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Disorder in Our House

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It was totally ironic that Warren Zevon’s “Disorder in the House” was playing in the background when I started piecing this column together. It was hard not to think about this whole thing, especially when Warren warbled:

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“The floodgates are open
We’ve let the demons loose.
The big guns have spoken
And we’ve fallen for the ruse.”

Quite prophetic perhaps.

Goodyear’s direct-to-consumer e-commerce plan is certainly a sweeping game changer… disorder in our tire house, providing Goodyear stays the course, that others follow its lead, and that the scheme doesn’t result in open pitchforks-and-torches rebellion.

Otherwise, “eWingfoot” will prove no more significant than Pirelli SpA’s billion-dollar “e-Pirelli” fail 15 years ago.

Sometime by mid-2015, Goodyear announced at its recent Dealer Conference, it will flip the switch and allow consumers to buy and pay for Goodyear, Dunlop and Kelly brand tires directly through its goodyear.com website. And they’ll be able to select a Goodyear location (dealer or company-owned store) to provide installation.

All from the comfort of their laptop, tablet or smartphone. 24/7/365.

Many, many details are still to be parsed – untidy things like volume bonuses, adjustments, ride complaints and other critical matters of major import to tire dealers. Those dealers interested in serving as an “installer partner” will certainly need to do their homework.

But there is no doubt that Goodyear intends to leverage its brand strength, its Interwebs presence and its distribution reach to sell tires directly to your customers.

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Goodyear claims that some 1,100 dealers have already committed to the plan, despite the fact the entire program was supposedly first revealed at the dealer meeting. Since that meeting, we have heard from a quite a number of dealers angered by what they see as another encroachment onto their turf. Another play for their business. Another hand in their profit pocket.

Such include long-time dealer Charley Gowland, owner of Chabill’s Tire & Auto Service, with 14 stores down in Louisiana, who wrote a terse letter to Goodyear, which he shared with media. Gowland sees the eWingfoot scheme cutting deeply into “a large part of the profitability” of his and other dealers’ businesses.

“If you want a program like this for these consumers, deliver the tires through your company stores,” he wrote. “You own them, so you certainly can install any program you think would drive business and profits to those locations. We, the independent dealer channel, helped the car dealers in this country go from a 1% share of the replacement market to nearly a 10% share today. Most of the tires sold in car dealerships are premium products. This program, if it matures, will result in a far greater share of the replacement market moving away from the independent dealer channel than did the car dealer support program.”

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Dealers like Gowland see this as reducing them to nothing but installers, and they are not happy. “It’s not easy to say NO to a major supplier in this industry, but if there was a time to do it, that time is now,” he said. Tiremaker loyalty to the dealer channel “has evaporated over the many years I have been in this business, so I certainly hope there’s many more dealers who feel the way I do, and who will say NO to you and to this program.”

“Disorder in the house.
There’s a flaw in the system,
And the fly in the ointment’s gonna bring the
whole thing down.”

Bottom line: Goodyear is doing this because they can. Because they recognize where the world is today and where consumers are moving in the future. Because the means has been there for years, and because the massive successes of Amazon, Zappos and dozens of other e-commerce sites have piled up.

Because Goodyear fears being left behind. Why not tires, why not us?

The consumer is in control, more so than ever, said chairman and CEO Rich Kramer, citing numerous large, familiar companies that have “embraced technology to meet those consumers’ expectations” and how those consumers expect a solution to the time and convenience friction they experience in the traditional tire-buying process.

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“Those consumers are never going to go backwards. So, if we don’t do this, somebody else will. And make no mistake, Goodyear is committed to this path. We won’t get left behind.

“But more importantly, we won’t leave you behind. We must do this together.”

They say that to win these days, companies need to be innovative, be disruptive, create dissonance and disorder. Like, say, sell your products direct.

Goodyear dismisses the magnitude here, saying only 6% of U.S. consumer tire sales are made online; we’ve heard it’s as high as 11%. Regardless, Goodyear pulls 20 million unique visitors to its website, so that 6% is a potential 1.2 million sales transactions executed without the aid of a human; at 11%, the figure jumps to 2.2 million transactions.

For 2014, some 240 million consumer tires were shipped. Six percent of that translates into 14.4 million tires or roughly 3.6 million transactions – 11% equates to 26.4 million consumer tires or 6.6 million sales.

Are those big enough numbers to freak out about?

But that’s today’s number. If Goodyear’s scheme gains traction…

People do talk to other people and share experiences. So how fast does that 6% become 26% or 46%? What’s the acceleration rate if and when another tiremaker adds an e-commerce option?

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We’ll all be watching to see whose next on the diving board. Think about who has the infrastructure and muscle – digitally and otherwise – to make the move? Who sees the same future as Goodyear? And who is willing to act?

Or will it be no one else?

“Disorder in the house,
All bets are off.
I’m sprawled across the davenport of despair.”

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