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Online sales impacting way dealers do business

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AKRON (Jan. 9, 2016) — With multiple tire manufacturers jumping on the e-commerce platform to sell tires directly to consumers, online tire sales have made their mark in the industry.

While some tire dealers met the new programs with hesitation, many have now found their footing as others struggle to compete.  

Though online tire sales are not expected to be the norm in the near future, both tire makers and dealers alike contacted by Tire Business said they believe the practice will continue to grow.

Tire makers move online

Entering 2017, Bridgestone Americas, Goodyear and Michelin North America have taken the lead in online tire sales initiatives.  

Goodyear was the first tire company to embark on consumer online tire sales, announcing its initiative in early 2015. The Akron-based firm is pleased with its results, both from end consumers and dealers as it heads into 2017, according to Mike Dauberman, Goodyear senior director marketing and interactive.

“We are pleased with the performance of our e-commerce program,” Mr. Dauberman told Tire Business.

“We receive great feedback from consumers and participating dealers, who have found value in the additional sales opportunities that come from serving online shoppers.”

Bridgestone Americas’ also saw the need for online purchasing when it acquired Canadian software developer TireConnect Systems.

“The emergence of digital has certainly changed the path to purchase for tires, and we believe it will continue to influence the tire buying process in 2017 and beyond,” said Erik Seidel, vice president of sales, U.S. and Canada, Bridgestone Americas Tire Operations.

“While less than 10 percent of tire buyers today report buying their tires online, more than 80 percent of consumers search for tires online before they make a purchase.”

Due to this online research trend, the company focuses on developing tools and programs to help both consumers and dealers, he said.

Bridgestone took its time rolling out its TireConnect program and found success. In just a few months, TireConnect generated more than 1 million tire searches that resulted in more than 40,000 quotes.

The Nashville-based tire maker is pleased with those numbers and expects TireConnect to grow steadily in 2017, Mr. Seidel added.

Michelin North America Inc. threw its hat in the ring partway through 2016.

“We continue to believe that providing our consumers with the opportunity to purchase tires online is the right strategy,” said Brian Adams, Michelin e-commerce project manager.

Consumers expect to be able to buy products anywhere, at any time, and on any device, he added.

“Our brand does not own any retail stores, so our close relationships with our dealer network is critical for success,” said Mr. Adams.

Direct Tire & Auto photo Barry Steinberg, president of Watertown, Mass.-based Direct Tire & Auto Service

“We have worked very closely with them to develop an e-commerce service partner program and an online sales approach that’s jointly beneficial to consumers, dealers and our company.”

Michelin launched its initial phase of online tire sales in the Charlotte, N.C., market with its BFGoodrich brand and more recently extended the initiative to include the Michelin brands.

“We are now in the process of expanding per our original plan that will include online sales for both the Michelin and BFGoodrich brands throughout the southeast U.S. and eventually nationally in 2017,” he added.

Dealer reactions

With tire makers engaging in online tire sales, independent tire dealers have had to find their way through the uncharted territory.

“Online is stronger than ever, but I can see that many dealers, like ourselves, have responded in a proactive way by matching the online pricing,” said Barry Steinberg, CEO of Watertown, Mass.-based Direct Tire & Auto Service.

“Our business is up because we shout from the roof tops that we match online pricing and we give service they can’t.”

Distributors, such as American Tire Distributors Inc. through its TireBuyer online site, and tire manufacturers will continue to market to end customers, said Spencer Carruthers, owner of Kenwood Tire & Auto Service in West Bridgewater, Mass.

Photo courtesy of Spencer Carruthers/LinkedIn Spencer Carruthers, Kenwood Tire

While direct competition can affect a business negatively, Mr. Carruthers noted that customers find Kenwood Tire through recommended installer listings. He sometimes gets the opportunity to match the price and make the sale.

 Tire installations usually lead to add-on service opportunities, such as alignments, brakes, etc.

Long-term impact

E-commerce has an impact across almost all industries, not just the tire market, observers noted, and thus tire dealers will need to adapt to the continually changing consumer.

“We see Internet tire sales increasing steadily throughout the coming years,” said Anthony Blackman, president and owner, Atlantic Tire Co., Cary, N.C.

“Not only will Internet sales impact the tire industry, it will have an impact on the sales of nearly every commodity in the market. It is here and it's not going to go away. It will become extremely critical that we react quickly to the competition from the Internet.”

Quality service is the key to continued future success for tire dealers.

“Online is...growing every day in just about every product in every industry. I do think both the national brick-and-mortars and the independents can still maintain a big market share, but they must continue to increase and improve their service and be cognizant of online pricing and adjust accordingly,” Mr. Steinberg said.

While more consumers are going online to research products, some dealers doubt the continued momentum of actual tire purchasing.

“The tire shopper’s thirst for research, reviews, specifications, and opinions will increase,” Mr. Carruthers said, “but the amount of shoppers who actually hit the ‘buy’ button will stay the same or decrease.”

While it is estimated the online sales channel will continue to grow, tire manufacturers and tire dealers alike agree that it is just one way for a consumer to purchase tires.

“Going into the program, we have anticipated roughly 5 to 10 percent of tire sales throughout the industry are from online sales, and this will only grow from here,” Michelin's Mr. Adams said. “We still believe that the majority of tire sales will occur in-store into the future.”

One consumer trend combating online tire sales is the “Buy Local” movement. Many consumers believe in the value of small, local businesses and independent tire dealers are a part of that.

Tire dealers can benefit from marketing their business as a family-owned and -operated or locally owned business, Mr. Blackman said.  

“We have chosen to work with the Internet tire sellers and become installers for them. The stark reality is that the Internet and its appeal to the consumer is not going away so we must work with them,” he added.

“The largest portion of the tire-buying market will continue to visit tire businesses and will rely on the tire salesman to help them navigate through the sometimes confusing and difficult process of purchasing tires.”

Tire manufacturers agree that tire dealers still have an important role in the industry.

“We believe online tire sales will continue to grow, but the rate and pace of that growth remains to be seen,” Bridgestone’s Mr. Seidel said.

“Tires are an unfinished good, and buying them online is different than purchasing a consumer packaged good online. The dealer is a fundamental part of the tire buying process and we don’t see that changing.”

Meeting the needs

Tire dealers can compete with online tire sales by catering to their customer base and showing them their value.

“Working to establish relationships with our customers is another advantage we will have over the Internet,” Mr. Blackman said.

“People buy from people and that will never change. Spoil your customers with the best service you are able to give and that will lessen the chance they will turn to the Internet for their next tire purchase.”

Mr. Steinberg shared a similar sentiment.

“Increase the repair services that people want to prevent them from going to the car dealers,” he said. “Focus on the training of your staff and taking care of your employees. They are your biggest asset.”

Providing information and reviews and additional services also gives you an edge, Mr. Carruthers said. And “do a quality installation every time, no matter where they buy their tires.”

Tire manufacturers are also doing their part to meet consumer needs.

“We know this program isn’t for every dealer, but we are focused on making Goodyear easy to buy, own and recommend and online sales are part of how we’re doing that,” Mr. Dauberman said. “And for consumers who prefer to purchase online, we will continue to provide that option.”

Mr. Adams said Michelin continues to work closely with its dealers in communicating the benefit to consumers and to their businesses.

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Jennifer Karpus-Romain is a freelance writer. She previously was a reporter for Tire Business.

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