AKRON—In the two months following Goodyear's announcement that it plans to sell consumer tires directly via its website, the tire maker is on pace to hit its goal of an early second-quarter launch of the new functionality.
Mike Dauberman, Akron-based Goodyear's senior director, marketing and interactive, told Tire Business the development process is going well, though no exact launch date has been established. In addition, the number of installer sign-ups is north of 2,800 outlets and continues to grow.
“We're already feeling good with the number,” he said. “We had a target and we've already surpassed it.... I don't think we've slowed down.”
Mr. Dauberman said he believes the only reason the number isn't already higher is largely because of Goodyear's “proactive communication effort” in discussing with dealers the program, which it introduced at its 2015 Dealer Conference in Grapevine, Texas, in January.
“Since the conference, we've been systematically talking to dealers about the program, explaining how it works, explaining their role, explaining why we did it,” he said. “As we leave those meetings, that's where we're getting our sign-ups.”
Though new installers are coming on board at a consistent clip, the news of Goodyear's plans for online tire sales brought quick and very mixed reactions from its dealer base.
Tom White, co-owner of Northeast Ohio's Dawson Industries Inc., which does business as Tire Source, said he is supportive of the change.
“I think Internet tire shopping, in my opinion, is going to happen whether we want it to or not,” he told Tire Business. “My take is, ask the video stores and the book stores, the ones that didn't see it coming.
“I think we're in a better position because we're going to be able to do the service, because (consumers) need a place to get the tires installed and to do the alignments and get the oil changes and all of that,” he added. “It's not a bad thing for dealers as long as manufacturers handle it correctly.”
Mr. White said he believes Goodyear's decision will help dealers in terms of cash flow and obtaining new customers, adding that it makes good business sense for the manufacturer, too.
“I have sometimes wondered about the manufacturers putting all their eggs in just a few baskets, giving up their distribution to wholesalers,” he said. “This is a way to kind of get some of that distribution back. Even though they still use the wholesalers to push (tires) out, there's more control this way.... I see the logic behind it.”
Not everyone sees the change largely as a positive.
Doug Meekins, general manager for Hunt Valley, Md.-based Brooks-Huff Tire & Auto Center, said he's not thrilled about the announcement.
“We've been a Goodyear dealer for 72 years, and we've stayed loyal to Goodyear,” he said. “Probably 90 to 95 percent of what we sell are Goodyear products, meaning Goodyear, Dunlop, Kelly—the same family. We only go outside of that if we absolutely have to make a sale because a customer requests a competitor's brand.
“We feel like we've been a strong ally to Goodyear, a business partner, and to be perfectly honest, I feel like what they're doing—instead of being our ally and business partner—is they're kind of becoming our competitor.”
Mr. Dauberman acknowledged that Goodyear's direct sales approach is “not without concern,” but reiterated that Goodyear does not believe it's going after the same consumer as dealers.
“We absolutely believe that this will be incremental business to participating dealers,” he said. “We think that as some consumers become more and more comfortable with using the Internet as the way that they prefer to shop, dealers who are not participating in a program like this will be at higher risk for the consumer choosing a place where they can buy a tire (online) and they're cut completely out of the transaction and the process.
“We went into this trying to protect, trying to support our distribution,” he added. “We didn't go into this trying to offset our distribution. We get that this is a scary change, and time will tell whether or not we accomplish what we set out to do, but that's our intent here. Our intent is to take a tire dealer and give them an opportunity to have a meaningful customer acquisition engine and a meaningful share in installation for a consumer that may, over time, no longer want to go to that traditional experience.”
For Goodyear, communicating the strategy has been essential.
“We didn't just one day say, 'We want to sell tires online,'” Mr. Dauberman said. “We actually developed the program with our distribution system and key retailers, and so when we went to roll it out, we were rolling out a program that we didn't solely design. That has helped a lot.
“It's scary, right? For a lot of dealers this is new,” he continued. “What we find though is that dealers who have a really good understanding of customer acquisition cost—how much it actually costs to get a new consumer, who know how hard it is to develop a commerce engine or commerce experience and, most importantly, who understand how difficult it is to get people to their websites—they've been very positive about the program.”
Mr. Meekins said that with so many avenues already available to consumers, tire sales have been a dwindling part of his company's overall business. When he started with Brooks-Huff 24 years ago, the firm's mix of business was about 50 percent tires and 50 percent service, but now only about 20 percent of its revenue comes from tire sales.
“From year to year the number of tires we're selling is getting less and less,” he said. “There's a lot of reasons for that, and e-commerce is only going to cut into it (more)....
“I just feel tires sell service, service sells tires—anybody in this business knows that. My concern is that with more avenues, more ways for consumers to find tires in other ways, the fewer vehicles that we're going to have coming through our bay doors and the less opportunity we're going to have to sell service.”
Mr. Meekins said margins on tire sales have shrunk in recent years as most dealers have access to all the same brands as their competition.
Bob Mirman, owner Los Angeles-based West Coast Tire & Service, echoed the sentiment, noting he believes competition within the tire industry is already overwhelming without tire manufacturers selling directly to consumers.
“We use tires to drive the locomotive,” he said. “We'll sell tires at cost to get a customer and maybe get the balance and so forth, and that's how desperate it's become in the tire industry today.”
Mr. White said he too believes that dealers who are “living just on tires” and not focusing on the entire automotive service package will have the hardest time going forward.
Both Messrs. Mirman and Meekins said they believe Goodyear's decision sets a dangerous precedent—much like years back when the company decided to sell tires through warehouse clubs—and opens the door for other tire makers to do the same.
“Our view is it's extremely dangerous because you can imagine that every other rubber company is going to sit back and take a look at what they're doing,” Mr. Mirman said. “If that should take hold, what are we going to become? Just an installation center for the rubber companies?”
Mr. Meekins also speculated that other manufacturers will follow suit. “Goodyear's always been the trendsetter, seemingly, and when they make that move it's not long before everybody else falls right in line. They're not going to want Goodyear to have the edge on that, so they're going to do the same thing.”
So far, no other manufacturers have announced such plans.
Michelin North America Inc. told Tire Business it is not offering consumers the ability to purchase tires on its website “at this time,” but the firm did not discount the possibility.
“The digital world changes at a rapid pace, and we will monitor consumer activity online,” said a spokesman for the company. “And we will continuously improve our approach to offer them an online experience that meets their high expectations of the Michelin brand.
“Today's consumers demand different options for purchasing products, including tires. Ultimately it comes down to providing the best consumer experience.”
Michael Fluck, director of digital marketing for Bridgestone Americas, offered a similar response.
“We continue to invest in our online and digital marketing programs, as we know that today's consumer wants to access information about our products and services online and through various digital channels,” he told Tire Business. “While we have no specific plans to sell tires directly to consumers at this time, we are always exploring new ways to support our customers and provide consumers with the very best brand experience.”
To reach this reporter: [email protected]; 330-865-6148; Twitter: @Will_Schertz