Dealer becomes his own wholesaler
Sam Batanian took advantage of a golden opportunity in 1987, and the CEO of King’s Tire & Wheel has done nothing but grow ever since.
“I was working in a tire store and I had a falling-out with the owner — he didn’t really know very much. I ended up buying the place and that’s how it began.”
Batanian started the one-store retail operation, located in El Monte, Calif., with a partner who he stayed with until 2000. Then another opportunity presented itself.
“I got into wholesale in 2002 when Winston Tire Co. went bankrupt. I was doing really well in retail and there was a Winston Tire up the street from me and the managers knew me. Since nobody was supplying them they kept coming to me and asking, ‘Can you give me four tires? I’ll pay you at the end of the week.’”
Even though Batanian was taking a risk since Winston Tire was in bankruptcy, he supplied the store from his retail business. It would come back to help him in the future.
“They started buying quite a bit and every week they sent me a check. And then they closed. The managers who knew me went to work in other tire stores, and they kept calling me because they knew I helped them. It started creating a wholesale business in my retail.”
As the wholesale business continued to grow, Batanian acquired a small warehouse in 2002. But it wasn’t enough. Then he jumped on another opportunity.
“Eight years ago my son said, ‘I want to run the retail store.’ Once he did that I decided to go into wholesale and open up a bigger warehouse. It just took off from there.”
That year Batanian’s retail business brought in $600,000 in annual sales. In 2013 sales totaled $24 million for retail and wholesale combined.
“It’s been growing and growing and we went from one retail store to three in the last two years. We’re planning on opening more retail stores in the future and also more wholesale distribution centers.”
In addition to the first retail store in El Monte, Batanian opened a second in Palmdale in 2011 and another in Camarillo in 2012. They were both existing tire stores. He also has a wholesale warehouse in El Monte up the street from the retail store, another in Rancho Cucamonga and a small warehouse in Palmdale.
All three retail locations offer complete automotive service and Batanian says his stores specialize in tires, brakes and suspensions.
Major brands carried at King’s are Continental, Pirelli, Hankook, Kumho, GT Radial, Cooper, Mickey Thompson, Nexen and Sumitomo. King’s Tire is a member of the Independent Tire Dealers Group (ITDG) and purchases about $10 million annually in parts and tires.
Batanian says his annual tire purchases are between $18 million and $20 million. Each of the retail stores has about $20,000 in parts inventories. He spends $200,000 annually on parts.
In addition, King’s Tire and Wheel is a Gold distributor for Continental Tire the Americas LLC, a FasTrack distributor for Pirelli Tire North America Inc., The One distributor for Hankook Tire America Corp., a Kumho Premium Fuel distributor for Kumho Tire U.S.A. Inc. and a distributor for Mickey Thompson Performance Tires & Wheels.
Model of success
Batanian says he employs the old-fashioned business model of taking care of customers and providing great service. The strategy is paying off.
“At our retail store in El Monte, we have 80% to 90% repeat business.”
Batanian says that service and a large selection of brands is what keeps King’s growing in its market. He says he attracts and retains great employees by treating them like family and making the workplace a happy environment.
In 2013 Batanian hired Net Driven, a provider of websites and Internet marketing solutions, to upgrade his website, www.kingstireandwheel.com. In 2013 he also began working with CustomerLink Systems Inc. to promote King’s Tire through direct mail. His goal is to keep existing customers while bringing in new ones.
“We have three generations coming back to our stores. We’re newer to Palmdale and Camarillo, but our name has a good reputation. We’re planning to add more retail stores because we already have the wholesale; all we have to do is be our own supplier. We’ve looked at a couple of places to give a good geographical coverage. We’re always looking for opportunities. Geographically I want to have about 20 to 30 miles between each store so we will have a good coverage of Southern California.”
A big vision
“I’m envisioning doubling my business in the next five years. I think we have the opportunity because we have the right customers. Even if we just take care of them more we will achieve it very easily.”
Batanian says a major issue he sees currently is the influx of some low-quality imported tires in the U.S.
However, he realizes that many of his customers are on tight budgets and can’t afford to purchase name brand tires.
“Some customers can’t afford to pay twice as much. They don’t want to pay it. If the gap was closer, within 15% to 25%, then a lot of people would be able to say, ‘I would spend $100 more to have a better warranty, a longer-lasting, safer tire.’” He says he stocks some imports to cover all income levels. Batanian’s best-selling brands are Continental, Pirelli and Hankook for his main lines.
“You have to explain to the customer the value of the tire they’re buying. That’s our business, that’s what we do with our customers. We make sure they understand that. You have to sell the better tire to the customer — you’ll make more money and they’ll be happier.” ■
By the numbers
• Name: King’s Tire & Wheel
• Annual sales volume: $24 million
• Monthly parts purchases:
$10,000 - $15,000
• Number of technicians: 12 total between three stores
• Number of bays and lifts: 20 lifts total; four bays in El Monte, five in Camarillo and four in Palmdale
• Tire inventory in stock: 40-50,000 units total in three wholesale facilities.
To read the June 2014 issue of Modern Tire Dealer, see our digital version here.