AKRON—The major tire makers are missing the boat when it comes to innovative retailing techniques, according to Nissim Calderon, retired vice president, corporate research at Goodyear. "As tires improve in quality to a point that they can be considered a commodity," what determines who gains and who loses will be price and service, Mr. Calderon said at the recent Tire Society meeting in Akron.
"Analogous to what Amazon. com did to book retailing, or Priceline.com to airline ticket purchasing, or Dell (Computer Corp.) to the PC business, the winners in the tire business will be companies that are able to come up with innovative ways of going to market, exploiting the massive change ushered in by the information revolution," Mr. Calderon said.
Citing the example of mail order specialist Tire Rack winning the J.D. Power award for tire retailing, Mr. Calderon posed the question: "Is this just a curiosity on the fringe, or a wake-up call?"
"Is it possible that, in the future, consumers will prefer selecting their tires, comparing prices and actually buying them without leaving their homes?" he asked.
Mr. Calderon said e-commerce-savvy consumers will prefer alternatives like having their tires serviced in their own driveway, at a convenient time of day, while they are having dinner, watching television etc.
"How about something more radical?" he asked. "You post your needs and let e-tire dealers bid for your business. You list the brand, size and what have you— how much you are ready to pay, and see who will come through with the best deal.
"Is this a fantasy? No way! If you can buy airline tickets in this fashion today, why not tires tomorrow? Do you know that posting on the web is successfully being used for wholesale trade in cattle, natural gas and grains?"
To drive home his point, Mr. Calderon, a 36-year veteran of Goodyear, suggested a hypothetical case of a newcomer to the business.
"For no better name, we shall call it E-Tires.Com," he said. "This company happens to be located in a demographic area where usage of e-commerce is widespread—say the San Francisco bay area. They contract for a supply of auto, light truck and medium truck tires from an offshore, low-cost Pacific Rim supplier.
"This offshore supplier has a warehouse somewhere on the West Coast where the imported tires are being stored. This aggressive supplier agrees to deliver tires, on a less-than-truck load basis twice a week, to a multitude of staging points.
"A staging point is a garage with a specially equipped truck suitable for roadside mounting and balancing of tires. The garage owner receives by e-mail a daily list of customers in the Bay area (who) purchased tires using E-Tires.Com's Web site.
"Using the Internet, the owner of the garage knows exactly what tires are coming on the next shipment and who purchased the tires, so he can easily e-mail the customer a confirmation and set a date for mounting at the customer's convenience.
"E-Tires.Com is delivering low-cost, quality tire service without a tire factory, no warehouse and no inventory—and no tire service centers in high-rent shopping malls. The offshore guys find a route to penetrate the market without having to line up dealers or invest in service centers.
"The customer selects his tires after doing his homework by accessing numerous Web sites that give tire tutorials. He can compare prices and make sure that he is getting a good deal. He gets his new tires mounted on his car with no pain whatsoever, as his old tires are hauled away.
"Within a short time the word is out all over the Net, and the new business model of selling consumer tires becomes a commercial reality.
"The obvious question is: Why don't the established tire companies do what E-Tires.Com just did?" Mr. Calderon asked rhetorically.
"I wish I new the answer. My guess is, it is like everything else: Outsiders most often introduce innovation. They are the risk-takers and are at the forefront of change."