Autopilot tire program
"We are tire DEALERS, not INSTALLERS.” Those were the words written on our website by a tire dealer when Goodyear Tire & Rubber Co. announced it was selling tires online. And yes, as the capital letters signify, he was yelling. He was angry.
More dealers will get angry if Michelin North America Inc.’s OnSite pilot program proves a success. If Michelin rolls out the program nationwide, some dealers won’t be tire installers, either.
Michelin launched its OnSite “concierge service” in Raleigh-Durham in August. Like Goodyear’s program, consumers can purchase the tires online with a credit card. Unlike Goodyear’s program, tire buyers can have them installed and serviced at a time and place of their choice, thanks to Michelin’s “mobile unit” (otherwise known as a big van) driven by a “trained and certified Michelin technician.”
Patrick Kirby, managing director of new business concepts for Michelin, says there is an “unserved market for this type of hassle-free, convenient, quality-focused service, especially as more consumers are looking for ways to save time as they balance their work and home lives.”
Michelin may not have company- owned stores like Goodyear and Bridgestone Americas Tire Operations LLC, but this program turns the tire maker into a tire dealer. Michelin OnSite not only sells and installs tires, but also gives consumers the chance to sign up for email reminders to schedule their next mobile service. And if they have any questions during the tire-buying process, they can live chat online or over the phone with a Michelin representative.
Here’s what Michelin defines as concierge service:
- mounting and balancing the tires, which includes servicing the tire pressure monitoring system. The cost is $169.
- disposing of the tires as needed.
- inspecting any tires that are not replaced for damage and irregular wear. The tread depth is also noted.
- inspecting the brakes.
Michelin would be the first to admit OnSite is not a replacement for brick and mortar. Alignment service is not offered; neither is automotive service outside proper mounting and balancing.
However, it takes away potential tire sales from the dealer. And with its email reminders, it keeps them away.
The reason Goodyear gave for selling tires directly from its website was the size and buying habits of the millennial generation.
“The preference for buying goods and services online, often through mobile devices, is being driven by a new generation of consumers,” said Chairman and CEO Richard Kramer at the Goodyear shareholder meeting earlier this year. “In the U.S. alone, 80 million millennials with $1 trillion in buying power are entering the market.”
According to Modern Tire Dealer statistics, 6% of the replacement passenger and light truck tires shipped in the U.S. are purchased online by consumers. In 2014, that represented 14 million tires.
How fast will online tire purchasing grow? In 2008, before everyone thought they could sell tires via the Internet, an estimated 3% of the consumer tire market was sold online. Even with the proliferation of sellers, the percentage has only doubled in six years. And it appears to have plateaued a bit.
When Goodyear announced it was selling tires on its website, I didn’t think the potential tire sales lost by any individual retailer would add up to much. Even if some of the other major tire manufacturers jumped on the bandwagon, I saw very slow growth. I still do.
Maybe the tire companies will sell more tires online, but some of that growth will cannibalize sales from existing online sellers such as The Tire Rack. Also, how many baby boomers, who still outnumber and outspend the millennials, are going to order tires online when they have to go to the tire store anyway? Not enough for significant growth.
Michelin’s Kirby says once consumers in Raleigh-Durham realize they have “a trusted resource to help guide them through the tire-buying process and get premium tire-installation service wherever and whenever they want,” interest will grow rapidly.
That seems too optimistic given the circumstances, but adding on-site tire service could be enough of a game changer to jump-start an increase in online sales.
Still, we don’t know if the pilot program will be deemed successful.
If all of its dealers jump to other suppliers, that may cause Michelin to take its OnSite Total Care program offline. ■
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