retailing motor oil. We'll talk about this below. To stand out among competitors, you need to have a good range of these products, which would cover different price segments. You can also organize the sale of oil on tap. To do this, metal barrels with taps are installed in the store, and with the help of a watering can you can sell motor oil of any volume, both a liter and five liters.
Another point is that you or your salesperson must understand this product so that you can advise the client on the right option for him.
Selection of premises and equipment
Since competition in this area is high, you need to look for places where your main target audience is concentrated. In big cities these are car markets. It is quite difficult to rent a place there, but you can be sure that sales will come, since such markets are usually well-promoted, and with an adequate targeting policy, each outlet there receives its regular customers. And if you organize a system of discounts, you can lure away most of them.
If the town is small, you need to look for shopping places near markets or in the city center. People there usually buy everything near the markets, especially those who come from the village, they will not look for your oil store somewhere on the outskirts of the city.
The area of the trading premises can be from 10 sq.m. and higher.
From the equipment for the motor oil trade, you will need:
- racks.
- showcases with shelves.
- equipment for the sale of oil on tap.
- If there will be a sale of components, including filters, then computer equipment will be needed to correctly select them from catalogs.
- furniture for the workplace of the seller.
- cash machine.
Rules for the sale of motor oils
Now let's talk about what documents and type of taxation will need to be completed and what permits to have in hand.
Here is a basic list of everything you need:
- you must be registered as an individual entrepreneur.
- indicate OKVE. For Russia, these are 50.30.3, 50.30.2, 50.30.1, 50.30 50.30.3, 50.30.2, 50.30.1, 50.30, 50.50. For Ukraine - 46.90.
- have on hand all the quality certificates for the goods.
- obtain permission to trade from the SES and the fire service.
- decorate the buyer's corner.
Range
The next step in opening a motor oil store is compiling an assortment of products. So, you must indicate all the positions, while you can analyze your competitors and sit on specialized forums to decide what is the more popular solution in this direction.
- motor oils;
- gearbox oils;
- technical fluids;
- auto chemical goods;
- filters;
- accessories and more.
Over time, this list can be expanded.
What start-up capital is needed?
To decide how much money you need, you need to consider many factors. Since all these factors will vary depending on your location, we have provided only a basic list of the costs of starting an oil sales business.
- Room rental – $150 – $200
- Taxes - $150
- Salesperson salary - $200
- Initial purchase of goods – $5000 – $7000
- Purchase of equipment – $800 – $1000
- Purchase of advertising products and signs - $150
- Transport payments - $60.
How much profit can you expect?
Everything will depend on whether you can rent good retail space, offer customers more choice or a lower price point. In each individual case, these indicators will be different.
Average markup on motor oils:
— draft oil – 90% – 100%;
– packaged – 40% – 50%.
For accessories, there is also a markup of about 40% - 60%.
We indicate only these numbers and with the help of them you can roughly draw up a sales plan for the store to become a plus.
Conclusions. Opening a motor oil store can be a good first step towards launching a full-fledged large auto parts and auto chemicals store. Of the difficulties is the choice of location.
Do you work in this market segment? Give some advice for readers of our site.
- Business Attractiveness
- Selecting a room
- Recruitment
- A step-by-step plan for opening a store selling motor oil in bottling
- How much can you earn selling motor oil
- What equipment to choose for a store selling motor oil in bottling
- Do I need a permit to open a store selling bottled motor oil?
- Similar business ideas:
There is unprecedented competition in retail trade today; it is already difficult to find a product that is not represented in your city in sufficient quantities. Motor oil is no exception in this regard. It is sold everywhere - in stores, service stations, service centers, even on the roads. However, today a new format for trading such goods has been opened - bottled motor oil. Car owners immediately benefited from the purchase of such a product. This is both a better price and better quality. And most importantly, stores specializing in the sale of bottled motor oil offer free replacement, thereby taking the lion's share of customers from the retail motor oil market in their city...
Business Attractiveness
Retail trade in bottled motor oil in our country is a very promising business. Judge for yourself. According to some data, in Europe, about 80% of motor oils are bought by car owners directly at service centers, where they have it changed. Whereas in Russia everything is exactly the opposite. Only 10% of car owners buy oil at service centers, the remaining 90% take motor oil in cans and change it themselves. These are the kind of drivers we have, there’s nothing to be done, they trust only themselves.
