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Net-Working Tire Dealers and the Internet

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Net-Working Tire Dealers and the Internet

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The Information Superhighway is not really a highway at all, and some would argue that it’s far from super.

What it is, is the Internet, a collection of circuits and relays, information and Web pages, tying people all across the world together through phone lines. It is, arguably, the greatest technological advance the world has made.

At the same time, the Internet is an enigma. It has remolded the lives of many to the point where they see no need to walk away from their computer. And it has had such a profound effect on others that they refuse to go near computers. It is what it is, a marvel that simultaneously stuns and stupefies.

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But what about tire dealers and the Internet? Dealers live in the real world where it takes real technicians to mount real tires on real cars. In general, they don’t live in a cyber world where communities are constructed out of fiber optic cable. However, dealers are resourceful enough to know that if something comes along to help them, they should get on board.

The Internet is just such a tool – if dealers are willing to learn how to use it. Granted, many dealers already use their computers to link with a tire manufacturer, order product, track shipments, and make payments. Goodyear’s Xplor and Bridgestone/Firestone’s Entirenet or Michelin’s Bib Net are just a few examples of Extranets created strictly to conduct dealer-manufacturer business. But the Internet can do so much more than that.

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The Internet provides vast resources and is filled with tons of information. Image never having to keep enormous parts catalogs lying around because the information is available on a Web site. Faster and cheaper communication is possible with e-mail. The Internet is used for e-commerce all the time – and there are ways for tire dealers to exploit this, as well. And let’s not forget about putting the dealership online. A tire dealer with a properly designed and used Web site can be a dangerous competitor.

Is the Internet going to help you mount tires? No. Can it help you get more tires to mount and make the process easier and better? Yes. Can it help you keep your stores from becoming individual islands? Yes. The Internet is not a person or another technician. It is a tool, one that can be used in many different ways to improve a business.

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History Lesson
As with much of the technology we use today, the genesis for the Internet began with the launch of the Soviet satellite Sputnik in 1957. After that rocket roared into orbit, the U.S. formed the Advanced Research Projects Agency (ARPA) to re-establish the U.S. as a leader in science and technology applicable to the military.

In 1965, ARPA sponsored a study on the networking of time-sharing computers in which two computers were linked together via a dedicated phone line.

Then on April 7, 1969, the true beginnings of the Internet took shape when the document "Host Software" was posted on ARPANET, a network created by the Department of Defense.

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UCLA and AT&T created a cross-country link in 1970, as did MIT and Utah, thereby opening the Internet to the non-military. Basic e-mail was created in 1971 by Ray Tomlinson. The Internet proliferated from there throughout of the 1970s, as evidenced by Queen Elizabeth II’s March 26, 1976, e-mail.

Networks popped up throughout the world in late 1970s and early 1980s until the domain name system was introduced in 1984. These networks continued to link countries together, leading to the need for agencies to continue creation, execution and monitoring of the Internet. Speeds were increasing, as were the technologies to improve systems.

The Internet as we know it today began in 1989, when Tim Berners-Lee distributed research information over the Internet via a network protocol called HTTP (Hyper-Text Transfer Protocol). While it was text only, Berners-Lee’s network let to commercial providers of Internet dial-up access in 1990 and the creation of the World Wide Web (WWW) in 1991.

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Internet societies, search engines, on-line banking and "surfing the Internet" – coined by Jean Armour Polly – followed soon after. The White House came on-line (www.whitehouse.gov) in 1993 with e-mail addresses for the president and vice president. E-commerce developed and viruses became more prevalent and complex.

It continued from there with whole communities, nations, organizations and advertising finding its way onto the ‘Net. Both America Online and the Vatican came on-line in 1995 and the U.S. Communications Indecency Act of 1996 prohibited the distribution of indecent materials over the ‘Net.

The Internet continues to grow today as there are now more than 1 billion indexable pages available.

Divided Highway
Tire dealers see the Internet in many different ways. Some use it every day and can’t understand how their business survived without it. Others have a computer in the office that’s probably used solely for connecting to a manufacturer and ordering product. Still others have no real use for the Internet and may not even have a computer in the shop. While going computerless is rare, it does show that dealers are divided over the Internet.

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"From my perspective, the Internet offers the greatest opportunity for manufacturers to provide information to their customers," said John Rastetter, director of information for The Tire Rack, one of the first companies to actively sell tires and custom wheels via the ‘Net. "In many cases, that information can be in the form of an electronic catalog, which is easily updateable because it’s paperless. The Internet offers so much flexibility.

"I use the Internet for a multitude of things at my job. For everything from research to accomplishing things that will go on our Web site. If you’re trying to find out about something or how to do something, you can quickly come up with the answers."

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"I think the Internet is an excellent source of information and it’s available at a low cost," said Brad Saunders, vice president of Fairmount Tire in Los Angeles. "I think it’s a great tool as long as it’s utilized for information."

It seems that the biggest impact the Internet can have is as an information-gathering tool. It provides quick access to many things a dealer may need, but not know how to get hold of. But it does do other things as well, such as reach customers and connect multiple locations together.

