Michelin North America Inc.’s decision to sell BFGoodrich tires online in the greater Charlotte, N.C., area, elicited plenty of negative responses from tire dealers.

Sound familiar? The same thing happened when Goodyear Tire & Rubber Co. became the first tire manufacturer to sell tires online in 2015.   

As we did then, www.moderntiredealer is giving the dealers their due with their opinions on the pilot program, which Michelin says will be rolled out nationwide in phases.

One of the unhappy dealers was Steve Fortner, owner of Tire Country Inc. in Gastonia, N.C. Located some 25 miles from Charlotte, he is directly affected by his supplier’s online strategy.

Steve called me when he tried and failed to post a comment on our website after reading about the news. The limit in our Comments section is 2,000 characters. His comment, more accurately a letter, is more than 2,000 words.

Steve bleeds Michelin blue. So does his store. Even his service truck promotes Bib and the brand (see photo).

As Michelin works out the kinks in the program, no one will be more affected than Steve, which gives him a unique perspective on the matter.

Here is his letter, in its entirety, which he also sent to Michelin executives.

Michelin's decision to go into the retail business is a slap in the face to the independent dealer and actually short changes the customer in the long run.

I have worked hard over the last 8 years to establish myself as "the place" to buy your Michelin tires in Gastonia, N.C.  I invested over $20,000 in my showroom alone, and aligned myself closely to the Michelin brand. (Check out the showroom here: http://www.tirecountryinc.com/about-us/virtual-tour.aspx). Plus, I spent another $2,000 to wrap our F150 as a mobile billboard for Michelin. I have taken every test and product knowledge program Michelin has introduced in order to become a "Michelin Certified Tire Specialist."

One of the first things you are taught when selling tires is walk out to the customer's vehicle. Take a look and see how the vehicle is used. Does it have a trailer hitch? Does it have three child seats in the back seat? Are the front tires worn completely out, while the rear tires still look great? Have they been rotating their tires? Do they have an alignment problem? So much information is gained by simply looking at the vehicle to help steer the customer into the right tire for their needs.  

And now, Scott Clark, COO, Michelin North America and other bean counters have decided to take BFGoodrich, and soon Michelin, direct to retail. This is making me rethink how heavily I promote the MAST product lines. Their actions to go into the retail business are short-sighted. They are not thinking about the long-term consequences their actions are going to have with independent dealers. Just how many customers will end up with the wrong tire on their vehicle? Wrong doesn't have to just mean size or performance rating; it could just be the wrong tire for their lifestyle or driving habits.  Or have they thought about it and simply don't care?

We have an online tire catalog on our website. (www.tirecountryinc.com). But we do not have online pricing. The decision to omit pricing online was done for a few reasons. First, this requires the customer to request a price. This starts a dialogue with the customer to determine if they are even looking at the right tire for their car. Second, it prevents competitors from simply using our site to shop us. And to explain to the customer why they might like the way the Michelin X-Ice X13 looks, it is not the tire they need on their car for this region.

Plus, mistakes happen. Our site requires the customer to input information about the car they are putting tires on. Inevitably a few of the customers answer those questions incorrectly, resulting in them showing up to have tires put on their vehicle only to discover they have a different rim diameter than they said or thought they did. Selling the right tire to a customer is much more involved than simply allowing them to push a button. 

“These days consumers expect to be able to buy products anywhere, at any time, and on any device. Our brand does not own any retail stores, so our close relationships with our dealer network are critical for success. We have worked very closely with them to develop an e-commerce service partner program and an online sales approach that’s jointly beneficial to consumers, dealers and our company.” -- Scott Clark, COO, Michelin North America Inc.

I call that statement a whole lot of bovine caca.

As previously mentioned, mistakes (and ignorance) happen. So, when the customer shows up to have the 15" tires installed they ordered online for their SE model car, only to discover they have an XLE and it is equipped with 17" wheels, whose headache is that? And regardless who is actually responsible for the wrong tire size... the independent dealer paid to install them is going to have to resolve the problem. I'm sure no one has ever come across any mistakes in the Michelin fitment guide, (extreme sarcasm intended). So, even when the customer has answered all the questions correctly, they still may end up with the wrong tire size. None of us have ever been told to expect UPS or FEDEX to show up with a set of tires on Monday, only to see two show up on Monday and the others not make it until Wednesday. Who will be getting the tongue lashing? The consumer's computer? The delivery driver? Or the dealer standing in front of the upset online buyer?

As of the August 22, 2016, just a week and half away from launching this in Charlotte, Michelin had yet to even determine the labor rate(s). They haven't approached any independents in my area to sign as an official installer. Between the consumers, dealers and Michelin, the only one that truly benefits from this haphazard attempt to cut dealers and distributors out of the loop, is Michelin.

If Michelin simply wanted to make their tires available to everyone, everywhere at any time, why not simply use some sort of "predetermined, mutually beneficial pricing policy" to advertise the price of the tire on their website? Then allow the customer to purchase said tire online through Michelin's website from a participating dealer of their choice. You say, “but that's what they are doing.”... Read on.

With the following changes to their current plans, everyone wins and it would be much simpler. When a customer decides to purchase their tires, they are asked which participating dealer they want to install their tires. Since Michelin already has all the information on participating AAD's, a quick query would tell them if their primary distributor has the tire in stock or not. If not, they also know the secondary distributor and another quick query tells them if it is available there. The tires would be pulled from that dealer's appropriate wholesale distributor and shipped to the dealer the online customer picked.  The dealer would then receive an email from Michelin with the customer's name and purchase information before the tires even arrived. This way Michelin utilizes the already existing distribution system in place to move the product. Plus, everyone involved from Michelin area tire representative to wholesaler to retailer gets the expected credit for tires sold in that market. It's a win for everyone.