Another positive aspect is the increase in the number of cars. Every year in our country, if you don’t lie, the vehicle fleet grows by 5-10%! That is, there are more and more potential clients. Everyone who is not too lazy gets behind the wheel. More and more women are joining the ranks of drivers.
Yes, by the way, women are the gold mine in this matter. I'll explain why. Stores that sell bottled motor oil often offer a free service for changing motor oil and filter if these components are purchased at this store. This is a very good marketing ploy, since 99% of women are not able to change the oil on their own (they won’t even unscrew the filter). Therefore, they will gladly go to such a store and become its loyal customers, the main thing is to lure them in before their closest competitor does.
And let me tell you, there are more and more competitors. Almost every town with a more or less normal population has shops selling bottled motor oil from barrels. Now they are actively skimming the cream while the market is not yet overcrowded.
Another pleasant fact is that the markup on bulk motor oil reaches 100 percent or more, especially on inexpensive oils. Today there are few retail goods on which such percentages can be marked up. Well, do you want to open a similar store in your city? Let's start with the premises for starting a business.
Selecting a room
Barrels with bulk motor oil take up a lot of space, so you will have to find a room with an area of 20-30 m2. Plus, you need a small warehouse of 10-15m2. One good fact is that this is not a children’s toy store and it’s clearly not worth investing in design here. Some do without repairs at all. Car owners are not whimsical people and will forgive you any shortcomings in the arrangement of the store, as long as they are not offended by the price. Renting such an area will cost, depending on the region, from 15,000 rubles per month.
Geographic location is also not particularly important. This could be a roadway in the city, or even a residential area. Believe me, the client will find you everywhere if you invest even a little in advertising and promotion of your outlet.
Yes, you will also have to find a room for a free oil change and a couple of “labor hands” (if you plan to provide such a service). A regular garage may be suitable for this.
How much money do you need to invest to open a store selling bottled motor oil?
How much money do you need to start a business? Let's do the math. The first and main thing that should be in the store is barrels of bottled motor oil. We need a good assortment, at least 7-10 items, from expensive (elite oils) to cheap options. Motor oil from Lukoil in a 216-liter barrel at a wholesale price will cost 14,200 rubles. That is, one liter in bulk will cost about 65 rubles. Oil from Gazpromneft is even cheaper - 10,300 rubles per barrel of 216 liters. A more expensive option, ELF Evolution oil, will cost 40,000 rubles per barrel of 216 liters or 185 rubles per liter. The prices are about the same for Castrol, Shell helix and Mobil.
So we buy:
- 5 barrels of inexpensive oil ~ 70,000 rubles;
- 5 barrels of expensive oil ~ 200,000 rubles.
In total, it turns out 270,000 rubles, we spend on the purchase of draft oil. To begin with, this will be "behind the eyes." Next, to expand the range, we must buy regular oil in cans of 2, 3-5 liters. Because there will be such clients who do not want to take the “spill”. We are a specialized store and must take an assortment! This will cost another 50,000 rubles.
Then we must purchase related products, those that can be purchased along with the oil: flushing oil, brake fluid, antifreeze, additives, auto chemicals, filters, spark plugs, etc. Trading such goods can significantly increase the store's turnover. The purchase of related products will cost at least 100 thousand rubles.
Thus, according to our calculations, it will be necessary to allocate at least 420 thousand rubles to create an assortment of goods. But that's not all the costs. We need display cases for displaying goods - another plus 20 thousand rubles, well, and perhaps minor cosmetic repairs to the store and other expenses - 30,000 rubles. That is, to open a store you will need to allocate about 500 thousand rubles.
In addition, starting costs can be reduced by purchasing motor oil for sale. There are companies that are ready to give away oil with a deferred payment for several months or even until the moment of sale. It’s up to you to decide, but starting this way can be two or three times cheaper!
Which OKVED code to indicate when registering a business selling motor oil in bottling
To trade in motor oil, it is enough to register a regular individual entrepreneur with the local tax service. This case costs 800 rubles in state duty and takes 5 working days from the date of submitting documents for registration to the tax office. There will be no problems with this. When filling out the application, indicate OKVED 50.50 “Retail trade in motor fuel.”