For some dealers, the Internet can be another form of advertising. Think of it as an ad in the Yellow Pages or local paper that can help draw in customers you may not be able to reach via traditional methods. "I think it’s an excellent tool to reach people that were previously hard to reach on a business level," said Jeaneane Vespia, human resources manager for Vespia Tire in South River, N.J.

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"For the consumer, the Internet is the easiest way to get information on store locations and product availability," said Frank Digiglio, Vespia’s general manager.

If anything, the Internet can be used to handle basic office procedures. Programs on the ‘Net exist that can handle accounting and payroll functions. Accounts payable and receivable can be created so dealers can have a real time understand of their business’ assets. Profit and loss statements could be generated on command. And don’t forget about online banking, which a dealer could take advantage of without having to take time out to actually visit the bank.

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Bringing It Together
And, as for connecting multiple dealerships, the Internet provides an easier – and, in many cases, less expensive – way for multiple dealer stores to be connected in real time. Inventory levels can be monitored from store to store, allowing for product swapping to meet customer needs. Even scheduling can be set up over the Internet to allow one location to pass work overflow to another in close proximity.

But some of that is a little more advanced than what most dealers currently want – or even think – the Internet should do. Forget that millions of dollars are spent buying products over the Internet. Forget that the Internet can transport you across the world and you never have to leave home. For many, it still is only a giant repository of information.

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"I think the Internet is a great way to retrieve information," said James Chen, president of Axix Sport Tuner in Sante Fe Spring, Calif. "I also think it’s great for purchasing smaller items easily, but I don’t think it would work so well for bigger purchases. People still want to touch and feel most things that they buy."

Still, Pirelli is actively selling some tires over the Internet in Europe. And Michelin has been offering BFGoodrich Scorcher T/As domestically, routing buyers to their nearest Michelin Americas Small Tires dealer. A few independent outfits have also been selling tires direct to consumers via the ‘Net, with varying degrees of success.

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One reason dealers may only think of the Internet only as an information source is because they may not fully understand the technology involved. Many see the Internet as something big and complex. But in reality, it’s not that complicated – certainly not as complex as the steel belted radial, the runflat tire or electronic engine controls.

"No, I don’t understand the technology," Rastetter said. "I know about all the pieces – the computer, the phone lines – but not the technology. I don’t care about the technology. I just care about what it does.

"I understand that a faster modem gets me information faster, but past that I don’t care about the technologies. I think that if I had to hit a function key for every step on the Internet, I’d be more frustrated. But I think it’s fine right now."

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"I really don’t understand the technology and I really don’t care," said Chen. "As long as it does what I want it to, that’s fine by me. When it doesn’t do what I want, then I care."

Levels of Connectivity
The opinion of Internet connections in dealerships varies as much as the importance of the Internet. Both Fairmount Tire’s Saunders and Axix Sport’s Chen have a DSL connection in both their offices and homes. The DSL line is a dedicated line to the Internet and is an upgrade – in both speed and price – from the usual 56k modem that most dealers have in their computers.

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"We’ve had the Internet in our office for a year and a half, and honestly, I really don’t know what we did without it," Saunders said. Chen’s connection was installed a little earlier, in 1997.

"We use the Internet for e-mail and to look up general information," Chen said. "We are also direct with Pirelli tires, so we use the Internet to place orders that way."

That’s probably the biggest reason most dealers are connected – to order tires quickly from their manufacturer. A very good reason, because it eliminates the hassle of waiting for a sales rep. The computer can tell you what’s available and how quickly it can be there, all with a keystroke.

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"We use Goodyear’s Xplor system to order 99% of all our Goodyear tires," Saunders said. "For that reason, the Internet is very useful to use."

But there are many shops that don’t want the Internet in the office, or may have only one connected computer sitting in the manager’s office. These dealers just don’t want everyone in the office to have access to the ‘Net because they see it as a distraction, something that will take valuable time away from sales and service work.

"We don’t have it in our shops because we think it’ll lead to a loss of productivity," said Vespia Tire’s Digiglio. "There’s really no need to have it. There’s also a cost to it because, for the 27 locations we have, we’d have to buy PCs and equipment. That’s too much."

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Added Jeaneane Vespia, "We’re linked to each of the dealerships and we’re linked to the Goodyear ordering system, so there’s really no purpose for the Internet in each of the shops."

Digiglio does have Internet access from his work computer, but doesn’t use it for very much, saying that "it’s too slow" to use on a regular basis. "What I use it for in the office is advertising because instead of getting hard copy proofs, I get them via e-mail. But that’s really the only thing I use it for," he said.

Electronic Billboards
What about having a Web site for the dealership? Everybody seems to have a Web site nowadays, including toothpaste makers and fantasy football leagues. Could a Web site benefit a dealer, serving, at minimum, as another form of advertising?

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"Having a Web site gains you a retail presence on the Internet," said Saunders. "I’ve been told by customers that if I didn’t have a Web site, they wouldn’t be coming in to buy tires from me. I have customers that surf the ‘Net to find what they need before going to buy."

