Online Tire Sales Will Increase, But Only By So Much

Bob Ulrich
Posted on March 1, 2018

"Next they'll be selling tires. They sell almost everything else."

My wife said that to me the other day. She was talking about the local Dollar General store. Or maybe it was Dollar Tree. Whatever. The popularity of these dollar-type stores and copycats like Five Below (yes, it sells items for $5 or less) is definitely increasing.

But no matter how many new products they find that they can sell for next to nothing, they will never sell tires. Whether or not you think of them as a commodity, they could never be that much of a commodity.

However, it does seem like everyone and their brother is selling tires. That's because of the dozens of online tire sales companies that have cropped up in the last 20 years or so since Tire Rack began selling tires online in 1998.

According to the 2018 Modern Tire Dealer Facts Issue, 7% of the replacement consumer tires in the U.S. were sold online in 2017. That's roughly 16 million tires. The majority of those were sold by Tire Rack and Discount Tire Direct -- I estimate about 70% -- but there are some other big players, like online-only SimpleTire.com and Onlinetires.com, who are trying to increase their share of the market.

Then there is Amazon.com. Athough the company sells more than 50 brands and, exponentially, thousands of tire SKUs, it is more a sleeping giant than a major player. But as the company increases in size and worth ($60 billion in product and service sales in fiscal 2017!), its Amazon Automotive Store will get larger.

Unlike independent tire dealers, all the online companies compete against each other, so some of the potential growth will be muted when they cannibalize each other's sales. And there is finite growth, because tires still need to be physically installed. But online tire sales growth is expected, with the rate of growth depending on how the buying patterns of millennials and the iGeneration evolve.

In the meantime, don't ever expect to see tires sold at the local Dollar Store, although it might not be out of line to check Amazon.com's "Five Dollar Items Or Less" section every once in a while.

Related Topics: 2018 Facts Issue, Amazon.com, B.O.B., Discount Tire Direct, millennials, online tire sales, Onlinetires.com, Simple Tire LLC, Tire Rack

Bob Ulrich Editor
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