Which taxation system to choose for a store?
This activity is not subject to licensing, which is good news. The only subtle point is that motor oil is an excisable product, so the use of UTII (imputed tax) is not allowed. And this is the most favorable special taxation regime for retail facilities. Therefore, you will have to use a different taxation system - the simplified taxation system, or in common parlance “simplified taxation”. You will have the choice of calculating tax at either a rate of 6% of revenue or 15% of profit. You will have to install a cash register in the store and register it with the Federal Tax Service. However, like UTII, the simplified tax system exempts from payment of income tax, VAT and property tax of the organization.
Recruitment
You will have to “sweat a little” to find adequate sellers for the store. Not only do you need someone with sales experience, but you also need a salesperson who understands cars. It is very important that he can speak the same language with customers. Not to mention knowledge of the motor oil market, the popularity of certain motor oils among car owners, etc. This is not even discussed. A lot of customers come to such a store for practical advice, for consultation, and even for a heart-to-heart conversation, like: “I filled it up with brand N oil, and a month later my engine seized up... well, that’s okay, it happens. Recommend something reliable for my ten..."
Ultimately, it is the seller who will make money for your store. Try to motivate the employee as much as possible. Don’t skimp on your salary; give him a small salary, but a good percentage of his daily earnings.
Before you open a car oil store, you need to realize: this type of business is full of hidden nuances. To achieve success in it, a business plan must be thought through to the smallest detail.
Opportunities and prospects
A store selling automobile oils has good prospects. The number of motorists is growing, and many motorists do not spare money on maintaining their personal vehicles. Therefore, sales of accessories and materials, including motor oils, will increase in the future. As the number of clients grows, the competitive environment also grows, so not every entrepreneur is able to stay in a niche. A niche has a narrow target focus, so before starting work you need to consider your capabilities as objectively as possible and evaluate them for compliance with market requirements.
Package of documents
A car oil store requires mandatory registration. An individual entrepreneur will be enough to open one point. In addition, it is required to obtain a number of documents that allow such activities to be carried out:
1. License and permit for the sale of flammable substances.
2. A document confirming the availability of premises (purchase or lease agreement).
3. Permits from the fire service and Rospotrebnadzor.
Background of business creation
In May 2016, I was left without my main job. My favorite job, which has faithfully fed me over the past 10 years.
To be honest, I never thought that having graduated from the law faculty of one of the most prestigious universities in the country with honors, I would ever find myself in such a situation. That I will go to interviews and look for a job myself. And that I will receive letters like these:
“We have carefully reviewed your resume, but are not yet ready to make you an offer...”, or the following: “You are too overqualified for our vacancy.”
Well, it’s clear that I didn’t want to go to work for 15-20 thousand hryvnia. It's not even 500-800 dollars now. And I’m already too old for this shit - too old to work for someone for that kind of money.
Well, it was time to step down from Olympus, remembering those ancient times when I, a very green and young lawyer who had just graduated from university, was invited to work by 5 companies at once. And I could choose where to go.
Times change. Now I was forced to look for companies to offer them my services.
Life is a very unpredictable thing and you never know where to lay the straw and where you can take a certain risk. The twists of fate are unknown to us and we can only adapt to objective reality, whatever it may be.
That is why I urge all citizens not to be lazy and have. So that if one source ceases to exist, the rest will cover you.
But I, by nature, am an optimist and always look at the next problem with a challenge. Always - philosophically, with humor and faith in a cloudless future! Only this way and no other way!
Has life decided to play cat and mouse with me? Test my fortitude?! Well, I was willing to take the risk and see who won! I happily accepted the proposed rules of the game.
I had a strange feeling the first few days. Feeling empty. Everything I was doing before suddenly no longer mattered. This was unusual for me. New.
I had enough time to think about it in a calm environment, look around and realize a few simple things.
Firstly, that our native Ukraine is in a deep... hole. Ukrainians have become poor. The number of unemployed has increased. Competition has become tougher. Small businesses are creaking and trying to survive.
Vladimir Borisovich Groysman knows what to do with this whole disaster. I really hope he knows, because it’s time to start boosting the country’s economy. It’s time to lend to small and medium-sized businesses, because if this is not done, we will continue to compete with Zimbabwe in terms of wages for a long time.
