HUNTERSVILLE, N.C.—Looking to help its independent tire dealer customers capture a share of growing consumer online tire and wheel purchases, American Tire Distributors Holdings Inc. (ATD) will launch an e-commerce Web site in April called TireBuyer.com.
In development for the past two years, TireBuyer.com is a full e-commerce site that allows tire and wheel consumers to review different tire and wheel options, check out how those options might look on their vehicles and then conduct an online transaction that includes both the purchase of the products and the installation from a participating tire dealer.
And while consumers will go through TireBuyer.com to make their tire, wheel and installation purchases—and select a participating dealer—ATD will conduct the transactions on behalf of the dealer, who will receive the entire gross receipts on the sale, including the gross profit on the product plus installation revenue, sales tax if applicable, tire disposal and other fees, ATD said.
“This is a very different model than anything out there,” said Ron Sinclair, ATD's senior vice president of marketing.
ATD will deliver the products to the dealer selected by the customer at no charge if the delivery is from a local distribution center. The customer and dealership will then contact each other to schedule and complete the installation.
Inventory and installation services and other charges are pre-sold, with dealers establishing their own installation fees in their dealer profile on the site. Once the dealership completes the installation and closes the order, it will receive payment from ATD for the full amount of the transaction via a direct deposit or paper check.
For its part, ATD will earn its normal wholesale margin for tires and wheels it sells via TireBuyer.com, said Bill Berry, ATD president and chief operating officer.
The goal of the new e-commerce effort is to help the distributor's independent tire dealer customers compete online and capture their share of the estimated 7 million tires now sold there annually, Mr. Sinclair said.
This is “a segment of the business the average independent tire dealer is not reaching, not able to talk to and not part of the consideration set,” he said.
Many dealers over the last 16 months have asked how ATD can help regarding Internet sales, Mr. Sinclair added.
“Dealers recognize they're not in the game on this and also are recognizing they can't do it on their own, so they are asking us, as their primary partner, how can we help?”
Mr. Sinclair and other company executives stressed that ATD is not getting into the retail tire business with TireBuyer.com.
“The first thing that we're going to hear from the competition is that ATD is in the retail business, and that is not true,” Chairman and CEO Dick Johnson said. “ATD is not in the retail business. ATD is putting dealers in the e-commerce business.”
Company executives introduced the concept to 400 members of its field sales force at a meeting the week of Nov. 10 in Dallas.
Following the meeting, the sales force began soliciting dealers to sign up for the program. To be eligible, dealers must be participants in ATD's ServiceBay program, level five or higher, or they must purchase a minimum of $25,000 a year in wheels from ATD or be an ATD Certified Performance Retailer—that is, dealers who are installation experts in tires and wheels focusing on high-performance enthusiasts, Mr. Sinclair said.
In addition, dealers must be in good credit standing with ATD and maintain a four-star customer rating.
ATD will charge dealers a one-time $100 set-up fee to participate, and dealers will earn unit credit and program enhancements where applicable.
The Huntersville, N.C.-based tire and wheel distributor also will charge a $1 to $5 fee per transaction to help fund marketing of the site and paid online search, Mr. Sinclair said.
The company aims to have a national network of 2,500 to 3,000 participating dealers at the time of the April launch.
The decision to develop TireBuyer.com reflects the overall growth of online sales, which are expected to double to an estimated $334 billion in 2012 from $174 billion in 2007, ATD officials said, citing a study conducted by Forrester Research Inc.
The trend for online sales of autos and auto parts is expected to be similar, Mr. Sinclair said, increasing to $30.9 billion by 2012 from $16.8 billion in 2007.
Online tire sales are expected to double to 14 million to 15 million units annually over the same five-year period.
“The important thing here is for the independent tire dealer, we believe it's critical they have a presence online,” Mr. Sinclair said.
“They've got to be in a place where consumers can find them because consumers are not just sourcing information on a product. They are also sourcing information on where to buy those products.”
Mr. Sinclair noted that 18 percent of consumers shopped online during the 2007 holiday season. “That validates that from a dealer's standpoint. It's critical they participate on the e-commerce side of the business.”
In developing TireBuyer.com, ATD will establish a national competitive price point per product.
“Our intent is to be competitive with national e-commerce and catalog retailers on a delivered basis (to the retailer),” Mr. Sinclair said. “This is out-the-door cost (including) taxes, shipping.”
ATD developed TireBuyer.com using the same technology as its wheelenvizio.com site that allows consumers and dealers to view different wheels on their vehicle in 3D.
TireBuyer.com takes that further, allowing users to see selected tires and wheels on their vehicle in 3D and to make a purchase online. The site offers a zoom feature allowing close-up views of the tire's sidewall and tread pattern.
In addition, users will be able to locate local participating TireBuyer.com dealers using the site, read reviews on them and even offer their own ratings of the dealerships.
Dealers will be able to establish their own dealer profile page offering information about their dealership, such as hours of operation, contact information and areas of specialization.
To get the word out about TireBuyer.com, ATD is building the site to achieve high placement on search engines like Google, Yahoo! and MSN so that when consumers are researching tires online, the site will appear among the most prominent.
Dealers participating in TireBuyer.com will have their own page on the site, as will tire and wheel manufacturers, giving the site thousands of pages of depth, which will help drive search rankings, Mr. Sinclair said.
Among other benefits for dealers, TireBuyer.com will be Payment Card Industry (PCI) compliant, meaning it will follow rules and regulations safeguarding against fraud and offering credit card security.
ATD also will provide customer service support for the site, Monday through Saturday, including personnel who can provide technical expertise for consumers with questions.
In accessing the site, consumers will be able to see what tires ATD has in inventory and to track shipments to the dealer once the order has been placed. Consumers will not pay a shipping charge for tires delivered from a local ATD warehouse.
One rule dealers must adhere to is accepting pre-sold inventory. That is, when the consumer makes a purchase on the site and selects the dealer for installation, the dealer must accept the pre-sold tires from ATD because the transaction is being captured on behalf of the dealer.
“That's the point, we're not in the retail business,” Mr. Sinclair said.
“When that dealer is selected by the consumer, the transaction passes from the consumer to the retailer.”
ATD doesn't care if the customer ever comes back through TireBuyer.com, Mr. Berry said.
“We don't care as long as that dealer develops a relationship and maintains that relation, because I'm going to get the business through the dealer anyway.
“We just want to drive these consumers, who are not his customer today, to a dealer. We want our dealers to have a shot at it.”