Best of Both Worlds
Consumers are looking for a great one-stop shopping experience. Will you be the first to offer it?
To varying degrees, many of us have now begun transitioning to buying some products online. The traditional methods of bringing one’s product to market are changing with the advent of companies like Amazon and Alibaba along with traditional retailers like Walmart and Staples, who have invested large amounts of resources in their online retail platforms.
Even the way companies advertise and market has changed to the online environment with social media being the largest recipient of this paradigm change. Even modest marketing budgets, if capitalized correctly on social media, can really have some positive effects on business. The question is, can the tire industry make this transition, and to what degree?
Online tire buying trends
Leading online companies like Tire Rack and Discount Tire Direct have been around for some time, and most consumers know of them. We are starting to see more bricks and mortar retailers starting online businesses along with pure online startups.
The numbers speak for themselves: in the U.S., in 2016, online purchases accounted for about six percent of the tire replacement market, moving to seven percent in 2017. That may not sound like much, however, seven percent equates to over 16 million tires within the U.S. market. I would presume slightly lower percentages in Canada, but trending in a similar manner.
There have been marketing studies conducted on consumer motivators when buying online, and the numbers look very positive for online’s continued growth trend. From benchmarks on ease of buying to repeat customers, etc., online retailers score very positively.
The largest consumer motivator for buying online is typically price. With a different cost structure than bricks and mortar, online companies typically present very competitive pricing. However, buying the tires themselves does not get them on your vehicle. For that, an installer is required.
The numbers still show that over 90 percent of consumers purchased tires from an installer, primarily bricks and mortar, with a smaller number made up by mobile installers.
The overall reasons most consumers shop online is for ease, selection, and price. For the tire industry, the key in the convenience factor is combining both parts of the sale, product, and service, to give a complete one-stop shop offering. No one has effectively made the entire transaction completely convenient to the consumer, as an online order of product, along with installation, in a convenient place and time for the consumer booked all in one spot, the online tire shop.
Future business models
In the past, the tire industry has adapted to newer technologies and ways of doing business and will continue to do so. The next wave of selling seems to be heading in the direction of convenience by way of online retailers. Whichever one can get the recipe correct, offering efficient service along with the best product to market strategy, will be a clear winner.
I think as market needs evolve, and new technologies become available, the tire industry will transition to the degree that the market dictates, but not before tying the product to the installation in a convenient package.