Business is done by the state, not by the state - business. Business gives taxes. Business develops the economy. Doesn't anyone at the top understand this?
What do I hear in the news from advisers of various ranks? Tighten taxes. Cancel the single tax. And other, excuse me, nonsense.
In general, the time when you have already been fired, but have not yet found a new job, is a very interesting time. Useful, I would even say. Because new horizons and opportunities open up before you. You stop living in your usual rhythm and can see seemingly the same familiar things from a completely different angle.
How did the idea of a business selling motor oil for cars come about?
I'm the kind of person who doesn't like to sit idle for a long time. And while I was sending out resumes to law firms and going to various interviews, the thought arose in me: “Why not open a new business?”
Of course, it was possible to focus on the business my wife and I already had (as I wrote about how we organized it) and continue to develop it.
But, firstly, my wife coped and copes with this task very well, and secondly, what kind of man am I if I don’t have my own business?! My own brainchild, which I will organize, nurture, and force to bring us additional (or main) income?!
At first I wanted to open my own law firm (I believe that almost every lawyer with many years of experience thinks about this sooner or later). However, there were many different pitfalls, the main one of which was - where to find clients?!
After all, you can open a law firm even tomorrow. Register LLC, or PE. Rent an office, buy a laptop, connect the "League" and humbly wait for customers. But what's the point?
The current economic situation in the country is such that it is now simply unrealistic to find large clients for an unknown company. Good (monetary) clients have long been dismantled and retained by large Ukrainian law firms from the TOP-50.
A foreign company or a large factory will not come to a firm without a name.
And dealing with all the little things, like registering enterprises, obtaining certificates, permits, licenses, etc., has long been uninteresting for me. After all, this is more technical work, which any graduate of Taras Shevchenko National University of Kyiv can handle. Especially now, when the Ministry of Justice has made it possible to register companies and receive many documents online, without leaving home.
Previously, I met with several partners I knew who had gone into free swimming and opened their own law offices. So, even their lawyers (in a firm that was already several years old, with a certain established client base) earned up to 15,000 hryvnia per month. The partners, of course, had a little more, but not much (pay taxes, office rent, staff salaries, how much will be left?!).
Times are tough right now, to be sure.
On the other hand, I wanted to move a little away from jurisprudence and try myself in something new. Moreover, there were good, reliable partners who had been offering to join their business for a long time.
How we started a business selling motor oil for cars and trucks
In general, after consulting with my wife, I decided to open a new business not related to law, while simultaneously continuing to search for work in my specialty. Still, I love jurisprudence and it holds a special place in my heart.
In just a few days, “Luigi’s Garage” appeared on the Internet - an online store selling motor oil for cars and trucks.
I decided not to bother and for now open an online store on the Prom.ua platform. This turned out to be cheaper than creating a separate website and promoting it (the simplest tariff with minimal basic promotion will cost about 3,000 hryvnia per year).
For comparison, to create a separate website now you will need at least $300. You will pay about 3,500 hryvnia more per month for its promotion.
Prom.ua, in our case, was quite suitable as a launch pad to attract the first customers. In the future, depending on how things go, it will be possible to create a separate site.
It was also very useful for us that the wife is an officially registered private entrepreneur who has the right to trade wholesale and retail in almost all goods for which it is not necessary to obtain a license in accordance with the Law of Ukraine “On Licensing Activities”.
It also turned out to be useful to have an office, which, of course, was used for the main business, but which could also be used as a warehouse for motor oil.
Why Luigi's Garage?
When I came up with the name for the store, I proceeded from the fact that the Italian auto industry has always been famous for its quality, sophistication and beauty. Ferrari, Lamborghini, Alfa Romeo - these are the cars that need no introduction. They just make you crazy. They have passion and soul.
In this I am impressed by the Italian masters. They are truly great professionals. And also, unlike the excessive German pedantry, Italians are always a little adventurers, following the lead of passion and feelings.
The character “Luigi” from the cartoon “Cars” also played an important role in the name of the store. It was a nice Fiat 500 - a repairman.
I wanted to breathe soul into the name so that it would become unique, have its own story and, perhaps, a character. And, of course, it did not contain any boring prefixes, like: auto (auto-moto, auto-house, auto-garage, chic-auto, etc.).
