How SimpleTire made a success of e-commerce
The tire industry has historically been slow to jump onto the e-commerce bandwagon compared with others, but that doesn’t mean selling online can’t be extremely profitable.
Six years ago Pennsylvania brothers Andy and Josh Chalofsky decided to take their family’s 30-some years’ experience in the tire business to the internet.
From little things, big things grow
The Chalofsky’s vision was originally to sell their company’s own tire inventory online, but they soon realized they faced stiff competition from the bigger players. So they hit the phones and used their contacts to start building a huge network of suppliers and installers that would fulfill their dream of creating a company that enabled consumers to buy any brand of tire, anywhere in the country, at the best possible price. And so SimpleTire was born.
“At the time most tire businesses were still pretty old-school, they were handwriting orders and using fax machines; there wasn’t much buying online or social media,” Josh Chalofsky said.
“It wasn’t that groundbreaking as an idea; it was just groundbreaking for the industry. My uncle always said that the tire industry was five to 10 years behind every other industry. When airlines were doing Expedia, tire businesses were just getting email, and social media has been around for years but many people in this industry are just getting a Facebook page.
“But the benefit of that rut was that we saw all these opportunities that were not even on the radar in the tire industry and that’s what our goal was. Everybody said we were crazy and it wasn’t going to work but it worked in other industries, so why wouldn’t it work here?”
SimpleTire uses a different business model
Fast forward six years and today, SimpleTire operates out of its Pennsylvania headquarters, with satellite offices in Utah, Tennessee, and India. It also has hundreds of distributors across the country, more than a thousand different shipping points and over 3,000 installers. SimpleTire didn’t start really connecting with other distributors and selling their inventory until 2012, but since then, business has been booming.
“Our model really helped propel us,” Chalofsky said. “Other companies are stuck with acquisition costs, and a Tire Rack or other company will be limited in the inventory they sell. They are stuck with certain locations they have to sell from and limited to the brands they can carry, whereas SimpleTire took the idea of connecting with the independent distributor and manufacturer to aggregate all that inventory. That has allowed us to basically sell every possible brand out there at very aggressive pricing.”
He draws parallels with Amazon and eBay and how those companies not only sell their own products, but those of third parties. SimpleTire can maintain “aggressive” pricing because the company is buying from the manufacturer or distributor and selling direct to the consumer, knocking out levels of transactions that push up prices.
“We found that because we had a couple of distributors around the country, our shipping rates were becoming very competitive and we were getting tires to the customer very quickly, and it started taking off from there.”
A fast response and the cheapest price
SimpleTire, Chalofsky says, runs a “transactional website.” It is fast and responsive, with dynamic pricing that changes every minute, much like Expedia. Customers will always see the best price for the tire they want and get the best deal available to them.
“Normally they would have to search a bunch of websites and figure out the best price, but our website is tuned to find that best deal in the marketplace and present that to the consumer. We are the ones that sell the tires. People buy tires from us and we buy them from whatever our source is. You are cutting out a bunch of processes.
“Tires are a commodity, just like gasoline, and we have the ability to look at all the options out there and get the best prices for the consumer because we are always buying at that lowest acquisition cost.”
Together, the Chalofsky brothers found a way to modernize buying tires and made it “simple” — hence the name. Not bad for a duo that started out with just each other and a phonebook.
“In 2010 it was a lot of hit and miss,” Chalofsky said. “Once we reached out to other distributors that family has worked with in the past and connected with them and started selling their inventory as well, it became very successful very quickly. We’re moving a lot of product now and we’re on a par with some of the larger companies, and we’ve never had a down month.”