Michelin: ‘We Have No Intention of Undercutting Them’
Convenience and value for consumers are the key goals for Michelin North America Inc.’s new online tire selling model. The company says undercutting dealer pricing on BFGoodrich brand tires is not part of the plan.
“Consumers want to buy anywhere, anytime on any device,” Brian Adams, e-commerce project manager, told Modern Tire Dealer. “That’s first and foremost one of the reasons we’re starting this. We want to provide that convenience for those that want to buy online.”
Adams said the company worked very closely with its service partners as it developed the program. “They are critical in this. We don’t own stores so the installation part of this, so the customer service, everything they do today is critical to making this happen. So we look at what we are trying to do as creating a win, win, win for the consumer, for our service partners, and for BFGoodrich tires.”
Two guiding principles are leading the company, according to Adams. “One of our driving forces is to make sure we help consumers maximize their value. Price is a big part of the value equation. So we’re always mindful of that. We need to be competitive in terms of offering something that helps them understand the value.”
The company’s second guiding principle involves its service partners. “But at the same time, we are in concert with our retail partners who resell our tires in the marketplace. We have no intention of undercutting them; we have no intention of trying to use this as a price disruptor. That would not be our objective at all. It’s about finding that balance of value for the consumer as well as value for our service partners,” said Adams.
The company is planning commission-based compensation for dealers. “The basics of the program are we will be giving them a commission for their service. They’ll also be getting the majority of the installation revenue that is collected. And third, there’s an opportunity for them to earn a bonus commission based on the consumer ratings and reviews of that installation experience. So we’ll be sending a survey out to consumers at the end of their installation. If they have an outstanding service, we’ll be providing dealers with a bonus commission as well.”
Adams clarified his comments on dealer compensation in response to a follow-up question from MTD: “We’re in the early phase of rolling the details of this program out. The intention is that for the installation work, for the part of the work the service provider performs they’ll absolutely get that revenue. In our industry, there’s disposal fees and environmental fees. We’re still working out the details of exactly how and where those get passed through. At this point, for the work that they're doing, they're absolutely going to receive that revenue. We would have absolutely no intention of trying to recover anything for any work we’re not doing or any value we’re not adding, we’re not interested in taking that revenue from our service partner.”
Adams said the company is preparing for an online future that is hard to predict. “Right now this is a growing channel. This is a part of the market that is not going to diminish but it will expand. We believe it will further expand in areas we can’t predict at this point. Our main goal is trying to get in there to meet consumer needs in this environment, learn with them and adapt over time so that we’re prepared for the future, which is a future that is very difficult to predict. So we’re just trying to get ourselves best prepared. Our main focus right now is getting in here, executing and finding something that is a win, win, win for everybody. The profits, the growth, the revenue will come if we do it the right way."
For more information on the new online sales program, see: “Michelin To Sell BFGoodrich Tires Online.” See what other dealers are saying about Michelin’s program in the comments section and add yours!