I didn’t think about the logo for a long time either. I chose an ordinary old car (Fiat, by the way) and wrote an inscription under it.
It turned out quite nice.
Why did you decide to sell motor oil?
Well, firstly, our partner is engaged in the supply of motor oil and auto parts for trucks (i.e. the goods are almost always in stock), and secondly, there are more and more cars every year in Kiev and Ukraine.
And I bet that no driver will refuse to buy motor oil from us at good prices, even if the old Flint parrot is the same.
I will even say more, “Luigi’s Garage” boldly competes with such a giant as “ATL”.
Our prices are actually cheaper!
What kind of motor oil do we sell?
We sell modern synthetic and polysynthetic motor oil for gasoline and diesel engines of the following brands: WOLF(Belgium), ELF And MOTUL(France).
Available in 1, 4 and 20 liter packs.
You can get more information on motor oil and its advantages over other types of oil by visiting the official website of Luigi's Garage.
Well, our next business experiment has started. The store is launched. Clients are slowly appearing.
So, if you need to please your iron friend with modern, high-quality motor oil, contact us!
P.S. After a month of being unemployed, I was invited to cooperate with one of the leading law firms in Ukraine. This means that Luigi's Garage will be run primarily by his wife. I have no doubt that she can handle it!
Opening an automobile oil store is a complex, multifaceted process, just like opening any other trade.
Trading motor oils is a business that involves a number of hidden nuances, so it is necessary to think through the plan down to the smallest detail. You can hardly read about how to open a car oil store in any literature, because this area requires a unique approach.
This area of business, namely the sale of motor oils, is quite promising, because every year there are more and more cars. Therefore, a business related to materials for automobiles will bring you considerable profit.
Room location
The first feature of the automobile oil trade is, of course, its location. In the case of a product such as oil, the best place for a store would be any road or avenue with active traffic. A crowded place where your store will be clearly visible is also suitable. In theory, this may be enough to start a business, but due to high competition, it may not be very successful. Therefore, it is better to look for those places where a large number of motorists accumulate. Such a place could be a large car market or a frequented auto parts center. Any place you visit that is somehow connected with the field of motor oils will do.
Here your plan should also include one nuance. The car market or shopping center next to which you will trade should not sell the same goods as yours. you should distribute similar products, but not the same ones. For example, if your business is located near an auto parts market, then you should not sell spare parts. In this case, it is much more rational to open a motor oil store or sell other spare parts for other cars.
If your plan includes such a clause, then something like the following will turn out. Any auto parts seller also has a range of motor oils in stock. As a rule, oils are more expensive there, since the trade is specialized in spare parts. In addition to the price of the goods, you will also surpass your "neighbor" in assortment, then you will have three main advantages of trade on your side: assortment, price, availability. Most importantly, your plan should ensure that there are no direct competitors within walking distance of you.
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Product range
As for the assortment, you should think over this aspect as carefully as possible and have as many different motor oils as possible. If you specialize in motor fluids, then these should be the priority. Non-essential items such as spare parts and air fresheners also come in handy. The product range is what will make your store competitive. The assortment is not only the quantity of goods, so buy both budget oils and more prestigious ones. For example, recently poured motor oils in barrels have become very popular.
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Automotive oil suppliers
Once you have developed your list of goods, you can think about more serious cooperation with suppliers. In this case, it is better not to rush and meet with all suppliers, discuss all aspects of cooperation.
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Store promotion
After you have a sufficient number of goods with acceptable quality in your assortment, you can think about advertising. You must have a high-quality advertising campaign, which in the future can be distributed in various ways: on TV, radio, billboards. There are also pitfalls here that you can master. For example, if you are going to distribute your advertisements on the radio, then it is better to choose road radio stations for this.
It remains only to sum up and understand how much money it will take to open such a store. In the regions of Russia, you won’t have to spend a lot of money on a car oil store at the start. For example, in Yaroslavl this business will require 300,000 rubles. This money will be used to rent premises, repairs, prepare documents, pay staff and purchase an assortment of goods. For your store to become profitable and return the investment, it will take no more than 1.5 years, again, using Yaroslavl as an example.
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