Currently, about 10% of tire customers buy their product online; however, as more and more customers look to the internet for research and knowledge prior to purchase, the number of tire customers to buy from an e-commerce retailer is expected to increase.
It’s not just tires. One of the major trends I’m seeing is that consumers as a whole are going online for product research and purchase options in every industry. I predict the number of people purchasing online will double – even triple – in the next three years as customers look for easier ways to do business. Digital commerce will become a conduit that overlays brick-and-mortar stores. Both channels will be necessary for a business to be successful.
These trends are both exciting and scary. On one hand, brands using videos and pictures to tell their stories are what excites me most as it shows great potential. What scares me most are the manufacturers who are trying to squeeze out the independents. I think manufacturers should encourage the industry to work with e-commerce retailers and be proactive when it comes to online. I have seen too many manufacturers try to either own the relationship themselves by boxing out the independents, or try to say that online retailers cannot sell their tires. Neither stance seems very helpful to the industry in the long term.
Tire brands need to be where tires are bought so outside influences like MAP pricing (or minimum advertised price) aren’t good for the industry. Instead of trying to control market pricing artificially, I would rather see those same manufactures engage online retailers to add value and keep pricing in line rather then go down the road of MAP pricing.
In the future, tire dealers will have to look for digital partners because, in the end, customers are the ones who are going to impact the way these dealers are making sales. Customers want the best value; they want to know what their peers think, and they need available feedback. Tire dealers need to be interactive and reactive to customers, as well as work with online retailers to help fill in any gaps that they currently cannot provide.
I consider internet retail giants like Amazon neither threat nor inspiration to the tire industry. It’s not specialized enough to be a threat, and it lacks the ability to build relationships and partnerships with customers. Smaller online vendors (like SimpleTire) are more focused on building relationships.
Instead of Amazon, I think we should be looking at the music industry for inspiration. Several years ago, customers could only purchase their music one way – on a CD. Then, the industry changed dramatically. Today music can be purchased, shared, rented, streamed, etc. The music-buying experience changed after facing a challenge similar to what the tire industry is facing today, as people’s relationships with the way products are sold is evolving.
To brick-and-mortar tire dealers who still don’t have a digital commerce channel, I advise you to first talk with your customers about what’s important to them. Then, find a partner in the digital landscape and embrace the digital future. Accept that, and we can all be winners with a shared focus on partnering and growing, and less talk about trying to slow the wave of innovation. A better approach is to embrace it and look for ways to innovate as a result. TR
Andy Chalofsky is CEO of SimpleTire who works with the company’s management team to revolutionize the tire business. He has grown and launched several companies within the automotive and related industries.