The influence online tire retailing is growing so fast that 20% of European tires sales could take place online by 2020. That’s the view of market analysts at Frost & Sullivan, which also reports that the influence of the Internet on the auto industry can be seen in the continuous growth of the eRetailing market for automotive parts in general. According to the analysts, eRetailing of automotive components has given aftermarket participants a fresh boost and presents a new sales channel dynamic enough to be in sync with evolving macro-economic conditions and also flexible enough to address customer needs by offering a personalized shopping experience.
Tires are by far the biggest segment among all automotive replacement parts sold online, contributing close to 46% of total aftermarket eRetail revenues for auto parts in Europe and being worth 2.5 billion euros in 2013.
“Rapid growth in online tire retail is indicative of a shift in aftermarket consumer behavior with respect to cost, availability and choice,” said Anuj Monga, Frost & Sullivan senior research analyst. “The online sale of tires currently constitutes 7.8% of the total tire aftermarket. Growth in online tire sales therefore challenges the current decline in sales, as witnessed by the broader tire aftermarket, particularly through traditional retail channel.”
Furthermore the analysts predict that tire retail will constitute roughly about 20% of the total tire replacement aftermarket revenues by 2020. “France, Germany and Russia are the countries leading this growth with an online tire retail penetration of 12%, 11% and 8% respectively while the UK, Italy and Spain are also expected to experience strong growth,” Monga continued. The inference is that these markets remain in single digit market shares.
Online tire retailers are matching service levels of traditional tire retailers to facilitate this growth, which includes efficient tire fitment and in most cases return of worn out tires. Getting this so-called “bricks and clicks” combination has long been understood to be at the root of success in this segment.
Some eRetailers selling ”refurbished” tires
While price discounts of tires sold online are a major pull for customers, the possibility of choosing from a wide variety of make and models is also said to be a key driver. Another area where tire eRetailers can possibly differentiate themselves is in refurbished tires. However, if this means part worn tires and not retreads, this is likely to cause some degree of consternation. Either way eGommerce, an Italian startup tire eRetailer, is already said to be exploring this avenue. Other discounts and freebies also belong to the tried means of attracting customers to the online channel.
New market players are attracted to the market, as customers show a growing confidence in purchasing replacement tires online. The shift in consumer attitude has lead companies to offer personalized shopping solutions, of which the ‘door-step delivery and fitment’ service is the most popular. Offering consumers a choice of tire fitment at a location of their choice has already triggered considerable attention, with companies like Allopneus (France) aiming to enrich the customer purchase experience.
In terms of revenues, German pioneer Delticom led the market by some way in 2013 with 600 million euros in sales. The company has 137 online shops spread across 42 countries and a network of 35,000 professional fitting garages. Other noticeable names in the tire eRetail market are Blackcircles.com, Oxyo-Pneus, PopGom, Pneus Online, Oponeo.pl and eGommerce. These new market entrants are expected to develop new business models in the future, which will further foster growth in online business. The market is however, expected to witness significant consolidation in coming years, as companies look to gain a stronghold in this competitive environment. If recent years are anything to go by this means small companies folding under intense price pressure at the bottom end of the market and large players merging (in all likelihood with private equity or other large backing) at the top of the market – something we saw in mid-September 2013 with the Tirendo/Delticom deal. (Tyres & Accessories)
