I don’t particularly care for Metallica. But I’ve always been impressed with the band’s co-founder and drummer Lars Ulrich. It’s hard to picture a devout headbanger as being bright, but Lars has proven himself as one of the most intelligent and erudite people in music today.
Metallica has been a loud opponent of Napster, a Web site that, at any given time, has over 100,000 songs you can download for free. Napster is not about making money, as its 19-year-old founder says. But Metallica and the small retailers that sell CDs are. And if one person makes one CD available to millions for free, that’s millions of CDs that aren’t sold.
Ulrich presented his band’s position on Napster in the June 5 issue of Newsweek. This portion of his column was most striking: “Who does Napster hurt? – owners of small independent record stores. We heard from a guy in Syracuse, N.Y. The guy said that since Napster went up, his business dropped 80% and he had to shut it down. He said kids were coming into his store, checking out the bins for cool new records and then downloading them instead of buying them.”
The recording and tire industries have little in common other than the shape of their products. But the potential impact of the Internet on both is a common denominator.
Which brings me to a question I’ve struggled with for months: What will the Internet mean to the tire industry?
Unlike the auto service and parts sectors, the tire market hasn’t seen much Internet encroachment as yet. And the few dot-coms working in this industry have provided some much-welcomed assistance to dealers looking to sell off slow movers or overstocks, or are seeking specific products to fill needs.
Seven of the world’s top tire makers have banded together to create an Internet-based procurement exchange, which holds the potential for better quality tires at lower prices. Good news for dealers and customers.
Because of the nature of the segment, there is no doubt the Internet will prove to be a useful tool for commercial tire dealers, suppliers and customers. Communications, training, inventory management, purchasing, tire performance tracking, fleet testing – services dealers are already intimately involved in – can easily be enhanced by the Internet. More good news.
But it’s the retail side of this business that may see the most significant Internet technology-induced changes.
Will tire makers leverage the Web to take their products direct to consumers? And what will that mean to dealers?
Michelin and Pirelli have both jumped into the direct-to-consumer Internet sales fray, albeit on a limited basis. Michelin’s Web sales of personalized BFGoodrich Scorcher T/As (Tire Review, June 2000) seems to be as much a demonstration of its C3M manufacturing capability as it is a test of an Internet sales system. Pirelli has limited its Net sales to Europe, and only for a Web-sales-specific line. Is that all there will be?
What happens if the mighty mass merchants – Sears, Kmart and Wal-Mart all have active e-commerce sites – decide to sell their tire stocks on the Net? They already have mounting/balancing equipment in place.
One only needs to look as far as tirerack.com to see how Internet tire distribution can be handled. Tirerack – the word few in the industry wish to utter – combined fitment data, inventory availability, delivery information, e-commerce and how-to-buy-tires information into an easy Internet experience, even for the tire novice. Is this the model of things to come?
Will today’s dealers become tomorrow’s ship-to and fitment depots? Will retail tire stores become much like the record shop owner in Syracuse and serve only as a reference library for consumers?
On the other hand, would direct Internet sales to consumers be all that bad? If you got a handling commission and could charge for mounting/balancing, would you mind it? Less overhead, less hassles, and less distraction from more lucrative vehicle service opportunities. But then wouldn’t dealers lose that one differentiating factor that separates them from the rest of the tire and auto service landscape?
Will it remain simply a promotional vehicle – like Yellow Page ads and TV commercials – that give dealers another means to get their unique messages out? Or could the Net be a major boom for tire dealers, creating a new breed of better-educated customers, enticing a wider-range of big ticket consumers, and generating other untold profit opportunities?
Truth be told, I’m still mulling over my view of our possible futures. What do you think?