CHALFONT, Pa.—Online tire retail and commercial dealer Simple Tire L.L.C. is barely three years old and already setting its sights on the top spot in Internet tire sales.
The fledgling company, a subsidiary of wholesale tire distributor Network Tire Inc., began life as Network Tire's online retail sales arm but has experienced substantial growth since shifting its focus to sourcing tires from other wholesale tire distributors across the U.S.
Brothers and co-owners Andy and Josh Chalofsky are quite forthright with their plans for the company: competing directly with Tire Rack Inc.
"My goal is to try to get to that Tire Rack level," said Josh Chalofsky, who became part owner in the company earlier in 2013. He handles the business' day-to-day operations while his brother Andy Chalofsky—who launched SimpleTire.com in 2010—is responsible for developing supplier relationships, budgeting and advertising.
"We're doing very well, we've been growing each month, we have a great core group of people who are all in it for the long haul and all want the same thing," Josh Chalofsky continued. "I feel this could be a really good opportunity for everyone on board. We're just going to keep pushing along."
Andy Chalofsky estimated that, at the company's current growth rate, their goal could become a reality in as little as five years.
"It's honestly incredible," Andy Chalofsky said. "We've exploded in terms of where we were last year. We're doing about three to four times the sales we were doing last year, and it's just growing tremendously month after month. It's really been a spotlight for us."
While Mr. Chalofsky wouldn't disclose specific sales figures, he noted the company is doing "tens of millions of dollars" in business this year and is poised to hit the $100 million annual sales mark in the near future.
"The hope is that we could be there within a year," he said. "That might be slightly ambitious, but I think it could definitely be achieved if we continue at our growth rate."
Initially conceived as a way for Network Tire to add some retail sales on the side, Mr. Chalofsky said he quickly realized that approach wasn't working.
"The problem is we really got hit with shipping," he said. "If you're in Northern California and you're shipping from Philly, it could be, like, $50. It made it not doable."
Instead, Mr. Chalofsky began approaching wholesale distributors about sourcing tires that would be sold online. Now the firm has approximately 300 partner distributors and more than 600 points of distribution.
The business model offers several advantages for the company, he said.
"With Tire Rack having such an ownership of the marketplace, we found it's really impossible for just the one-off Network Tire to compete, and so by building a network of distributors we really thought we could build a better mouse trap," he said. "Where Tire Rack would have six warehouses to ship from, we have 100 times that, and so we can offer better shipping rates, better availability.
"With oil pricing and tire pricing going up and down, Tire Rack or someone like that is held to an acquisition cost," he continued. "We're always using the best acquisition cost. If somebody has an old deal, and we're able to source it at a lower price, we do it."
While Tire Rack's primary focus is the retail segment, Simple Tire has seemingly found a niche in the commercial business.
"Our core product screen is actually OTR and medium truck," Mr. Chalofsky said. "We do a lot of light truck, we do some agricultural and we do a lot of passenger and performance like Tire Rack, but we've really found success in the medium truck tires and OTR tires because it's a segment where not a lot of other online retailers are involved in."
In fact, the company recently integrated freight shipping on its website, allowing for very large tire shipments, both in terms of size and numbers.
All transactions through the website are fully automated, using software custom-built for Simple Tire by Cookeville, Tenn.-based TCS Technologies, Mr. Chalofsky said.
"What happens is when a customer places an order, the computer looks at all the distributors that carry that tire, it looks at all the shipping times and the shipping costs and it looks at our acquisition cost," he said. "And then the computer decides—based (on those factors)—what is the best means for us to source that tire.
"There's an algorithm we built where we sacrifice profit for quickness," he added. "If it's going to be a dollar cheaper but five days longer, we'll scratch that dollar and get it to the customer the next day."
When an order is made, the computer automatically selects what distributor to buy the tire from and sends the distributor a purchase order and shipping labels. The customer is sent a receipt and tracking information.
In addition, the Simple Tire staff is able to monitor and track the sales in the company's own system.
"We're fully integrated, so literally only in about 3 percent of sales does a human hand have to intervene," Mr. Chalofsky said.
The company will be making some major changes soon, according to Mr. Chalofsky, including a possible expansion into international markets, such as Canada, Mexico and parts of Europe.
"That's really a huge opportunity. We're figuring out the best way to attack that, whether that be some sort of licensing deal, a franchise deal or stepping up and doing it ourselves and putting an office in those areas," he said. "So, Simple Tire is going to be taking some large steps forward. We really want to establish ourselves as a leading online retailer, and I think we're well on our way to doing that."
In addition, Simple Tire plans to relaunch its website within the next 120 days and launch a mobile version of the site within the next 60 days. Alterations were primarily focused on creating a more user-friendly experience on the website, which currently "just kind of throws everything at you," he said.
"When you search a size of tire there could be 180 results, so we want to make it easier for our customer to pick what they're looking for, whether it be a certain tire or something cost-effective in a certain size," he said.
The new site also will include uniform pictures of tires—something not present on the current site—and an interactive display feature that allows users to spin tires around and view them from every angle, Mr. Chalofsky said.
Lastly, Network Tire is in the process of selecting a site for its new corporate office and warehouse, which will replace the company's existing facility in Chalfont.
To reach this reporter: [email protected] crain.com; 330-865-6148.