E-commerce: Michelin expands its digital business
All the major tire manufacturers sell tires on-line today using a click-and-fit approach: consumers buy tires from a virtual store which directs them to a tire fitting service network. This phenomenon is here to stay as, besides generating additional sales, on-line transactions help build a customer relationship which provides a wealth of precious information.
Although only 10% of consumers worldwide choose to buy their tires online today, the trend is growing and this global figure conceals significant regional disparities (5% to 25%). In mature markets (Europe and the US), at least half of sales are estimated to have been subject to digital influence (research, data, initial contact etc.). This is known as the ROPO effect (see glossary).
How does Michelin do business on the web?
E-retail has been revolutionizing conventional distribution practices for the past twenty years now. E-retail is not in competition with bricks and mortar business, in fact, it complements and even consolidates it as you still need an expert to fit the tire. Michelin foresaw this trend several years ago and has sought to grab a bigger share of the on-line market outweighing its off-line share.
Working on the premise that many heads are better than one, as early as 2013, we bought out three leading European pure players: Tyredating, a wholly-owned subsidiary behind the Popgom brand present in 14 European countries at the time of purchase, Allopneus in France (40% stake) and Blackcircles in the UK which is now going global thanks to a partnership plan with local retailers (100% stake).
Surveys reveal that individual customers are more satisfied with their purchasing experience (including fitting) when buying products from (good) pure players than from a traditional network. Blackcircles and Allopneus both boast a Net Promoter Score (NPS) of over 70%!
After cutting their teeth on individual consumers, these companies are now targeting professionals: small haulage fleets, farmers etc. In additional to giving us a foothold in these markets (including for Michelin Travel Partner products), they generate additional sales for both Michelin and its retail network!
At the same time, in France and the US, MICHELIN and BFGoodrich have opted for direct online sales. This enables us to analyze the online purchasing process from start to finish and identify the strengths and weaknesses. This digital lab approach gives us a 360° vision of the customer journey, allowing us to improve availability, attractivity, visibility, in other words, all the various dimensions of on-line channel management. It also provides a testing ground for promotions applied on a one-off basis before addressing the entire retail chain. This experience is practiced with our retail partners worldwide who help us streamline the purchasing process by capitalizing on the experience gleaned on our own websites. Michelin already offers various forms of e-commerce to its partners and more than 50 new projects are ongoing – and that is just for the Passenger Cars and Light Trucks Product Line!
Euromaster is also an on-line player via its websites in each country (euromaster.fr, .es, .de etc.). Online sales grew by 30% in 2016 and accounted for 15% of sales in 2017. The target set for 2018 is 25%. Tyreplus in Asia is also making the move to e-retail.
Independent retailers can take advantage of a click-to-sell offer marketed by our subsidiary YepGarage. This takes the form of a turnkey retail website including pricing tools and regular content. Over and beyond the sales aspect, it is a means of supporting independent retailers by providing them with services which put them on a par with the big names. This offer is available in seven European countries and is currently being rolled out in Canada, Mexico, Brazil and Australia. YepGarage has just launched a new offer: click2sell to Network is designed to help wholesalers run their own retail networks.
What about the other markets?
Almost half of bicycle tire sales take place online. To tap into this potential, we are partnering with the most dynamic pure players in the cycle accessories market (helmets, inner tubes etc.).
The Trucks Product Line has teamed up with an e-shop in Spain - vianeumaticos.com - a platform selling MICHELIN tires and services. In the US, our North American Truck division has started selling its Uniroyal brand tires via the web.
What about our competitors?
Most tire manufacturers are lagging behind us when it comes to e-retail in particular in their relations with pure players. But some are now following suit:
- Hankook, bought out a dynamic on-line retailer in Australia, JAX Tyres.
- Bridgestone acquired TireConnect at the end of 2015. This company commercializes a turnkey online sales tool for dealers and retailers, mainly in Canada and North America.
- Others, such as Goodyear, have opted to boost sales via their own websites Goodyear.com was the first to do this in the US in 2015.
Did you know?
Marketplaces are booming in Europe. They provide a means for retailers (garages, dealerships) who lack visibility in a complex sales environment to gain direct access to tires stocked by various European wholesalers. The most well-known marketplaces are Tyre24 in Germany and 07ZR in France. Every year these platforms handle some 15 million tires - virtually.
Et Michelin Travel Partner ?
