Industry Insight – Competing with the Americans
You’re bigger than you think!
Canada is situated next door to the largest consumer market for tires in the world, the USA. This means that many of your customers will shop for their tire needs south of the border, either by physically crossing the border or shopping online.
To further aggravate this situation, many things in the USA seem cheaper. I stress “seem” because when consumers visit the website of a major US internet tire retailer and look at the retail prices they say, “WOW… these guys are cheaper than my local tire store.”
But once they process the online order and factor in shipping charges, they get a rude awakening…OUCH…7% duty (if the tire is not from NAFTA), $25 to $60 per tire in freight charges, plus customs brokerage fees. Suddenly the internet price from the USA is not as appealing.
Competing with the USA
Here is the shocking truth. In many cases, if you are selling a major brand tire you can compete with that major US internet tire retailer… and we all know who it is. However, you have to work at it. You must visit their retail site regularly (I suggest at least once per month) and do price checks to obtain sample prices, including duty, freight and brokerage fees. Do these price checks on your popular sizes in your popular brands.
Now compare these sample prices to your retail price. Bear in mind that these prices from the US internet tire retailer do not include installation, so when you compare, look at your tire prices alone.
True, on some items you may have to lower your profit margin to match their price but you can compete, while also charging for labour and installation. And your advantage is that you can service that consumer today or maybe tomorrow, whereas if they buy online, then they will have to wait a few days for delivery.
Keys to success
Here’s what you need to do:
- If you are in the business of retailing tires you must look the part. Stock the popular, fast moving tires so that the consumer sees that you have “lots of tires” on hand. Then use your Tire Distributor to refill your inventory regularly. People shop online with that major USA internet tire retailer because they look the part – they have tires in stock and lots of them.
- Establish a good relationship with a large and efficient Canadian-based Tire Distributor. They should be large enough to offer a wide selection of brands and to have the critical mass of business that gives them the purchasing volume to obtain the best prices from manufacturers.
- Get online with your Tire Distributor. Use their B2B web order system to access tire availability and pricing quickly. This will help you impress the consumer with the fact that you have speedy access to a huge inventory.
- Pick a few tire brands and focus on those. Get to know them. Be the expert in these brands.
As a Retailer, you may feel that you are just a small player in a huge market. But you don’t have to be. Partner with the right Tire Distributor, develop a strong business relationship with that Distributor, build volume with them, focus on a few tire brands, stock popular tires, take advantage of training, do market research, be the local tire expert. Do all of this and you can compete!