Retail

Your Next Great Competitor Is... The Odds Favor Amazon.com Over Sears Automotive

Bob Ulrich
Posted on March 17, 2017

Who will be your next great competitor? As independent tire dealers, you already compete against stores owned by tire manufacturers, mass merchandisers, warehouse clubs, car dealerships and muffler shops.

Shortly after the turn of the 21st century, Ford Motor Co. upped the ante with its Quick Lane Tire & Auto Centers outlets, which are run like independent tire dealerships. Now there are more than 800 of them in the U.S.

Costco Wholesale Corp. is not the biggest of the three warehouse clubs, but it is arguably the most successful, especially following a big 2016. Not coincidentally, it runs its 500-plus domestic tire centers like stand-alone tire dealerships, at least more so than the other clubs.

So it’s time to look ahead for the next big player in our industry. I am handicapping the top three, all of which already sell tires, but are potentially set up to grow exponentially if they play their cards right.

It would have been four, but I just couldn’t imagine Target Brands Inc. ever selling tires, at least at its 1,800 Target stores. Tires are not a good fit with its self-proclaimed signature businesses: “Style, Baby, Kids and Wellness.”

And in case you had a little extra cash burning a hole in your pocket, sorry. You will not see these odds in Las Vegas.

Amazon.com: 3-1

In its 2015 fiscal year ended Dec. 31, 2015, Amazon.com Inc. sold $63.7 billion worth of goods online in North America. That included tires and automotive parts.

According to a report by “Internet Retailer,” Amazon.com accounted for nearly 82% of the web revenue growth among publicly traded online retailers in the third quarter of last year. ChannelAdvisor Corp. estimated Amazon accounted for more than half of the quarter’s online sales reported by the U.S. Department of Commerce!

 Although Amazon sells every major tire brand, plus plenty of imported tire brands, it has only scratched the surface of what is possible. From what I hear, the reluctance of many tire manufacturers to sell direct to the company is holding it back. So is its lack of distribution partners.

Online tire sales account for 6% of the total consumer tire market, according to Modern Tire Dealer research. That represented 14 million passenger and light truck tires last year.

Even if some of its growth cannibalizes the sales from other companies selling tires online,  Amazon’s growth potential is substantial.

Sears Automotive: 10-1

At one time, Sears, Roebuck and Co. sold more than 20 million tires a year. Now that total is down to around 3 million. A revolving door of executives has tried to jump-start tire sales to no avail.

As recently as nine years ago, there were more than 800 Sears Auto Centers in the U.S. Now there are less than 650. The vast majority of them are attached to Sears stores, which makes them unattractive to potential buyers.

The company recently unveiled a new stand-alone store concept: the DieHard Auto Center Driven by Sears. The first store opened in San Antonio Feb. 17.

The new auto center “is another example of how we’re unleashing the power of the DieHard brand,” said Brian Kaner, president of Sears Automotive. “It offers state-of-the-art technology and services in a contemporary, comfortable setting; that, combined with our experienced associates, can help today’s drivers make the right choices for their vehicle’s needs.” Sound familiar?

It might be too little, too late for Sears to stop the bleeding.

NAPA Auto Parts: 100-1

Here’s a sleeper. The National Automotive Parts Association, better known as NAPA (NAPA Auto Parts is technically redundant), has not really shown an inclination to push tire sales, but it is logistically set up to do so, with more than 6,000 stores in North America.

NAPA, which is a division of Genuine Parts Co., could add bays, but has chosen to leave tire sales and service up to its 14,000-strong independently owned NAPA AutoCare Centers network. It doesn’t even sell tires online.

What about those service centers? They  are truly independent. They are members rather than franchisees. As such they are not a cohesive group, per se. They also emphasize automotive service and collision repair over tire sales.

If Amazon, Sears and NAPA all beat the odds, look out.    ■

If you have any questions or comments, please email me at bob.ulrich@bobit.com.

To read more of Bob Ulrich's editorials, see:

Online Tire Sales: Mandatory Sales Tax Collection Would Even the Odds

Is Our Love Affair With the Car Over?

Now That Trump Will Be President... Proactively Offer Your Support or Constructive Criticism

Race Against a Racing Ban

P Zero World Re-Defines the Independent Tire Dealer

Related Topics: Bob Ulrich editorial, Competition, Editorial, online tire sales

Bob Ulrich Editor
Comments ( 1 )
  • Jeff

     | about 4 months ago

    Although Amazon is building out its own distribution network, part of what makes the Amazon formula work is to remain relatively asset light. It's estimated that about 40% of Amazon's revenue comes from its 3rd party seller platform. In other words, Amazon is going to sell stuff (tires, knives, etc.) with or without the approval of the manufacturer. To fight that is a waste of time and energy. It is true that the tire manufacturers have expressed no interest in selling to Amazon thus far. I anticipate that will remain the case for at least the top 5 manufacturers. That said, there is no shortage of distributors who fulfill for Amazon. What actually holds Amazon back is its absolute and unwavering focus on their customer at the expense of its vendors and their profit margins.

More Stories
News

Simple Tire Adds Another Delivery Option for Online Tire Buyers

Simple Tire LLC has added a third delivery option for customers of its online sales platform. They can ship their tires to any of the 1,800 FedEx Office locations in the U.S. But Simple Tire’s real goal is to redirect those customers to one of its installation partners.  

News

Pep Boys Expands in New York and New Jersey

Pep Boys — Manny, Moe & Jack, a wholly-owned subsidiary of Icahn Automotive Group LLC, has acquired an automotive and tire center in New York, and opened a new Pep Boys Service & Tire Center in Bordentown, N.J.  

The tall ceilings of Jeff Hall's Gardiners Road store give it a modern look and feel.
News

The Secret to Success for Midas in Canada: Tires

The owner of the two busiest Midas locations in Canada says offering an extensive tire inventory and more than a dozen tire brands has transformed his business. Consider Jeff Hall’s success a sign of what’s to come at Midas stores across North America.  

News

Six Hankook Tire Dealers Will Host Events for Veterans

Six tire dealers will help Hankook Tire America Corp. continue its partnership with the Disabled American Veterans (DAV) organization. Those dealers will host the group's Mobile Service Offices (MSO) at their stores so the DAV can reach out to veterans in those communities.  

Joe Venezia will lead Bridgestone's retail efforts at its 2,200-plus company-owned stores.
News

Bridgestone Retail Stores Have a New Leader

The 2,200-plus retail stores owned and operated by Bridgestone Americas Inc. have a new leader. Joe Venezia is the president of Bridgestone Retail Operations LLC (BSRO) effective June 19, 2017.  

Be the First to Know

Get the latest news and most popular articles from MTD delivered straight to your inbox. Stay on top of the tire industry and don't miss a thing!