The Influence of Amazon: Tire Tiers, Tire Brands and Tire Prices
It’s been a year since Amazon.com Inc. added tire installation to the check-out process for tire-buying consumers. Since then, it’s partnered with three retailers to build a nationwide network of installation options: Monro Inc., Pep Boys — Manny, Moe & Jack, and Sears Auto Centers.
Analyst and Modern Tire Dealer Your Marketplace Columnist John Healy has studied the online retailer’s entrance into the tire business, and surveyed 100 service providers in 20 major U.S. cities who are installing tires for Amazon shoppers.
What the Installers Say
Healy, a research analyst for Northcoast Research Holdings LLC, said it’s important to remember Sears was the first Amazon installer — it had more than a two-month jump on Monro’s initial test with 52 Mr. Tire stores in Baltimore, Md. The Sears stores reported more traffic and more of a volume increase in sales than either Monro or Pep Boys. The Sears stores said on average they were seeing an additional eight to nine customers per week, while Monro and Pep Boys saw one extra customer.
“Sears was first to partner with Amazon and has had several additional months to market their partnership. We believe it is still too early to judge the success of these programs,” Healy said, though he called the initial results “promising.”
The tires consumers are buying from Amazon and having installed at these stores are a mixed bag, almost an even split between Tier 1, Tier 2 and Tier 3, or “value” tires as Healy called them. For the 35% buying Tier 1, the installers noted Goodyear, Michelin and Pirelli were popular brands. The value segment amounted to 34% of installations, and included the Sumitomo, Westlake and Milestar brands. Tier 2 tires, including the Cooper and Yokohama brands, amounted to 31% of installations.
The installers reported few problems related to their Amazon sales. “Nearly all of our contacts across the country were happy with the transparency, ease and delivery of Amazon tires, and just a handful had encountered problems with customers.” The most common issue — consumers who ordered the wrong size tire. It was usually due to consumer error, and not a matter of the wrong tire being shipped. Still, Amazon made those returns easy, the stores said.
Healy even ordered a set of tires and arranged for installation at a nearby Monro store.
He was “pleased with the ease and service as a customer.” Identifying a tire, service location and appointment time was a simple process, and, he made a discovery. When purchasing installation ahead of time, it was discounted by as much as $10 per tire. Healy said the three retailers charged between $14.77 (Sears) and $24.99 (Monro) per tire for installation.
In Their Own Words
A few installers offered additional thoughts on the partnership. A Sears Auto Center in Massachusetts told Healy that “the Amazon partnership was just about the best thing that happened to this auto center. I’d say we got about 350 Amazon orders this past month, and about 70% of these people are new customers.”
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A Pep Boys store in Tennessee expects its Amazon tire installations to increase over time. “The main reason is that our customers have found that the price of tires is roughly 10% to 15% cheaper when ordered on Amazon.”
Of course, it’s not all smooth sailing. A Sears Auto Center in Texas said Amazon has brought additional business to the store, but tire deliveries can be problematic. “Our only complaint is that Amazon does not always deliver the entire set of tires at once, since they can come from different locations. This has led to some scheduling issues. Sometimes customers book an appointment for installation, but when they come to our shop only two or three tires have arrived. They assume an alert from Amazon means their entire order has arrived when that is not always the case.”