“Everyone at that meeting got it, and what they got is that the shopper is changing,” Mr. Kramer said. “Anyone ignores that at their own peril.”
The tire business, like that of prescription eyeglasses before Warby Parker and mattresses before Casper Sleep Inc., seems ripe for some Silicon Valley-style disruption. It's a hugely complicated pipeline of products. The next time you're near a car, take a look at the jumble of numbers and letters orbiting the black rubber and try to figure out what denotes a model, a size, a Gmail password, a proprietary chemical recipe for rubber, etc.
Those cryptic codes are necessary these days because the number of tires offered rolls on practically without end. Goodyear's tire-comparison engine, for example, breaks inventory into four categories: all-terrain, all-weather, winter — which, frankly all seem like variations on the same thing — and something called “sport performance.” Within each category are also product lines marked by a seemingly arbitrary naming convention — an old trick from the mattress business.
Is Goodyear's Assurance tire better than the Eagle? And what about the Fierce Instinct? Is the Wrangler HT good enough at $159, or does one need to cough up $171 for the Wrangler SilentArmor? Are you the kind of monster who would put your kid in a car without silent armor on its wheels?
Some of these tires are super; others are crap. They're all exceptional at confusing customers and getting them to spend exactly as much as they are willing and able to — no less. It's a masterstroke of economics and marketing, and it works great in a network of fragmented dealers.
The poor sucker with a flat isn't likely to know one tire from another when he or she limps into the local shop or a franchise like Monro Muffler Brake Inc. — let alone how much they should cost. The customer just makes a decision based on what he or she can afford and based on the dealer's advice about what to buy. It has long been thus. But more and more consumers are doing their tire homework and ordering online, rather than waiting for a flat.
Goodyear said about 20 million customers digitally kicked the tires on its website last year, and the company estimates about 6 percent of tires purchased in the U.S. are now bought online. Tire Rack Inc., a popular online retailer based in South Bend, Ind., does about $1 billion in business a year, according to Mr. Higginbotham. Amazon.com, meanwhile, is also bringing its scale to bear on the industry. It's currently selling 117 tires that would fit my vehicle, ranging from $60 apiece to $395. Almost half of them ship free with a Prime membership.
That's the market Goodyear is trying to stay ahead of. After all, Amazon slicing its margins to ribbons is far more of a threat than the ire of small-town tire jockeys.
“Once you go down below a Monro Muffler or Pep Boys, you're not going to have a lot of e-commerce,” Mr. Higginbotham said. “That fragmented landscape, in a way, is going to be one of the opportunities for a manufacturer like Goodyear.”
The tire maker also has the benefit of geographic diversity. It gets slightly more than half of its revenue from outside the U.S. From that perspective, its new Web store will serve as a bit of R&D — a start-up, if you will.
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Kyle Stock is an associate editor for Bloomberg Businessweek who offers political analysis and commentary. He wrote this opinion piece for that publication.
