Tire dealers outraged by BFGoodrich online sales plan
Tire dealers across the U.S. have expressed their anger and disappointment at Michelin’s decision to sell BFGoodrich tires online direct to customers. Under the move, consumers will be able to purchase tires from the BFGoodrich website from September this year and have them installed by local service partners.
While no information is yet available on exactly how Michelin-owned BFGoodrich intends to operate its online sales and installation model, Traction News spoke to two dealers on the reaction of the tire dealer community, the potential impact and what the future holds.
A ‘betrayal of trust’
Direct Tire owner Barry Steinberg said the feeling among independent tire dealers was one of a “betrayal of trust”. Dealers would now be competing against their own vendor, who is taking business away from them.
“It’s just a very greedy, short-sighted thing for the manufacturers to do,” he said. “They are going to garner the revenue that we would normally get, they’re taking money out of our pockets. We’re the ones that have helped build their business over the last 100 years. I think the pushback from the dealers and distributers is going to be huge. I think they are making a mistake and I don’t think they have thought about the long-term, adverse affect it will have on dealers.”
Steinberg said he believed the move would force dealers to lower their prices even further and damage business, or make less money by only receiving an installers’ fee.
Customers could lose out
Steinberg argues that customers will lose out, or face paying even more for their tires in the long run. This is because the free services tire dealers offer when tires are bought through them will no longer be included in the price.
“If you bought a tire from me today, I’d fix your flat tire for free. I would check the alignments for free. I’d give you a rotate and balance every 6000 miles for free and that goes along with the purchase,” Steinberg said.
“If you get tires shipped in here, you’re basically on your own. You’re going to pay me for a flat repair, you’re going to pay me to rotate and balance your tires, you’re going to pay me to check your alignment. The consumer will lose out in the long run because the maintenance is going to cost them more money, the flat repairs are going to cost more money and if there is a recall, for example, they’re going to have to deal with Michelin, not me.”
Dealers may choose not to stock certain brands
Both Steinberg and Melvin’s Tire Pros owner Jim Melvin Jr agree that dealers may refuse to stock BFGoodrich tires and/or refuse to do the installation the company will require for tires bought online. Steinberg, for one, says he has no need to sell BFGoodrich and will not in future. Melvin is equally adamant that dealers still have a choice.
“I’ve got five retail stores, I’m going to sell my customer whatever I want to sell,” Melvin said. “I’m going to sell them what does the best for Melvin’s Tire Pros, so whatever BFGoodrich wants to do, will we match the price? Yes, but we will move our retail business into a line that we can sell more profitably.”
A new business model will be needed
Michelin is not the first tire manufacturer to make a foray into the world of selling online direct to customers. Goodyear did the same in 2015, although tire dealers report the demand for the installation of Goodyear tires sold this way hasn’t been that much.
Melvin believes there is an inevitability more manufacturers will seek to sell online direct to customers, but says there must and will be an improved business model that will compensate independent tire dealers for their expertise and services.
“The internet’s not going to go away — that’s where everything is going and we’re going to see more of it but there’s going to have to be a more equitable revenue share between the tire manufacturers and the installing independent tire dealers,” Melvin said.
Tire dealers are still vital to business
Unlike selling pure commodities online, like a refrigerator or a TV, tires still require expert installation, using expensive and complex equipment. Once you factor in the price, shipping cost and installation fee when ordering tires online, Melvin argues, you are almost comparing “apples with apples” when it comes to tire dealers. And add to that the fact these deals don’t include free flat repair, rotation, lifetime balancing and alignment, then tire dealers still have an edge.
“People go online, they educate themselves about tires and they get some idea of what the price is supposed to be,” Melvin said. “You’ve got to be competitive but there’s expertise involved with installing and servicing tires.
“But if they are comfortable with the level of service they are receiving from you and want those additional services and they are comfortable with your professionalism, as long as you are close on price, say maybe four percent different, they will be happy.”