NASHVILLE, Tenn.—Bridgestone Americas' pending deal to buy Canadian software developer TireConnect Systems represents the tire maker's first step toward establishing an online tire-buying platform for its dealer network, according to John Baratta, president, consumer replacement for Bridgestone Americas Tire Operations.
The acquisition, expected to close by mid- to late November, will allow Bridgestone, its dealer network and distributors to meet the needs of “digitally minded consumers” more effectively by providing an integrated tire-buying experience from online to in-store, Bridgestone said.
“At Bridgestone, we constantly look for new ways to grow our business, while also empowering and growing the businesses of our dealers,” Mr. Baratta said.
“As the world's largest tire and rubber company, we know that we need to be active and aggressive in the increasingly digital marketplace.
“The acquisition of TireConnect will allow Bridgestone to create a direct path to online tire buying that collectively benefits our dealers, distributors and consumers,” Mr. Baratta said, noting that providing an online tool for the retail channel has been on many of the company's dealer customers' wish lists.
Mr. Baratta said in a conversation with Tire Business that Bridgestone considered providing a platform for capturing online sales was critical as tens if not hundreds of millions of dollars in tire sales are now being transacted online—3 percent of tire sales in the U.S. a year—and that figure is growing constantly.
Bridgestone calculates that 83 percent of consumers in the market for tires are researching their purchases online. That translates into 1.2 billion searches, he said, with another 800 million for related services.
“We want to make sure our dealers are playing in that space and that our products are represented,” he stressed.
The TireConnect software tool allows dealers to get full credit for online tire sales, while also remaining in control of their inventory, pricing and labor/installation costs, according to Bridgestone.
Financial terms of the deal are not being disclosed. TireConnect and its management team will continue to be based in Richmond Hill, Ontario, once the deal closes, Mr. Baratta said.
Referring to TireConnect as a “plug-and-play solution,” Bridge-stone's Erik Seidel, vice president, sales, consumer replacement sale, said the tool works with Bridgestone dealers' current websites, providing a seamless research-and-purchasing experience between consumers and a preferred local dealer.
“The customer literally thinks he's at Joe's Tire Store” when using TireConnect, Mr. Seidel said. “He sees what they're offering, their service charges and other services offered. The dealers have back-end control.”
The tool also improves efficiency, saves time and delivers enhanced speed-to-market for dealers and distributors, Bridgestone said.
To ensure dealers have product available to sell, Bridgestone has nearly doubled the size of its Tire Wholesale Warehouse (TWW) distribution subsidiary in the past couple of years to 24 locations, with a 25th due to open near Columbus, Ohio, before year-end.
“Consumers today aren't willing to wait,” Mr. Baratta said. “They're looking for convenience. If you [dealers] don't have the product available that day or the next, you're probably not going to get the sale.”
Mr. Seidel added, “It's hard for retailers to carry 2,000 SKUs of Bridgestone- or Firestone-brand products. They'll carry the high-velocity SKUs, but we need to make sure they have ready access to the breadth of our product lineup.
The expansion of TWW “is designed to make sure we have full breadth of product available in the market when the consumer wants it,” he said.
Bridgestone added five locations in 2014 and four so far in 2015, mostly in major metropolitan areas. TWW also recently added the revived LeMans brand to its tire portfolio. (See story on page 10.)
Founded in 2012 by George Silagadze and Chance Harrington, TireConnect offers unique B2B and B2C online tire sales solutions to more than a dozen customers with nearly 600 points of sale across Canada and the U.S.
Mr. Baratta said that, under Bridge-stone's control, TireConnect will be exclusive to Bridgestone retail and wholesale customers for fees yet to be worked out. The tire maker said it also will work out a solution for existing customers that aren't Bridgestone dealers to be able to continue using it.
Messrs. Silagadze and Harrington will join Bridgestone as part of the acquisition.
“We are excited that Bridgestone chose to acquire TireConnect and establish it as a digital and ecommerce solution for its dealers,” Mr. Silagadze said.
“This move demonstrates the company's ongoing commitment to its customers and end-user consumers, and we look forward to working together to further enhance the tire buying experience.”
The Bridgestone TireConnect online sales and ecommerce solution will be available to Bridgestone dealers and distributors in the first quarter of 2016.
The company did not say what the cost will be to use TireConnect. As it's currently structured, dealers pay a $150 start-up fee and $69.95 per month for the online tire quote tool, Mr. Silagadze said in an interview with Tire Business earlier this year.
The plan is to offer TireConnect through the Bridgestone Affiliated Dealer program, Messrs. Baratta and Seidel said, meaning both retailers and wholesalers will have to subscribe to the service.
At the same time, Bridgestone has increased its spending on digital promotion, advertising and related activities fivefold in the past few years, Mr. Bar-atta said, without disclosing the actual spending.
He said the tire maker plans to enhance its digital space graphics, product information, videos, etc., “to make sure than when the consumer's online, they're seeing Bridgestone and our dealer base at their best.”
Mr. Seidel stressed that dealers who want to leverage TireConnect to their advantage need to make sure their own Web presence is up to speed.
“The average consumer going online goes to 7.3 different sources,” he said, “including dealer sites.
“If the dealer doesn't have the right information or is able to provide a quote or inventory, that consumer's probably not going to come back to that site.”
To reach this reporter: bdavis@ crain.com; 330-865-6145; Twitter: @reifenmensch