Steve Fortner, owner of Tire Country Inc. in Gastonia, N.C., was very unhappy with Michelin North America Inc.’s decision to sell BFGoodrich tires online in the greater Charlotte, N.C., area. He said so very clearly in a letter he sent to Michelin executives and Modern Tire Dealer.

I ran the letter in my blog last Friday. You can read it by clicking here.

Since then, Michelin representatives have met with Fortner to discuss the company’s online strategy. Following the meeting, Scott Clark, Michelin’s chief operating officer, sent MTD a rebuttal to the blog and the letter.

Before I run it in its entirety, I should let you know I was recently quoted in a Greenville News article, “Dealers upset as Michelin moves into online sales,” written by Rudolph Bell.

Here’s the quote: “Bob Ulrich, editor of Modern Tire Dealer, a trade publication in Uniontown, Ohio, said he doesn’t expect Michelin dealers to be affected much by the new program because online sales don’t account for much of the market -- about 6 percent, he said."

"We would not seek a short-term gain that actively undermines the valuable dealer relationships that BFGoodrich and Michelin have spent decades developing," writes Clark.

"We would not seek a short-term gain that actively undermines the valuable dealer relationships that BFGoodrich and Michelin have spent decades developing," writes Clark.

Dear MTD Readers,

I’d like to clarify a few important points concerning the upcoming launch of the BFGoodrich Tires online sales program in Charlotte, which recently was the subject of a lengthy letter by Steve Fortner of Tire Country in Gastonia, N.C.

First, according to our internal research (which aligns with other published findings), today’s online tire sales account for only 5–8% of all unit sales across the industry. This means that up to 95% of sales still occur in a retail location. Today’s consumers clearly expect to shop and purchase when, where and how they choose. This means they also expect seamless online access to research key product information, to learn the total price and to execute the transaction, if they choose, with installation at one of our service partners.

Second, we actively are inviting our service partners to participate in a new e-commerce network that would be challenging technically and financially for many small businesses to develop on their own. Participating dealers also could save marketing dollars they might otherwise spend to acquire new customers online.

Third, and perhaps most important, we would not seek a short-term gain that actively undermines the valuable dealer relationships that BFGoodrich and Michelin have spent decades developing. Our company owns brands that consumers trust, which should drive additional consumer traffic for our service partners. But unlike online purchases for books, or clothing, or diapers, online tire sales can’t be completed without a respected local service partner to perform the service work. So the online tire sale also creates opportunities for the service partner to sell additional services around the vehicle.

It’s our organization’s respect for those dealer relationships that led members of our BFGoodrich team to meet personally with Mr. Fortner earlier this week to discuss his concerns at length. I’ll address his key questions here for MTD readers.

What happens if the consumer selects the wrong tire? The BFGoodrich online sales tool starts with a question about the consumer’s driving experience, which narrows the choices quickly and easily to a few products for closer consideration.

After the online purchase, consumers may cancel their orders at any time up to the point of installation for a full refund. This also empowers the dealer to refuse installation of a tire that’s not the right fit or application for the consumer’s vehicle. Even if the consumer simply has a change of heart, we have established a contact center that enables the consumer or service provider to return the tires for a full refund.

Why aren’t local dealers signing up? To the contrary, we’re quite pleased with the level of interest the program has received from Charlotte-area service partners that intend to participate. Dealers with national retail networks have responded with even more enthusiasm, as have other independent dealers outside the test market. Though we’re in the early days of deployment, we expect to make adjustments based on feedback from service partners and consumers as the program expands nationally. The purpose of a pilot launch is to learn and adapt to the market needs.

How much will the service partner get paid? Labor rates will vary based on the complexity of the tire installation ― big, heavy, technical tires for light trucks and SUVs logically will have a higher labor cost than smaller cars. While we don’t intend to publish the labor rates for competitive reasons, our service partners will have full access to the rates in their agreements ― including factors such as installation, tire disposal, TPMS, environmental fees and taxes, and so on.

How will the service partner get paid? Using the website, when the service partner validates the installation is completed, the first paper check is mailed promptly ― taking about a week, in most cases. After the dealers receive the first payment by check, they will have the option for more timely direct deposits going forward. So it’s the same as cash, which is a much better option than a credit for most small businesses.

In closing, I’d like to emphasize that participation is open now to any BFGoodrich- or Michelin-authorized service partner in the Charlotte area. It’s easy to participate: contact your BFGoodrich or Michelin sales representative, or respond to the registration email when it arrives. Beyond the Charlotte area, those who are interested can also sign up to join when the program expands to their markets. We expect participation to grow quickly, based on the encouraging feedback we’ve received so far.

As I’ve said before, our approach to online sales reflects the real expectations of today’s mobile-savvy consumer. The companies that can provide immediate answers to the consumer’s questions about price, availability, service and other details in the “golden moment” of need will win in the digital economy. Michelin can provide the technology, but we understand that we can only win the tire transaction through collaboration with the service partners we’ve worked with all along.

Respectfully,

Scott Clark

Chief Operating Officer, Michelin North America

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.

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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.

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