Amazon Aftermarket Chaos: Part One

By Bill Wade, Wade & Partners

Longtime BFF John Passante, a seasoned aftermarket veteran and leading traditional channel optimist, has sent me three panicked emails in the past two weeks. If I didn’t know him to be generally unflappable, the term ‘Henny Penny’ might be sharply descriptive. Especially troubling to him was the news that Monro had thrown in with the Amazon DeathStar.

He was right about one thing: the replacement tire business, mostly unchanged for 80 years, is unrecognizable after four months of turmoil. See how fast it can (and has) happened:

Goodyear Tire & Rubber and Bridgestone Americas announced in April they are forming one of the largest tire distribution joint ventures in the United States. TireHub  LLC will provide U.S. tire dealers and retailers with a comprehensive range of passenger and light truck tires from two of the world’s leading tire companies, with an emphasis on satisfying rapidly growing demand for larger rim diameter premium tires.

TireHub will combine Goodyear’s company-owned wholesale distribution network with Bridgestone-owned Tire Wholesale Warehouse (TWW). The transaction will enable Bridgestone and Goodyear to grow their respective tire businesses and capture enhanced value for their brands.

Then, on May 9, the 800-lb. gorilla entered the industry, as com, Inc. teamed up with Sears Holdings Corp. to allow customers to buy replacement tires online and have them installed at the troubled department store.

The moves signal radical changes in the replacement-tire market. Manufacturers are taking control of their own distribution, cutting out wholesalers like American Tire Distributors (ATD) and, along with retailers, are developing their own internet capabilities to reach consumers directly.