I’m experiencing déjà vu. Another tire manufacturer – Michelin North America – has entered the direct-to-consumer market. And no surprise, Tire Review’s website blew up with comments from tire dealers that manufacturers are out to steal the tire dealer’s business.
I feel your pain. This direct-to-consumer sales trend hurts your business. You’re no longer in control of pricing and profit margins. Plus it’s a new “competitor.” That sucks.
But, if you didn’t see the threat of online sales coming, your head was in the sand. In Q1 2016 online sales reached $97.3 billion domestically, and in Q2 online sales topped $1,201.9 billion, according to the U.S. Commerce Department.
The reality is e-commerce is disrupting businesses across all industries. Tires just feel “new” to online sales.
Many dealers view the tire manufacturers as the bad guys when it comes to e-commerce, but that’s not entirely true.
Think about this list: Amazon.com, Jet.com, Walmart.com, Sears.com and Costco.com. All of these sites sell tires, and all of these sites cut the tire dealer out of the transaction.
When talking with industry insiders for this column, I heard estimates that Amazon is hitting $90 million in tire sales annually. How large is Walmart’s share of online sales? One can assume it’s comparable.
I know it’s been estimated that online tire sales equate to only 5-8% of the current market, but if I were you, I’d want my share of that $90 million in tire sales Amazon is getting.
At least with the manufacturers’ direct-to-consumer plan, and even ATD’s TireBuyer.com, the tire dealer isn’t being completely written out of the transaction. The tire dealer still gets a piece of the pie, even if it’s minimal.
I hear your argument now, “But, Goodyear has their own stores they send consumers to and that cuts us out all together.” True, but Goodyear also drives consumers to local independent dealers.
Share your concerns with the tire manufacturers and maybe online sales will work more in your favor. But do you think Amazon or Costco will listen to your complaints?
In a perfect world tire dealers wouldn’t have to compete with online sales. This just isn’t that world. There will always be a tire manufacturer or tire distributor willing to sell to one of these giants, so online sales aren’t going to just stop.
You don’t have to like this direct–to-consumer and e-commerce trend – it’s a bummer for local businesses and traditional brick-and-mortar locations – but you can make it work for you.
There’s a big reason tire manufacturers and others want to sell tires online – consumers are active in the space.
As one dealer I spoke with shared, “These consumers were probably going to buy their tires online anyway.” I agree 100%. These are customers who are determined to buy online, but now online sales brought them into your location.
But, wait, wait, wait, there is an even better opportunity tire dealers can capitalize on when it comes to online sales to consumers – make them your own.
That’s right. Steal back your business and enter the online space yourself. Your website should function as a second storefront. Sell there and capitalize on the consumer who prefers to shop online.
There’s a convenience to buying things online. If I could buy tires online from a dealer I trust, I would do it. It’s easier for me and I know the product will be available when I want it installed.
There’s another benefit to selling tires online yourself; you can make sure the customer gets the right tire. Not just the correct tire size, but the correct tire for their needs. You can do this through a follow-up telephone call prior to install.
If you don’t have the ability to sell tires yourself, challenge your website provider, challenge your distributors, challenge the tiremakers themselves to give you access to solutions and ways to sell more product online.
Another way you can make online sales work for you is when there is a mistake in the online sales process. It’s bound to happen, a consumer orders the wrong tire. Consumers think all tires are the same – round and black – so when a mistake does happen, use it as an opportunity to educate the consumer of the importance of working with an expert to find the right tire.
Once a consumer screws up or has to try and claim a warranty for themselves through a manufacturer, they’ll realize the convenience of working with a tire dealer. No one has time for mistakes, so they’ll want to avoid more in the future.
So, dealers, it’s okay to be frustrated with tire manufacturers selling direct-to-consumer; however, don’t let this frustration prevent you from embracing the larger business trend. Online sales are here and will only grow larger. It’s time to get onboard with selling online.
To tire manufacturers selling to consumers online (and those who are soon to do so):
Remember who got you where you are today and don’t trivialize what tire dealers do. They aren’t just “installers;” they’re service providers. They sell your product. And they sell it better than any advertisement will ever do.
Tires are complex; online sales and advertising don’t really share that message with the consumer, yet tire dealers do. If you don’t want your product to be viewed as a commodity, don’t sell it online like it is one. There will be no such thing as a Tier 1, Tier 2 or Tier 3 company if consumers don’t understand the differences in products, and this is a story tire dealers are much better at telling.
Your tire might be a great tire, but when used in the wrong application, it stinks. All of a sudden your brand will be written off. Without someone guiding consumers to the right tire for their lifestyle, mistakes will happen and your brand will suffer.
Tire dealers will push product for those companies that give them respect, so don’t make decisions with your online programs that will further hurt dealers. Remember that they’re your partners. When it comes to online sales, don’t bite the hand that feeds you.
Commissions are nice, but how about giving tire dealers credit toward unit sales? They’re the ones doing all the work, putting the tire on the car, providing the customer a positive in-store experience. They should get the credit for the unit sale.
Other ways you can be a better partner for dealers is to provide a simple way for dealers to sell your products on their own websites. And make it easy for them to deal with consumer-made mistakes while getting paid for those services. They’re the ones dealing with the headaches, the ones doing extra work, so they should make extra money for their time.
Also, don’t write out the distribution channel. Tire distributors have a model that works to get tires to a destination on time. FedEx and UPS can transport goods, but they may not always arrive on time as promised. I’ve ordered plenty of items off the Internet and have seen logistics companies fail to deliver on time and lose products in transit. Tire dealers are the ones that will have to deal directly with the customer who doesn’t get the tire on time, so help the dealers out by using the distributors they already trust.
Viewing independent tire dealers as partners needs to be more than just lip service from tire manufacturers. It needs to be a reality, tire companies, otherwise you risk hurting yourself.