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Tire dealers outraged by BFGoodrich online sales plan

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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.”

4 Comments

4 Comments

  1. Bob Hazard

    August 31, 2016 at 8:41 am

    I agree entirely with Barry and with Jim. Tires (and in my case, wheels) REQUIRE a professional to install them properly. Manufacturers that go down this road (selling directly to the consumer) alienate the dealer base that has built their businesses for years and years. The same thing is happening in the wheel business, but the wheel companies going direct to the consumer are trying to be slick about it by selling under another name.

    Go Wheels and Parts does not sell to consumers…we support our authorized dealers 100% by steering consumers to our local dealer who carries our products. I, personally, had major issues with a previous company I worked with because of “channel conflict.” As long as i’m at the helm of Go Wheels and Parts (DAI Wheel USA)here in the USA…I refuse to take the company down the road of competing with the very customer base that is going to help us grow here!! It’s that simple for us.

  2. Jay Bartlett

    August 31, 2016 at 5:19 pm

    My boss has over 2 decades worth of plaques from TBC Corporation thanking him for his “valuable partnership” with them. His real reward was TBC buying NTB and Midas right in his own backyard. He had over 60 years in the business before he passed away and I can still hear him say “It’s easy to tell when a tire company rep is lying to you. If their mouth is open-they are lying.”

  3. ray simon

    September 1, 2016 at 7:10 am

    more dealers should take the same course of action as we have. explain to the walk in on line tire buyer that we mount tires free if bought from us, and then just pad the mounting cost to them. also wish them well if they should have any problems with the on line tires. is saving a few dollars worth giving up friendly, quality local service ? there are enough product lines for us to sell that I have told Michelin to kiss my ass

  4. Mike Tracey

    September 2, 2016 at 6:54 am

    Value added services are taken for granted by consumers. Manufacturers want it all and put their arrogance on full display when they enter the direct sales channel. It’s as though they were doing their loyal dealers”a favor” by selling through them over the past decades. The Authorized Reseller label means nothing today.

    I have experienced this in a different industry, printer cartridges, where Hewlett Packard dropped our dealership after 25 years as an authorized reseller. HP had been selling direct on-line for years, but being dropped 2 years ago for no apparent reason was the ultimate insult.

    I agree with the previous comments that there are plenty of other opportunities available and remind dealers that we started our businesses because of our desire to control our own future. Being “set free” can be a blessing in disguise. Stop wasting time trying to please the wrong people. Instead, focus on your business and your employees. You’re true customers will stick with you!

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