The customer will have paid for their tires online, but the labor is yet to be determined. The customer will then need to bring their vehicle to the shop to determine exact labor costs and have the installation done. This gives the dealer the chance to check for aftermarket complications that drive labor higher. The customer can be quoted a price for the labor based on how their vehicle is equipped. Does it have aftermarket wheels requiring the use of tape-a-weight? Has the vehicle been lowered to the point it is next to impossible to lift the vehicle? Does their aftermarket wheel require removing 36 screws (half of which will be seized up) from each decorative multicolored center cap just to get to the lugs? For every one reason Michelin can come up with for having one or two set labor rates, I can come up with two reasons that that's not realistic. May look good on paper, but it won't work in the real world.

And how are they then going to "pay" us for the labor? Credit us through our primary wholesale distributor that had nothing to do with the sale? That would hardly be ethical. 

Are they going to credit the dealer once a month like they do with co-op? The dealer will have to set up a new charge account to bill all the labor to Michelin as a third party. This will give the dealer one account to look at for all unpaid labor invoices. Then what kind of monkey shenanigans will the dealer be required to do to get paid? Fill out an online claim form and then scan and upload an invoice with customer name, vehicle information and some type of sales ID number that Michelin will recognize as an official online sale? Then, Michelin will need to provide some type of statement showing which labor invoices they are paying so the dealer can reconcile their accounts. 

And how long will that take? I've done maybe four Michelin 30-day satisfaction claims. I'm still waiting to get paid for two labor claims I've done in the last 60 days. If they can't make the Promise Plan labor claims work flawlessly, what makes them think they can convince me an ill thought out and rush to market of an idea, like going into retail, is not going to be fraught with problems? The truth is, they know they can't. That's exactly why they are not releasing this nationwide. They are going to use me and my market as the test, the guinea pig.

 "By selling online, we can now direct these consumers to our service partners who, in addition to compensation for installation services, can earn additional revenue for add-on services." -- Marc Pasquet, Vice President of Sales, Michelin Americas Small Tires

Again... bovine caca.

If the consumer didn't trust me enough to sell him the tires, or value my input on his purchase decision, are they really going to want to hear my sales pitch for "add-on" services?  

When a customer purchases four MAST products from me, I currently provide them with a FREE alignment check. This allows them to decide whether they want to have the vehicle aligned to prevent any uneven tire wear. Should they decide not to align their vehicle, I have covered my tail for when they come back with uneven tire wear and want to file a mileage warranty claim. There is no incentive for me to worry about this on tires I didn't sell, because I'm not going to be motivated to assist that online consumer with any warranty problem they may encounter. Also, I don't see many, if any, of the "online customers" interested in purchasing a tire protection plan from the dealer that has been simply paid to install their tires.

I provide discounted services for customers purchasing their tires from me. Free tire rotations for the life of the tire. Half-price balancing and tire repairs. I will not be offering discounted pricing for future service on tires I did not sell. Therefore, the customer has no incentive to return to my place of business. No one else is going to offer that customer discounted labor on the tires they purchased online and then had me install. So, the customer is ultimately the one that loses out in the end. 

So, summing up. The only "winner" in this current proposed fiasco is none other than Michelin. Their own sales reps lose out. The wholesale distributors lose out. The dealers lose out. And the customers actually lose out, too.

I will now begin to drive and focus my sales to other premium products on the market.

Will this be a huge game changer, customers buying their tires online? Not at first. It will most likely be the millennials and even younger who will be drawn to this idea. You know, because they all know so much more than the rest of us anyways (again with the sarcasm). But it's not the idea or the concept of the manufacturer retailing their product on their own website that's flawed. It's all about how it's implemented. So, if I want to have any say in how this inevitable change is going to affect me, I need to stand up now and shout. Otherwise, it will be too late. So, here goes...

MICHELIN! GO BACK TO THE DRAWING BOARD WITH THIS CONCEPT! YOU APPARENTLY THINK THINGS ARE PRETTY BLACK AND WHITE! THEY'RE NOT! SO, INVITE ME TO THE PARTY! YOU WILL LOVE THE COLOR OF MY CRAYONS!

Now I ask you to forgive any typos, grammatical errors, etc. I am a tire dealer, not an English teacher.

Steve Fortner

Tire Country Inc.

704-866-9144

To view the other comments, check out these links:

Michelin to sell BFGoodrich tires online.”

Michelin: ‘We Have No Intention of Undercutting Them.’”

Dealers Weigh In on Michelin’s Plan to Sell Online.”

Author

Bob Ulrich
Bob Ulrich

Editor, Retired

Editor Bob Ulrich has earned a reputation as an industry expert thanks to his insightful, in-depth articles and blogs on the tire industry. Before joining Modern Tire Dealer in 1985, Bob earned a B.A. in English literature from Ohio Northern University. Also, he graduated from the University of Akron School of Law with a J.D.

View Bio

Editor Bob Ulrich has earned a reputation as an industry expert thanks to his insightful, in-depth articles and blogs on the tire industry. Before joining Modern Tire Dealer in 1985, Bob earned a B.A. in English literature from Ohio Northern University. Also, he graduated from the University of Akron School of Law with a J.D.

View Bio
0 Comments