In the highly competitive travel guides sector, Michelin Travel Partner (MTP) is profiting from its knowhow by joining forces with the main on-line booksellers: Amazon, Fnac.com, etc. MTP actually acted as a consultant for Amazon’s French website in 2016, helping it redesign and operate the travel section. This channel gives us the opportunity to branch out and use new sales techniques such as liquidating surplus inventory via online private sales website vente-privee.com as well as promoting Amazon products on our own websites (e.g.:Michelin Travel).
The Michelin Days website launched in December 2016 in Italy and France and in January 2017 in Spain (www.days.michelin.fr) targets web-savvy consumers who enjoy good food and hotel breaks and are looking for something out of the ordinary - exclusive menus, discounts, a free aperitif, coffee, glass of wine etc. – or are attracted by unique experiences - visiting the kitchen of a top restaurant, meeting the chef, enjoying a dish created personally for them etc.
These offers are short-lasting (7 to 10 days) so as to ensure a quick turnover but they are valid for several months and the customer always has a choice of dates.
The customer pays the full amount at the time of purchase (no changes or cancellations are allowed so the restaurant does not run the risk of a no show) and receives a confirmation email. A trilingual after-sales service is available.
Pure Players: companies only operating on the Internet (Amazon, Alibaba etc.).
e-retail: on-lines sales of tires and services either directly via the retailer’s or manufacturer’s website or indirectly via a third party such as a pure player.
e-shop: on-line store where the customer can order and pay for a product.
Simply getting someone to respond to your call-to-action, such as a click on a call-to-action link inside an email, going to the landing page and filling out a registration form and, of course, buying your product – the ultimate conversion.
A discount code or number that can be redeemed on a website. Like traditional coupons, online coupons are used to attract new customers and increase the loyalty of new customers. However, online coupons offer a retailer much clearer analytics on which promotions are more successful, and can even help track whether new customers become loyal customers. Online coupons are usually only valid for the online component of a store and cannot be redeemed at a physical store location. This is primarily because the overhead costs of products from an online store and a physical store are very different, so the same discount cannot be fairly applied. Traditional coupons can, however, be found online – usually at a retailer's website – and printed off for in-store redemption. Online coupons may be sent by email or social media to loyal customers, or they may be posted as ad campaigns or to online coupon aggregation sites.
Refers to the purchasing behavior by which the consumer searches the Internet for information before purchasing it at the point of sale. The search can be done on the product or directly on the location of the nearest point of sale (also referred to as ROPO). From a marketing standpoint, the web to store designates all the actions and devices used on the Internet to bring the consumer to the physical point of sale. The web-to-store approach can be triggered by a specific marketing or advertising campaign directed directly to points of sale, such as banners or delocalized SMS, etc.
Click and Collect:
From a consumer point of view, buy online, pick up in store (BOPUS). It takes the advantages of online shopping and marries them to the advantages of traditional stores, namely the ability to get a product quick and to see and touch it. By combining the ability to shop online when the consumer wants ease and in the store when the consumer wants immediate gratification, many retailers can leverage their physical stores as distribution centers where consumers take over the cost of getting the items from the store to their home.
Click and Mortar:
Click and mortar is a type of business model that includes both online and offline operations, which typically include a website and a physical store. A click-and-mortar company can offer customers the benefits of fast online transactions or traditional face-to-face service. This model is also referred to as clicks and bricks. Also referred to as an Omni channel strategy, the merging of online and offline channels provides customers with an enhanced shopping experience with more choices, greater flexibility, more convenience and more services. Retailers benefit from improved customer relations and more customer transactions. Due to their ability to spend millions of dollars on click ads with search engines, their promotions tend to show up higher in product search results.
An online marketplace is a type of e-commerce site where product or service information is provided by multiple third parties, whereas transactions are processed by the marketplace operator. Consumer transactions are processed by the marketplace operator and then delivered and fulfilled by the participating retailers or wholesalers (think Dealers). In general, because marketplaces aggregate products from a wide array of providers, selection is usually wider, and availability is higher than in vendor-specific online retail stores. Also prices may be more competitive.
ROPO (Research Online, Purchase Offline):
The increasing trend in buying behavior where customers leverage the available online tools (websites, on-line chat, blogs, ratings and reviews, social media) to educate themselves regarding a product or product category and gather relevant information including desirable product features, available choices, and pricing, but then make the actual purchase in a physical store.
Making a reservation or appointment for a service via a connected device, mainly via mobile.
e-Commerce is increasingly becoming based on personalized offers and marketing messages. The major challenge for online retailer is to make customers feel that they are special. Not like one of the thousands of consumers, but the one, unique recipient who may expect customized products, content, and communication methods, and service. Knowing what your customers want, often before they do, and delivering it to them enables e-Retailers to build loyal customers.