But Saunders is in Los Angeles, where everyone seems to be connected to the Internet through their cell phones or Palm Pilots. That’s Fairmount Tire’s market, and it benefits them greatly to have a site. However, it’s tougher to tell a dealer in the middle of Iowa or Montana that they need a Web site to drive store traffic.

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"I don’t think every dealer needs his own Web site. Unless he can schedule customer visits and really do things like that, not every dealer needs a Web site," Rastetter said. "While the Internet allows a lot of flexibility, there’s also a lot of complexity involved. If you’re going to use your site as a billboard, that’s fine. But as far as trying to actively sell, I’m not sure it’s going to provide that kind of improvement."

Web sites do work just like a Yellow Pages ad – it’s there for those who are looking to find information today. But more can be added to boost future sales, like, store specials, coupons, services offered, prices, store employees.

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If a dealer really wanted to get creative, they could allow customers to schedule maintenance over the Internet. Or provide a shop locator, if there’s multiple locations to choose from. Or have tire size calculators or anything else that can be imagined. The only things that limit you on the Internet are imagination and cash.

People Need People
There’s a growing push to increase the technology that dealers use. From more advanced changers and balancers to sophisticated inventory management programs, the technology that dealers have available is truly amazing. The Internet also falls into that category – for those dealers who want to use it.

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However, most technological advancements are designed to revolutionize something. The very first tire balancer changed the industry forever. So did the first alignment rack and on-car brake lathe. But will the Internet revolutionize the tire industry?

Unlike shop equipment, the Internet wasn’t designed specifically for the tire industry. Even so, it can be adapted to provide a lot of help to make the lives of dealers easier.

"I think that the Internet could save a lot of time for people, but I feel the tire business is still a people business and that will never change," said Saunders. "I still think the tire business is complex and you need to talk to people in order to get the right information, and help them make a good tire choice."

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Saunders’ point is a valid one. The tire industry is a people business. Customer interaction and customer relationships are both critical for building and maintaining profits. The Internet was designed around less interaction – illustrated by the fact that tire maker systems eliminate the need to talk to a live person when ordering tires.

"I think people still want to put their hands on the product they’re buying and talk to people about it. Buying tires is not like ordering a golf shirt from a catalog," said Digiglio.

Tire Rack’s Rastetter concurs, believing people make the difference in this industry. "I don’t think it will revolutionize the industry. It’s simply another form for a manufacturer to communicate with the customer. It serves the same purpose as a magazine or a phone call," he said. "It still takes somebody installing a tire on a wheel and bolting it onto the car. The Internet can’t do that."

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At least not yet.

E-Commerce Has a New "Peer" in the Tire Industry
Within the last several years, business-to-business (B2B) Web sites have become popular. Sites that allow dealers to buy, sell and swap product over the Internet as an easy form of inventory management. Some of these sites survived, some did not. Basically, the seller pays a fee for marketing his products on the exchange site, and both parties involved in the transaction are kept anonymous until the deal is finalized.

 

But now a slightly different style of site has developed, one called peer-to-peer (P2P). The purpose of these Web sites is to eliminate the middleman and allow buyers and sellers to interact directly with each other. One such P2P site is OpenWebs.

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"OpenWebs is the creator of TradingNetwork, application software that combines state of art point-of-sale software and best-in-class accountingsoftware with computer-to-computer connectivity and intelligent trading capability," said Dennis DeLeonard, vice president of automotive marketing. "In a nutshell, TradingNetwork allows dealers to buy from and sell to each other directly – in real time – so that a dealer who is out of stock of a particular product can easily source it from another dealer and still be able to say ‘yes’ to his customer."

OpenWebs formed just over a year ago, has drawn on the knowledge of Fortune 500 companies, consulting firms and information technology organizations. But dealer networks have been setup before on the Internet. TireDex and TruckTireXchange are just a few examples. What’s to prevent OpenWebs from getting lost in the montage of Web sites that are constantly cropping up?

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"These companies are based on ‘exchanges’ in which all transactions of buying and selling flow through them for a fee," DeLeonard said. "We sell and service software which enables tire dealers, distributors, manufacturers and other suppliers to conduct business directly with each other according to the business rules they agree upon. Our peer-to-peer structure eliminates the middleman.

"This enables tire dealers and wholesale distributors to continue to work directly with each other, as they do today, based on their own business rules, as they do today, with the same autonomy and control that they have today. And they still get all of the breakthroughs in efficiency, cost reduction, speed, and customer service that the Internet provides."

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It’s hard to tell what kind of response dealers will provide to new ideas like this. It’s well documented that dealers don’t always use the Internet in ways that can help their businesses. For something like OpenWebs to succeed, it has to plan on spotty dealer response and build a system that is very user-friendly and can provide a necessary service that’s not being met.

"The software was designed by people who have years of experience in the tire industry, and we’ve made an unprecedented investment in product development, so we expected a positive response," said DeLeonard.

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"Where we have been positively surprised is in how quickly wholesale distributors and retailers grasp the power of the trading aspect of the product. Virtually every distributor we’ve talked with has been really excited about the prospect of linking their retail customers into a trading community, and the retailers are excited about joining."

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