Online sales — 'adapt or die'

HILTON HEAD ISLAND, S.C. (May 13, 2016) — Online tire sales by tire manufacturers are not necessarily an unmitigated disaster for brick-and-mortar dealers, according to speakers at the 32nd Clemson University Global Tire Industry Conference.

Nor are they an unmixed blessing for online sellers, said John Evankovich, director of Sam's Club Tire & Battery Centers, and Glen Nicholson, senior director of retail training for TBC Corp.

Messrs. Evankovich and Nicholson delivered their presentation at the Clemson conference, which was held at Hilton Head April 13-15.

Online sales have some drawbacks for dealers, online retailers and consumers alike, they said, but it also offers substantial benefits to all three.

Web-based tire sales are driven completely by consumer demand, and are happening with or without the consent of tire dealers or manufacturers, Messrs. Evankovich and Nicholson said.

“This is not something tire manufacturers invented to cut dealers out of the market,” Mr. Evankovich said.

Consumers go online to research tires, he explained, and the first thing that comes up in their Google search is a tire manufacturer's website.

“It's difficult for an individual dealer to come up first in a search return,” he said. “But when there's no place on the manufacturer's website to buy tires, the consumer hits the back button on Google, types in ‘Buy Tires,' and up comes a list of places.

“This is the way the consumer wants to shop,” Mr. Evankovich said. “Things don't work out well for businesses that ignore consumer demand.”

Online sales also can mean increased car count and new customers for dealers, according to Mr. Nicholson.

“It's difficult for an individual dealer to come up first in an initial Internet search. But manufacturers have the capacity to come up pretty high.

“If somebody in your town is looking for a particular tire, he might not know if his local dealer carries it,” Mr. Nicholson continued. “But if the dealer aligns with the manufacturer, the consumer could discover that the dealer right across the street carries the tire.

“Even if the sale is through the manufacturer, the customer still goes into the brick-and-mortar shop,” he said. “If you build loyalty, these customers will keep coming back to you.”

However, the flip side of the story is increased competition, Mr. Evankovich told conference attendees.

“It's the same size pie, but there are more slices,” he said. “This is a new distribution channel where the manufacturer may end up deciding where the priority lies. Let's face it, the competition out there is fierce.”

There is the danger that online sales may force tire dealers to become installation centers, according to Mr. Evankovich. “Manufacturers will get the sales and profits, and the installer gets the service and the liability,” he said.

Tire dealers must invest in online sales platforms in order to compete, according to Mr. Evankovich. “Online sales are here to stay, and tires are among the most researched products.”

Mr. Nicholson suggested that “adapt or die” should be every dealer's motto in the Internet age.

“You can benefit from the increased customer count, or refuse to adapt and potentially become extinct,” he said. “Consumers are increasingly looking to buy things online, and if you can't figure out how to leverage that, you might not have a bright future.”

Meanwhile, the picture isn't all rosy for online retailers, according to Mr. Nicholson. They too suffer from increased competition, and they don't have the benefit of offering tires and auto service to offset reduced profits. They also face possible brand offering limitations and competition for available service providers.

At the same time, consumers benefit from a simple shopping process in online retailing — from research to purchase, according to Mr. Evankovich, noting that they also avoid possible hassles and intimidation from salespeople.

But consumers lose out in not having the expert advice from tire technicians who know which tires best meet their needs, he said. There is no substitute for this, and the dealers who can best provide this advice are best positioned to survive in the new market landscape.

Mr. Evankovich illustrated his point with a story about a friend with a 2014 Mercedes. This particular model must have rear tires with a recommended pressure of 47 psi, he said.A tire technician at his friend's local dealership caught a potentially deadly error  —that the replacement tires the friend bought online took 44 psi — and steered the friend to the correct set of tires for the vehicle.

“Not one website identified this problem,” Mr. Evankovich noted.

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